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Glossary — F
Fair Value Gap (FVG)
A price imbalance where a candle's body doesn't overlap with the body two candles prior, creating a 'gap' in the price auction. Institutional traders often return to fill these gaps.
False Breakout
When price briefly breaks through a support or resistance level but quickly reverses back, trapping traders who entered on the breakout. Also known as a fakeout or trap.
Fibonacci Retracement
Horizontal lines based on Fibonacci ratios (23.6%, 38.2%, 50%, 61.8%, 78.6%) drawn between a swing high and low. These levels often act as support/resistance and are used to identify potential reversal zones.
Fibonacci Extension
Fibonacci ratios projected beyond the initial swing to identify potential profit targets. Common extension levels include 127.2%, 161.8%, and 261.8%.
Flag
A continuation pattern formed by a sharp price move (flagpole) followed by a rectangular consolidation that slopes against the prior trend. Breakout from the flag resumes the original move.
Flagpole
The sharp, nearly vertical price move that precedes a flag or pennant pattern. The length of the flagpole is often used to project the target after the pattern breaks out.
FOMO (Fear of Missing Out)
The anxiety-driven urge to enter a trade after seeing a big move, fearing further gains will be missed. FOMO leads to chasing entries at poor prices and is one of the most destructive trading emotions.
Forward Testing (Paper Trading)
Testing a trading strategy in real-time with simulated money to validate backtesting results. Forward testing reveals execution challenges, slippage, and emotional factors not captured by backtests.
Falling Wedge
A bullish pattern formed by converging downward-sloping trendlines where the resistance line falls faster than the support line. Despite the downward bias, the narrowing range signals weakening selling pressure.
Four Price Doji
An extremely rare doji where the open, high, low, and close are all at the same price, appearing as a horizontal line. Represents absolute market inactivity and extreme indecision.
Falling Three Methods
A five-candle bearish continuation pattern: a large bearish candle, three small bullish candles staying within its range, then another large bearish candle closing below the first.
Fear and Greed
The two primary emotions driving market cycles. Fear causes panic selling at bottoms; greed causes euphoric buying at tops. Successful traders learn to act against the crowd at emotional extremes.