Why Your Entries Fail: The Fair Value Gap Entry (Free Guide)

Key takeaways

A break alone means nothing, price can wick or even close through a level and reverse
Wait for displacement: a fair value gap through the level
Then wait for the retest, and only enter if it holds
Stop goes beyond the retest candle, target at least 2 to 1
The waiting is the strategy, missed moves cost nothing

The one reason entries fail

You are entering on the break. This guide shows, frame by frame from the video, why the break is the trap and what to wait for instead.

Step 1: The setup everyone sees

Candles approaching a marked level with a breakout candle pushing through it — A level, a push through it, and a thousand traders hitting buy.

Price breaks a level and it looks like the move is leaving without you. That urgency is exactly what gets exploited.

Step 2: Why the break alone is a trap

The break marked with a red glow, showing price able to reverse straight back through the level — Wick through, close through, either way price can reverse straight back and take you out.

A break on its own means nothing. Price can wick through your level, it can even close through it, and still reverse straight back. Buying that break puts your stop exactly where the market goes hunting.

Step 3: Demand displacement

The breakout leaving a fair value gap drawn as two rails with a shaded box labelled fvg — The break that matters leaves a fair value gap behind it.

The fix is to demand evidence. Wait for displacement: a break so forceful it leaves a fair value gap, drawn here as the shaded zone running off the chart.

Step 4: Know the anatomy

The three candles of the fair value gap numbered 1, 2 and 3, with the two wick tips ringed in red — Three candles. The gap lives between candle 1's wick and candle 3's wick, ringed in red.

The fair value gap is a three candle pattern. Candle 2 moves with so much force that candle 1's wick and candle 3's wick never touch. That empty space tells you whether buyers or sellers are really in control, or whether it was just another fake out.

Step 5: Wait for the retest

Price pulling back into the gap zone and holding, with the entry marked — Price comes back to the level it broke. If it holds, that is the entry.

Once the gap prints, do nothing. Price pulls back to the level it just broke. If the retest holds, that is your confirmation and your entry. If it slices straight back through, the filter just saved you a loss.

Step 6: Fixed stop, fixed target

The completed trade with a red stop zone below the entry and a green target zone twice as tall, labelled 2 to 1 — Stop beyond the retest candle, target at least twice the risk.

Stop goes beyond the retest candle. Target is a minimum of 2 to 1. Small defined risk, asymmetric reward, and no more donating your stop to false breakouts.

Before you trade it

Drill the retest entry on the free entry trainer, check every live setup against the pre-trade checklist, and build the foundations with the free beginner course if you need them. Then 20 demo trades before a cent of real money.

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Frequently asked questions

Why do breakout entries keep failing?

Because a break on its own proves nothing. Price can wick through a level or close through it and reverse straight back, taking out everyone who bought the break. Without evidence of force behind the move, the break is just as likely a trap as a trend.

What is a fair value gap entry?

You wait for a break that leaves a fair value gap (displacement), then wait again for price to pull back and retest the level it broke. If the retest holds, you enter, with a stop beyond the retest candle and a target of at least twice the risk.

How do I identify a fair value gap?

It is a three candle pattern. The middle candle moves with so much force that the first candle's wick and the third candle's wick never overlap. The empty space between those two wicks is the gap.

What if price never retests the gap?

Then there is no trade. Some breakouts run without ever coming back, and missing them costs nothing. The retest requirement filters the fakeouts, and accepting the missed runners is the price of that filter.

What risk to reward should I use on these entries?

A minimum of 2 to 1. With the stop tucked beyond the retest candle the risk is small and defined, so a 2 to 1 target only needs you to be right about 1 trade in 3 to stay ahead.

Written by Tony: AA Global FX
Tony runs a live trading desk on Deriv synthetic indices and index CFDs and has published 116+ free trading tutorials on YouTube since 2022. About · YouTube
Last updated: 2026-07-17

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