FVG Mitigation and the 50% Entry: How Retracements Are Traded
Once a fair value gap exists, the practical question is: where inside it do I look to enter? That depends on how price mitigates the gap.
What mitigation means
Mitigation is price returning into the gap. It is measured as a percentage of the gap that has been traded through:
- 0% – untouched
- 25 / 50 / 75% – partially filled
- 100% – fully filled (price reached the far edge)
If a candle then closes beyond the far side, the gap is invalidated — for a bullish gap, a close below its lower edge.
The 50% entry
The midpoint of the gap, often called consequent encroachment, is a popular entry because it balances two risks: waiting for a deeper fill can miss the trade, entering at the first touch can mean a worse average price. On the example gap 3311.30 – 3314.00 the 50% level is 3312.65.
Other entry modes (all configurable)
| Mode | Idea |
|---|---|
| Any touch | Enter at the first edge price meets |
| 50% | Enter at the midpoint (default) |
| Deep retrace | Enter around 75% of the way through |
| Order block touch | Use the order block instead of the gap |
| FVG + order block | Only where the two overlap |
| Confirmation candle | Wait for a candle to react inside the gap |
Stop-loss and target
The stop normally sits beyond the sweep extreme plus a buffer; the target is the nearest opposing liquidity. Check risk-to-reward before entering.
What can go wrong
- Price blows through the gap without pausing.
- A shallow retrace never reaches your 50% level and the move leaves without you. Missing a trade is not a loss; chasing it usually is.
Testing it
Use a backtest to compare entry modes on the same data before choosing one.
Questions & answers
Why is the 50% level popular?
It is objective, easy to compute and sits between an early shallow entry and a late deep one. Whether it performs best on your data must be tested.
What if price only fills 25% of the gap and leaves?
With a 50% entry, no trade is triggered. That is by design; the model does not chase.
Does a fully mitigated gap disappear?
It stays in the database for history and backtesting, but it is no longer treated as an untouched imbalance.
Can I change the entry mode?
Yes, administrators can choose the mode in the strategy settings. Each change is audited and should be stored as a new strategy version.