Analysis of Fair Value Gap (FVG) Trading Strategies: Retest Dilemma & Market Context

The analysis originates from a Reddit discussion [0] where traders debate waiting for Fair Value Gap (FVG) retests. FVGs are untraded price zones from impulsive three-candle moves [1][2]. Key arguments:

1. Consistency over retests
   : Execution consistency matters more than rigidly waiting for retests [0].
2. Market context impact
   : AI bubble nervousness reduces retests, leading to faster, unretracted moves [0][4].
3. Mechanical rules
   : A rule-based approach (HTF bias + 1-min structure shift + confirmation) eliminates emotional decisions [0].
   The AI bubble context (45% of fund managers view AI as a bubble [4]) creates volatility where retests are less frequent [0][5].

• Sentiment-strategy interaction
  : AI bubble nervousness directly alters FVG behavior, requiring adaptive strategies.
• Emotional risk mitigation
  : Mechanical rules reduce FOMO, a common pitfall when waiting for retests [0].
• Contextual flexibility
  : No single rule applies—traders must balance FVG signals with market conditions [0][3].

• Risks
  : Waiting for retests misses 1-2 continuation trades per fast leg [0]; emotional decisions lead to poor entries.
• Opportunities
  : Rule-based strategies capture more trades in volatile markets [0]; adapting to AI bubble sentiment aligns with current dynamics [4].

FVGs are untraded zones from impulsive moves [1]. Traders face a dilemma: wait for retests (risking missed trades) or use mechanical rules (capturing opportunities). Market context (AI bubble) reduces retests, making adaptive, rule-based strategies relevant [0][4]. Consistency in execution is prioritized over rigid retest rules [0].