How to Trade Imbalances: FVGs, Liquidity Voids, and Volume Imbalances Explained

Every aggressive candle on your chart tells a story about one-sided order flow. When price moves so fast that normal two-sided participation breaks down, it leaves behind an imbalance -- an area where only buyers or only sellers got their orders filled. Understanding these imbalances is what separates traders who react to price from traders who anticipate where price is going next.

This guide covers the three types of imbalances you will encounter, gives you concrete rules for which ones are worth trading, and walks through the entry techniques that extract the most from each setup.

What Is a Price Imbalance?

Markets are auction systems. Every transaction requires a buyer and a seller. When price moves efficiently, both sides participate at each level -- buyers are buying, sellers are selling, and price delivery is balanced across the range.

An imbalance occurs when this two-sided participation breaks down. Price surges in one direction so aggressively that there are no counterparty orders to fill on the other side. The result is an open price range where only one side was represented. This creates what traders call inefficient pricing -- a zone the market statistically tends to revisit to "rebalance" before continuing.

The concept is rooted in auction market theory. If price moved through a zone and only sellers were present, there are unfilled buy orders that need to be accounted for. The market will typically retrace to that zone, allow both sides to participate, and then continue in its intended direction.

There are three distinct types of imbalances, each identified differently and traded with different techniques.

The Three Types of Imbalances

1. Candlestick Imbalances (Fair Value Gaps)

This is the most common type and the one most traders are familiar with. A fair value gap forms when three consecutive candles create a void in price:

• Bullish FVG: The low of candle 3 is above the high of candle 1. The gap between those two wicks is the imbalance.
• Bearish FVG: The high of candle 3 is below the low of candle 1. The gap between those two wicks is the imbalance.

The displacement candle (candle 2) moved so aggressively that it left behind an open range where normal retracement did not occur. This is the foundation of most smart money trading strategies.

What matters is not just identifying the gap but understanding that the zone itself contains minimal orders. The significant buying or selling happened at the edges -- the supply and demand zones that sit just beyond the imbalance boundaries.

2. Liquidity Voids

A liquidity void is a larger, more extreme version of a candlestick imbalance. While a standard FVG typically spans one to three candles, a liquidity void can stretch across an entire impulse move consisting of multiple large-bodied candles with little to no wicking.

The distinction matters because liquidity voids behave differently from standard FVGs:

• They take longer to fill because the imbalance covers a wider price range
• Price often fills them in stages rather than in a single retracement
• The edges of a liquidity void tend to act as support and resistance as price works through the range
• Partial fills are common -- price may retrace into the void, react, and then return to fill deeper later

You can read more about the specific differences in our FVG vs liquidity void comparison.

3. Order Flow (Volume) Imbalances

This type requires footprint chart data. Order flow imbalances are identified by comparing bid and ask volumes diagonally on a footprint chart. The standard threshold is a 4:1 ratio -- if the aggressive side has four times or more volume than the passive side at a given price level, that level is flagged as an imbalance.

Three things cause order flow imbalances:

• Large institutional orders being executed across multiple price levels
• Multiple traders entering simultaneously, often triggered by a news event or a technical breakout
• Stop-loss cascades where protective orders are triggered in sequence, creating the appearance of aggressive one-sided flow

When three or more consecutive price levels show imbalances in the same direction, it creates a stacked imbalance -- a particularly strong support or resistance zone that price tends to respect on retests. These are the levels where aggressive participation was most concentrated.

Order flow imbalances are particularly useful for confirming breakouts. When price breaks out of a consolidation range and the breakout candle shows stacked imbalances, it signals that the break is backed by genuine institutional participation rather than a thin-volume fakeout. If the breakout candle has no imbalances on the footprint, treat it with skepticism -- it is more likely a false breakout that will reverse back into the range.

How to Validate Imbalances With Volume

Not every open price range is a true imbalance. Some are simply thin-market conditions (overnight sessions, holiday trading) where low volume created gaps that have no institutional significance. Here is how to separate real imbalances from noise.

Check the displacement candle's volume. The candle that created the imbalance should have above-average volume. If a large candle printed on low volume, the gap it left behind is less likely to attract institutional attention on a retest. High volume confirms that significant order flow occurred during the move.

Use the fixed range volume profile. Apply a fixed range volume profile across the three candles that form the imbalance. A true imbalance will show an extreme ratio of buyers to sellers (or sellers to buyers) within the gap zone. If the profile shows balanced participation, the zone may have already been efficiently delivered despite appearing as a gap on the candlestick chart.

