Tickfloor

Fair Value Gap: does it work?

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In-sample, not a promise. Every figure we measured here comes from a backtest on past data.

Did Fair Value Gap beat the benchmark in Tickfloor's test?

No. We tested Fair Value Gap on 8 crypto pairs, 2017 to 2025. After costs, it returned 105.4 percentage points a year less than the benchmark. None held up once we allowed for the many other rules we tested. This is a historical test of the rule as described, not a prediction or advice.

A fair value gap is a three-candle pattern where the first and third candles' wicks do not overlap. ICT-style teaching says price comes back to fill the gap, so you trade the first return into it.

The rule we tested. On hourly bars, mark a three-candle gap only if it is wider than half the average bar range (ATR) and the middle candle moved the same way. Enter on the first return into the gap within 48 hours, stop at the far edge, target 2R, and close after 24 hours if neither is hit. Gaps are found by rule, not by eye.

See a full worked example of one of these reads (free, no account)

Receipt: parameters, data, window and result file
Run id
t100-fvg-h, run 2026-10-06
Frozen parameters
timeframe 1h; minGap=0.5, expire=48, maxHold=24, targetR=2
Data source
vendor not recorded in the result file; data fingerprint sha256 d482077d31ca2631...
Instruments and coverage
8 assets: BTCUSDT, BNBUSDT, XRPUSDT, ADAUSDT, DOGEUSDT, LTCUSDT, LINKUSDT, TRXUSDT
Date window
2017-08-17 to 2025-03-14 (discovery cutoff 2025-03-15)
Sample
13,429 completed trades over 2017-08-17 to 2025-03-14 (7.6 years)
Cost rule
0.10% to 0.12% per side; charged on every change in position/weight; benchmark pays none; no funding/borrow on shorts
Fill rule
not recorded
Benchmark
equal-weight long of the same assets, rebalanced daily across assets trading that day (no costs)
Run record (public)
research/hunt2/ledger.jsonl, line with id t100-fvg-h
Full result file
not published yet

No. None of the versions we tested passed. After costs: crypto pairs −105.4 pts/yr vs the benchmark. None held up once we allowed for how many other rules we tested. That covers the versions, costs and benchmark described here, not every version of the rule.

Tested a rule of your own? Check whether your backtest is just luck. It is free and needs no account.

Failed: only the tested version above. Not tested: Hand-marked gaps; other gap sizes and reward targets; higher timeframes; stocks and futures. A result for the tested version says nothing about these.

This is one line in a bigger check. The research desk has run 1,346 strategies, most against an equal-weight benchmark of the same assets rebalanced daily that pays no costs (the strategies pay theirs). After correcting for how many we tried (the luck check, Benjamini-Hochberg, 1,778 tests), 0 passed. That does not prove no strategy works, and it says nothing about versions we did not test.

General information only. It doesn't consider your objectives, finances or needs. Tickfloor holds no financial services licence and never places trades.

Short answers: the verdict and the rule, as questions

Does the fair value gap strategy work?

No. None of the versions we tested passed. After costs: crypto pairs −105.4 pts/yr vs the benchmark. None held up once we allowed for how many other rules we tested. That covers the versions, costs and benchmark described here, not every version of the rule.

What exact rule did Tickfloor test?

On hourly bars, mark a three-candle gap only if it is wider than half the average bar range (ATR) and the middle candle moved the same way. Enter on the first return into the gap within 48 hours, stop at the far edge, target 2R, and close after 24 hours if neither is hit. Gaps are found by rule, not by eye.

Is this financial advice?

No. This measures a publicly claimed strategy rule, not a recommendation. General information only, not personal advice.

See the full numbers on the Top 100 retail strategies family page, or the full method and every result.

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Other rules we've tested

Terms explained