FVG Sniper Entry Strategy Explained (With Nifty50 Options Example)
The Fair Value Gap (FVG) Sniper Entry strategy is a Smart Money Concept (SMC) method used by professional traders to enter trades with precision. This approach combines liquidity grabs, imbalances, and change of character (ChoCH) to catch institutional moves in the market.
What is a Fair Value Gap (FVG)?
A Fair Value Gap is an imbalance in price movement that occurs when price moves too quickly in one direction without balanced buying or selling on the opposite side. This creates a “gap” where fewer transactions took place. Price often returns to this zone later to fill the imbalance.
Why does this happen?
- Large institutions enter positions aggressively, causing price to move sharply.
- The quick move skips price levels, leaving an area of inefficient trading.
- Market returns to this gap to “rebalance” orders before continuing in the main trend.
How to Identify an FVG
Look for a 3-candle pattern on the chart:
✅ Bullish FVG (Uptrend Imbalance)
- Candle 1: Bearish or small bullish candle.
- Candle 2: Strong bullish candle (big body).
- Candle 3: Candle’s low does not touch Candle 1’s high.
Gap Zone: Between Candle 1 high and Candle 3 low.
✅ Bearish FVG (Downtrend Imbalance)
- Candle 1: Bullish or small bearish candle.
- Candle 2: Strong bearish candle (big body).
- Candle 3: Candle’s high does not touch Candle 1’s low.
Gap Zone: Between Candle 1 low and Candle 3 high.
How to Draw FVG on Chart
- Identify the 3-candle FVG pattern.
- Mark the gap zone:
- Bullish FVG: Candle 1 high ↔ Candle 3 low
- Bearish FVG: Candle 1 low ↔ Candle 3 high
- Draw a rectangle covering this zone.
- Extend the rectangle to the right until price comes back to test it.
FVG Sniper Entry Strategy Steps
1️⃣ Liquidity Grab
Institutions push price above recent highs (for shorts) or below recent lows (for longs) to trigger stop losses of retail traders. This provides liquidity for their positions.
2️⃣ Price Returns to FVG Zone
After grabbing liquidity, price moves back toward the imbalance zone (FVG) where institutional orders were left unfilled.
3️⃣ Wait for Change of Character (ChoCH)
A ChoCH is confirmation that the market has reversed direction. In a bullish setup, a minor high is broken; in a bearish setup, a minor low is broken.
4️⃣ Entry & Risk Management
- Entry: At FVG zone after ChoCH confirmation.
- Stop Loss: Below/above the FVG zone.
- Target: Previous swing high/low.
- Risk-to-Reward: Minimum 1:2.
Nifty50 Options Example
Setup: Nifty50 25,450 CE Intraday Trade
Step 1: Liquidity Grab
In the morning session, price dipped below intraday support at 25,400. Many traders’ stop losses were triggered. Institutions absorbed these sell orders.
Step 2: Price Returned to FVG Zone
A strong bearish candle created an imbalance on the 5-min chart. Later, price retraced into the FVG area (25,420–25,430 zone).
Step 3: Change of Character
Once inside the FVG, Nifty broke above a minor intraday high at 25,435. This confirmed a bullish reversal. Entry was taken in 25,450 CE.
Trade Execution
- Entry: 25,450 CE at ₹120
- Stop Loss: Below FVG zone (₹100)
- Target: Previous high zone (₹160)
- R:R: 1:2.5
Step 4: What Happened Next?
After ChoCH, Nifty50 rallied to 25,470. The 25,450 CE premium rose to ₹165. Target was achieved and the trade was closed with profit.
📈 Why This Trade Worked
- Liquidity Trap: Retail stop losses were taken at 25,400 giving institutions entry.
- Imbalance Fill: FVG zone acted as an area for institutional re-entry.
- Structure Shift: ChoCH confirmed trend reversal.
📌 Key Takeaways for Traders
- Always confirm liquidity grab before taking FVG trades.
- Use ChoCH for direction confirmation.
- Maintain a minimum R:R of 1:2.
- Best used on 5-min or 15-min charts for intraday options trading.
- Avoid during news events or low volume times.
⚠️ Disclaimer
This blog is for educational purposes only. Trading in derivatives involves risk. Always do your own research before taking trades.