Fair Value Gaps Part 2

Fair Value Gaps Part 2Leçon 4 sur 66 min de lecture

The stop and target

Where the two other prices go on a gap trade: the stop beyond the swing the pullback made, and the target at the liquidity the move came from.

An entry price on its own is not a trade. The stop and the target are decided at the same moment, before the order exists.

The stop goes past the swing

You entered because the pullback ended. The stop belongs at the price that proves it did not.

On a buy, that is below the low the pullback reached. On a sell, it is above the high the rally reached.

If price goes back through that point, the reason you entered is gone. Nothing about the trade is worth keeping at that stage.

The stop sits where the idea is wrong, not at a distance you like.

The target is the other side

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