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Strategies / Pattern / Fair Value Gap Reversal

Fair Value Gap Reversal

This idea buys when a three-bar bullish gap appears, with the high from two bars earlier below the current low. It sells short on the opposite gap and reverses, so it stays in the market once started.

PatternLong & shortSwingUSD/JPY4 hours
n/aProfit factor
525,980Net profit USD
38.54%Win rate
2,779Trades
-353,460Max drawdown
189Avg trade

Best run of 3. USD/JPY, 4 hours, spread 1, from run sweeps:2026-10-03-USDJPY-4h-opt.tsv:21.

Entry rules, long

  2. A long is opened only when no long position is already open.

Entry rules, short

  2. A short is opened only when no short position is already open.

Exit rules

  2. No stop or target is coded.

Test conditions

PeriodUp to 2026-10-03
InstrumentUSD/JPY, 4 hours
Spread1 points
Starting capital1,000,000
CostsSpread only. Commissions and overnight financing are not included.
BarsUp to 200,000 bars, fewer where the instrument has less history
Last tested2026-10-03

Every run

Markets and timeframes tested

MarketTimeframePFTradesWin %NetMax DD
USD/JPYBest run4 hoursn/a 2,77938.54525,980 USD-353,460
USD/JPYDailyn/a 1,27835.602,450,070 USD-1,295,710
GBP/USDDailyn/a 1,32138.5320,064 USD-7,212

Charts

Results by run

Net profitMax drawdown

The code

ProBuilder code, as tested

// ==============================================================
// Fair Value Gap Reversal
// ProRealAlgos Strategy Library  |  prorealalgos.com
// Type: Pattern
// Direction: Long & short
// Timeframe tested: 4 hours
// ==============================================================

DEFPARAM CumulateOrders = false

11 more lines: the entry and exit rules.

Setup

How to load it

  1. Copy the code with the copy button on the code block.
  2. In ProRealTime, open a chart of the instrument and timeframe you want to test, then open ProOrder > New trading system and choose "Create with programming".
  3. Paste the code, give the system a name and save it.
  4. Click "Backtest", set your own spread and position size, and run it before you consider trading it live.
Read this firstKnown weaknesses2 points
  • No profit factor is available, because only sweep results exist for this strategy.
  • The maximum drawdown of 353,460 USD is large next to the net profit of 525,980 USD.

Questions

About this strategy

Can I run Fair Value Gap Reversal in ProOrder?

Yes. The code is ProBuilder and runs as an automated ProOrder system. Backtest it on your own account with your own spread and position size before trading it live.

Which markets was it tested on?

It was tested on 3 market and timeframe combinations. The best run by trade count was USD/JPY, 4 hours, with 2,779 trades.

How large was the drawdown?

The best run had a maximum drawdown of 353,460 USD at the tested position size, against a net result of 525,980 USD.

Does it trade long, short or both?

It trades both long and short.

Related

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Trend Surfer

Best run on the same market, USD/JPY.

1.04 PF · 10,813 trades

Breakout Reversal

Also a pattern strategy.

n/a PF · 459 trades

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Past backtest results do not guarantee future results. This is not financial advice. Curated and maintained by ProRealAlgos. ProRealTime™ is a trademark of ProRealTime SAS. prorealalgos.comStatsDocs