Look for cumulative volume delta confirmation. During a bullish imbalance, CVD should show strong positive delta (aggressive buying). During a bearish imbalance, CVD should show strong negative delta. If the delta diverges from the price movement, the imbalance may be a stop-loss cascade rather than genuine institutional entry -- which changes how the zone will behave on a retest.

The Supply Demand Pressure Cloud visualizes this dynamic directly on your chart, showing where buying and selling pressure concentrated during impulse moves so you can quickly assess whether an imbalance zone has genuine institutional weight behind it.

Why Imbalances Get Filled

The market's tendency to fill imbalances is not random. It is driven by how institutional order flow actually works.

Large players cannot execute their full position in a single price move. They accumulate or distribute over time. When an aggressive move creates an imbalance, it means there are unfilled orders that need to be matched. The market pulls back to that zone because:

1. Liquidity is thin inside the imbalance. There were not enough orders at those prices to facilitate two-sided trading. The market needs to return and allow participation from both sides.
2. Institutional profit-taking. Traders who rode the impulse move take profits on the retracement, which pushes price back toward the origin.
3. New entries at better prices. Institutions that missed the original move use the retracement to enter at discount (for longs) or premium (for shorts).

This is why you often see price retrace through an imbalance, tap into a demand or supply zone at the extreme, and then reverse. The imbalance itself is the corridor. The supply or demand zone at its boundary is where the actual orders are sitting.

Which Imbalances Get Filled and Which Do Not

Not every imbalance is worth trading. Here are the rules that separate high-probability setups from noise.

Rule 1: The Extreme Imbalance Has the Highest Probability

When multiple imbalances exist in the same direction, the one furthest from current price -- the extreme -- is the highest probability fill target. The market tends to skip the first imbalance and drive through to the deepest one because that is where the most significant unfilled orders remain.

If you see two bullish imbalances stacked above each other, do not anchor your trade plan to the first one. Expect the market to fill through the first and react at the second. This principle alone will save you from taking premature entries.

Rule 2: Trend-Aligned Imbalances Fill More Reliably

An imbalance that forms in the direction of the prevailing market structure trend is significantly more likely to fill than one that forms against it. A bullish imbalance in an uptrend is a pullback entry zone. A bullish imbalance in a downtrend is a minor retracement that may never receive a meaningful fill.

Always establish your directional bias through break of structure analysis before trading any imbalance.

Rule 3: Unmitigated Gaps Only

An imbalance that has already been partially tested loses its potency. The whole thesis behind an imbalance trade is that price has not returned to that zone for two-sided order matching. Once it has been touched, the unfilled orders may have already been absorbed. Trade only fresh, unmitigated imbalances.

Rule 4: The Candle Close Test

A wick through an imbalance zone is acceptable. A candle close through it is not. If a candle body closes through the imbalance entirely, that zone is invalidated. The close tells you that the market accepted prices through the entire range and two-sided participation occurred. The wick, on the other hand, is a rejection -- price entered the zone but was pushed back, confirming the orders at that level are still active.

This single rule filters out a massive number of failed setups.

Rule 5: Premium and Discount Positioning

For bullish trades, only target imbalances that sit in the discount half of the current range (below the 50% level). For bearish trades, only target imbalances in the premium half (above 50%). This is directly tied to the premium and discount concept -- institutions buy cheap and sell expensive.

Use a Fibonacci retracement from the swing low to swing high. If your bullish imbalance sits above the 50% level, skip it. The risk-reward is poor and the probability of a deeper retracement is high.

Rule 6: Structural Confirmation Must Precede the Gap

A valid imbalance should form after a break of structure. The break confirms directional intent. The imbalance that forms during the breakout displacement candle is the one worth trading. Imbalances that form in choppy, structureless price action have no directional edge.

Rule 7: Size Matters

Larger imbalances carry more weight than small ones. A fair value gap that spans two or three points on an index is background noise. A gap that spans fifteen or twenty points represents genuine displacement. There is no universal threshold because it depends on the instrument and timeframe, but as a rule of thumb, the imbalance should be visually obvious on the chart without zooming in. If you have to squint to see it, it is not worth trading.

Two Approaches to Trading Imbalances

There is an important distinction between how different traders use imbalances, and choosing the wrong approach for your style will cost you.

