Discover the FVG Indicator for NinjaTrader 8
FVG Indicator For Ninjatrader 8 is a tool that reveals price imbalances in the market, which is a complex place influenced by many factors. Traders are using technical indicators more to gain an advantage. Among these, the Fair Value Gaps (FVG) Indicator stands out for finding market inefficiencies and imbalances, or when buying and selling aren’t equal. Let’s explore how this Smart Money indicator operates on NinjaTrader 8 charts.
The FVG indicator is made to show fair value gaps on NinjaTrader 8 charts.
Understanding Fair Value Gaps
Before we dive into the technical stuff, let’s understand what Fair Value Gaps (FVG) are. FVGs are basically when prices are uneven on one side of the market. They’re also called ‘price imbalances’ or ‘market inefficiency.’ The main idea is that prices move to find a balance between buyers and sellers, making the market work smoothly.
In a balanced market, there are as many buyers as there are sellers. This balance is seen on a price chart when candlesticks overlap. However, when prices suddenly move away from a trading zone, leaving a gap, that’s an FVG. These gaps show the actions of ‘smart money’ or big institutional traders.
In the chart below, red rectangles highlight short imbalances, and green rectangles show long imbalances.
This Smart Money Indicator isn’t a standalone trading indicator System.
Understanding this Smart Money Indicator
FVG Indicator For Ninjatrader 8 is like when the prices are uneven on one side of the market, sometimes called ‘price imbalances’ or ‘market inefficiency.’ The main idea is that prices move around to match up buyers and sellers, like a market trying to keep things in balance. The ‘Smart Money Indicator’ players work with a lot of money, so they spread their orders across many price points.
Market Efficiency:
Market efficiency happens when there are as many people buying as there are selling. You can see this on a price chart when the candlesticks overlap, whether their bodies or wicks. The more they overlap, the better the market is working. But when prices don’t overlap, it’s seen as an imbalance and can be seen using FVG Indicator For Ninjatrader 8.
When does an FVG occur?
An FVG occurs when the price diverges quickly from an order block. Such a move indicates that the ‘smart money’ is at play. To spot a Fair Value Gap, look for an area of market inefficiency (a lone green candle without a red counterpart or vice versa). If the candles on either side, including their wicks, fail to close these gaps, an FVG has likely formed.
It’s worth noting that markets may not immediately address these inefficiencies. Especially on larger timeframes, the resolution can stretch from days to even years. However, on intraday and scalping timeframes, corrections are often swift.
How to Identify an FVG Using FVG Indicator For Ninjatrader 8:
- Single Directional Candle Structure:
- To visually spot an FVG, look for a single, strongly directional candle (e.g., a green candle in an uptrend or red in a downtrend) that appears isolated, without an opposing candle on either side.
- Candle Wick Gaps:
- An FVG is present when the wicks of the candles on either side do not “fill” or overlap the directional candle, meaning there is no attempt to balance price within this range. If the price action does not return to fill this gap, it remains an FVG and can serve as a target for future price retracements.
- Where FVGs Typically Form:
- FVGs often occur around important levels, such as support or resistance zones, or following a breakout from consolidation areas. For example, after a breakout from a resistance level, the quick move up might leave behind an unfilled gap, creating an FVG.
Interpreting the Significance of FVGs:
- Indicative of Smart Money Activity:
- When institutional traders or “smart money” cause an FVG, it indicates they have taken a decisive position, leaving behind gaps due to strong buying or selling. Retail traders often follow suit, interpreting this imbalance as a signal of institutional interest.
- Potential Retracement Levels:
- Prices often retrace to FVGs to “fill” these gaps as the market seeks balance, making these levels valuable for setting up entries or exits. A return to the FVG level can provide an opportunity for those who missed the initial move.
- Trend Continuation or Reversal Signals:
- FVGs can indicate trend continuation if price respects the gap level as support or resistance, but they may also signal an exhaustion point if price fails to move past the FVG in the prevailing direction.
Showing FVGs from Higher Time Frame?
Users have the flexibility to customize the Fair Value Gap indicator to display imbalances from a higher time frame. As illustrated in the screenshot below, despite the 3-minute timeframe, it plots FVGs based on the 60-minute chart.
How to Interpret an Fair Value Gap Indicator?
Typically, an FVG should maintain the 50% level. Prices often react between the opening and the midpoint (50%) of the FVG. When the price fills the entire gap, it might be targeting the order block either above or below the FVG.
Fair Value Gap Indicator Display Options
As traders delve into the FVG Indicator, they’ll notice a series of settings designed to enhance user experience and provide more granular insights. These options help customize the visual representation ensuring traders can tailor the indicator to their unique preferences.
- Users can view FVG areas for long and short.
- Support to display FVG from Higher Time Frame HTF.
- Option to remove FVGs when price moves enirely through them.
- Users can define a minimum size for highlighted FVGs in Points.
- The length of Fair Value Gap lines can be adjusted; setting it to 0 will extend the lines to the present candle.
- Indicator comes with Chart Trader to trade FVGs
Key Points for Using FVGs in Trading:
- Set Ups Around FVGs:
- Traders often watch for price to retrace to the FVG zone to potentially enter in the direction of the original move. By doing so, they align their trades with institutional flows.
- Confirming with Volume and Market Structure:
- Volume spikes, price action confirmation, and alignment with the broader market structure can further strengthen FVG setups.
- Stop Placement and Risk Management:
- Stops are typically placed beyond the FVG to protect against reversals, while take-profit levels may be set at key levels like recent highs or lows or at the next anticipated FVG.
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Conclusion
The Fair Value Gaps Indicator for Ninjatrader 8 is a dynamic tool for traders looking to harness the power of market inefficiencies. Offering a visual representation of price imbalances and providing customizable alert options ensures that traders don’t miss out on potential trading opportunities arising from these gaps. Whether you’re a seasoned trader or just getting started, the FVG indicator is worth exploring to refine your trading strategies.
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