Imbalance and fair value gap are two related concepts that are often used by traders

who follow smart money concepts.

 Imbalance refers to a situation where there is more buying or selling pressure

in the market than there is on the other side. This can be caused by a number
of factors, such as news events, economic data releases, or simply changes
in investor sentiment.
 Fair value gap (FVG) is a type of imbalance that is created when there is a
large price movement in one direction, followed by a smaller price movement
in the opposite direction. This can create a gap between the wicks of two
candles on a chart.

Traders who follow smart money concepts believe that imbalances and FVGs can be
a sign that large institutions are entering or exiting the market. This is because large
institutions often have a significant impact on the price of an asset, and their
movements can cause imbalances to occur.

For example, if a large institution is buying an asset, it will likely cause buying
pressure to increase. This can create an imbalance, as there will be more buyers
than sellers in the market. If the imbalance is large enough, it can cause a FVG to
occur.

Traders who follow smart money concepts can use imbalances and FVGs to identify
potential trading opportunities. For example, if a FVG occurs, it could be a sign that
the price is about to reverse direction. This could be a good opportunity to enter a
trade in the opposite direction of the FVG.

However, it is important to note that imbalances and FVGs are not always reliable
indicators of future price movements. There are a number of other factors that can
also cause imbalances and FVGs to occur, such as technical analysis patterns or
random market noise.

As a result, it is important to use imbalances and FVGs in conjunction with other

technical analysis tools and indicators when making trading decisions.

Here are some of the key differences between imbalance and fair value gap:

 Imbalance is a general term that refers to any situation where there is more
buying or selling pressure in the market than there is on the other side. FVG is
a specific type of imbalance that is created when there is a large price
movement in one direction, followed by a smaller price movement in the
opposite direction.
 Imbalances can be caused by a number of factors, while FVGs are typically
caused by large institutions entering or exiting the market.
 Imbalances can be used to identify potential trading opportunities, but they
are not always reliable indicators of future price movements. FVGs are also
used to identify potential trading opportunities, but they are typically more
reliable than imbalances.