The Partial-Fill Approach (FVG Trading)

This approach treats the imbalance zone itself as the entry area. When price retraces into the gap, you enter immediately -- typically at the opening edge or the 50% midpoint of the gap.

Advantages: You get into more trades and capture moves that reverse from partial fills.

Disadvantages: Stop-loss placement is problematic. Your stop must clear the supply or demand zone beyond the imbalance, which can create wide stops and poor risk-reward. Many of these gaps also get fully filled, stopping you out before the real move begins.

The Full-Fill Approach (Imbalance Trading)

This approach treats the imbalance as a corridor to be traveled, not a zone to trade from. You wait for the entire imbalance to be filled, then enter from the supply or demand zone at its extreme boundary.

Advantages: Better risk-reward because you enter at the edge of the range. Stops are tighter (just beyond the demand/supply zone). The entry itself is at a level where institutional orders are confirmed to exist.

Disadvantages: You miss trades where the market reacts from a partial fill and never reaches your entry.

The full-fill approach is more mechanical and produces higher risk-reward ratios on winning trades. The partial-fill approach generates more signals but requires additional confirmation techniques to avoid getting caught in full fills.

For most traders, the full-fill approach is the better starting point because it removes ambiguity. Either the imbalance fills and you get your entry at demand/supply, or it does not and you move to the next setup.

Entry Technique: The Multi-Timeframe Imbalance Setup

This is the workflow that ties everything together. It uses a higher timeframe for analysis and a lower timeframe for execution.

Step 1: Identify the Trend on the Higher Timeframe

Use the 4-hour or daily chart to establish directional bias. Look for clear market structure -- higher highs and higher lows for bullish, lower highs and lower lows for bearish. If structure is unclear, move to a different asset.

Step 2: Mark the Imbalances

Identify all unmitigated imbalances in the direction of the trend. Note which one is the extreme (furthest from price). That is your primary target zone. If there is a demand or supply zone immediately beyond the extreme imbalance, mark that as your entry zone.

Tools like Impulse & Balance automate this process by detecting impulse legs and their corresponding balance zones, highlighting exactly where efficient and inefficient price delivery occurred.

Step 3: Wait for Price to Reach the Zone

Do nothing until price fills the extreme imbalance and enters the supply/demand zone beyond it. Patience is the edge here. Most traders get impatient and enter at the first imbalance, only to watch price fill through it to the extreme.

Step 4: Drop to the Lower Timeframe for Entry

Once price reaches your zone, switch to the 15-minute or 5-minute chart. Look for:

• A change of character (ChoCH) -- a break of the lower timeframe trend confirming reversal
• A lower timeframe imbalance forming in your trade direction after the ChoCH
• Candlestick confirmation at the zone (rejection wicks, engulfing patterns)

Place your entry at the lower timeframe imbalance or demand/supply zone. Stop-loss goes beyond the higher timeframe swing point. First target is the next unmitigated imbalance in the opposite direction on the higher timeframe.

Step 5: Use Imbalances as Targets

This is the part most traders overlook. Imbalances are not just entry tools -- they are targets. If you are long, the next unmitigated bearish imbalance above current price is a natural profit target because that is where the market will encounter unfilled sell orders.

The GapSniper and GapHunter MTF indicators are built specifically for this workflow, automatically detecting fair value gaps across multiple timeframes and highlighting which ones remain unmitigated -- making it straightforward to identify both entry zones and targets without manual markup.

Risk Management for Imbalance Trades

Stop-Loss Placement

Never place your stop inside the imbalance itself. The imbalance is the corridor -- price is expected to move through it. Your stop belongs beyond the supply or demand zone at the imbalance extreme.

For the full-fill approach:

• Long trades: Stop below the demand zone low (the swing low that anchors the imbalance)
• Short trades: Stop above the supply zone high (the swing high that anchors the imbalance)

For the partial-fill approach:

• Long trades: Stop below the candle that created the FVG (candle 1 low)
• Short trades: Stop above the candle that created the FVG (candle 1 high)

Position Sizing

Because imbalance trades at the extreme offer tight stops relative to targets, the risk-reward profile is naturally favorable. Target a minimum of 2:1 risk-reward on every imbalance trade. The full-fill approach at demand/supply zones regularly produces 3:1 or better because you are entering at the deepest retracement point.

Use a position size calculator to determine your lot size based on the distance between your entry and stop.

Partial Profit Protocol

Take half off at 1:1. Move your stop to breakeven. Let the remainder run to the next imbalance target. This protects your capital on the trades that reverse after initial profit and lets winners extend into the full structural move.

Common Mistakes When Trading Imbalances

Trading every imbalance you see. Imbalances form constantly on every timeframe. Most of them are noise. Only trade imbalances that meet all six rules above and align with your higher timeframe bias.

Ignoring the demand/supply zone beyond the gap. The imbalance is the path. The order block or demand/supply zone at its boundary is the destination. Entering in the middle of an imbalance without reference to where the orders actually sit is guessing.

Using a single timeframe. An imbalance on the 5-minute chart means nothing if the daily chart shows price is in a strong trend against your direction. Always confirm with multi-timeframe analysis. The MTF Confluence Key Levels indicator helps by showing where key levels from different timeframes overlap, giving you confidence that a particular zone has multi-timeframe significance.

Trading against the trend. Counter-trend imbalance trades have significantly lower fill rates and higher failure rates. Until you are consistently profitable with trend-aligned setups, skip every counter-trend imbalance.

Chasing partially filled imbalances. Once an imbalance has been touched, its edge is reduced. Do not enter a trade based on a second or third visit to the same gap. Fresh, unmitigated zones only.

Imbalances Across Timeframes

Imbalances are fractal. The same three-candle pattern appears on the 1-minute chart, the 1-hour chart, and the weekly chart. But the timeframe determines how the imbalance behaves.

Daily and weekly imbalances are the highest conviction. They represent significant institutional order flow and can take days or weeks to fill. These are the zones you use for swing trade entries and for framing your overall bias. A daily imbalance that aligns with the weekly trend is one of the most reliable setups in price action trading.

4-hour and 1-hour imbalances are your primary trading zones for intraday and short-term swing trades. They fill within hours to a few days and provide the zones where you execute after confirming direction on the daily chart. This is the timeframe combination used in the multi-timeframe setup described above.

15-minute and 5-minute imbalances are execution tools. You use these for precise entry timing after the higher timeframe zone has been reached. They also serve as targets for scalping strategies. On their own, without higher timeframe context, these low-timeframe imbalances have a high failure rate -- which is why lower timeframe signals fail without higher timeframe context.

1-minute imbalances are for aggressive scalpers only. They fill within minutes and require fast execution. Use them exclusively as the final refinement layer when a higher timeframe zone is already in play.

The general principle: identify imbalances on your analysis timeframe, confirm the trend two timeframes above, and execute two timeframes below.

Imbalances in the Context of the PD Array Matrix

If you are studying ICT methodology, imbalances fit into a larger hierarchy of price levels called the PD Array Matrix. Within this framework, fair value gaps (called SIBI and BISI) are ranked alongside order blocks, breaker blocks, and mitigation blocks.

The matrix ranks which arrays price is most likely to respect based on their position relative to the dealing range. A fair value gap inside a premium zone during a bearish delivery has a high probability of acting as resistance. The same gap in a discount zone during the same delivery may be skipped entirely.

Understanding where your imbalance sits within the matrix hierarchy prevents you from trading low-priority gaps that the algorithm is likely to ignore.

Putting It All Together

Imbalances are not a standalone strategy. They are a component within a complete trading framework. The highest-probability approach combines imbalance identification with market structure analysis, supply/demand zones, and multi-timeframe confirmation.

Here is the complete checklist for every imbalance trade:

1. Higher timeframe trend is confirmed through break of structure
2. Imbalance is unmitigated and forms after a structural break
3. The imbalance sits in the correct premium/discount zone for your trade direction
4. You are targeting the extreme imbalance, not the first one
5. Price fills through the imbalance to the demand/supply zone at its boundary
6. Lower timeframe confirms reversal (ChoCH + new imbalance in your direction)
7. Stop is beyond the swing point, not inside the imbalance
8. Risk-reward is 2:1 minimum before entry

Follow this checklist mechanically and imbalances become one of the most reliable concepts in your trading arsenal. Skip any step and you are back to trading gaps randomly, which is how most traders use this concept and why most traders lose with it.

If you want to deepen your understanding of the concepts that underpin imbalance trading, start with our guides on price action strategy and liquidity in trading. Both provide the foundational knowledge that makes imbalance setups click.

The difference between a trader who understands imbalances and one who profits from them is discipline in execution. The concept is simple. The edge comes from waiting for only the setups that meet every criterion.