First Touch or Retest? Tracking an ICT Fair Value Gap

Two screenshots show price entering the same fair value gap at the same depth. In one, it is the first return since the gap formed. In the other, price spent most of the morning moving back and forth through the zone. Cropping off the left side makes them appear identical.

A useful retest study keeps a visit history. It asks whether the state of the gap changes the quality of a defined setup, without assuming in advance that untouched always means profitable or that any touch destroys the level.

Definition and chart context: visit history of a fair value gap

Imagine a bullish gap extending from 1.08463 to 1.08517, approached from above. Three consecutive five-minute bars have lows of 1.08511, 1.08494 and 1.08506. All enter the band. If the latter two bars open and remain partly inside the same zone, these observations can describe one continuous visit rather than three independent retests.

For the ICT background, see 2022 Mentorship Episode 6. The worksheets below use stated study rules for measurement, confirmation and simulated fills. Those choices let you reproduce the examples; they are not claims that a public candle identifies the owner, size or intent of an institutional order.

Why this distinction matters

Counting every candle inside a zone as another touch inflates sample size and hides the difference between repeated independent approaches and one extended auction. Conversely, calling a lightly penetrated zone fresh because its midpoint remains untouched conflates two facts. A gap can have a visited edge and an unvisited midpoint at the same time.

How to identify it before the next candle

Record the outer boundaries at the close of the third source candle. Create separate fields for first edge touch, first midpoint touch and first far-edge reach. In this exercise a new visit requires a completed bar entirely outside the zone before re-entry. Another rule may be reasonable, but it changes the count. Do not reset the count when changing from five minutes to one minute.

Adopt a reset rule for this worksheet: one entire later bar, including the wick, must stand above the upper edge before a fresh downward approach can count as another visit. This is a research convention. Someone using closes only will obtain a different visit count. Record the raw bar that separated visits so the convention can be changed in a second analysis.

One visit or three? Define separation before counting

A bullish gap spans 1.08436 to 1.08494 with midpoint 1.08465. The first returning bar trades down to 1.08479, then two more bars remain partly inside. A later candle trades entirely above 1.08506; after that, another descent reaches 1.08457. Under the separation rule there are two visits, not four. The midpoint was untouched during visit one and crossed on visit two. That exact wording preserves information that the labels fresh and mitigated alone would discard.

The denominator matters. A first-touch entry is possible for every fresh gap that returns. A second-touch entry exists only for gaps that return, leave and come back. Comparing the win rates of the two sets without reporting these selection steps can make a rare survivor group look better than it would as a practical trading policy.

How to trade the idea in a paper replay

For a first-touch model, an overnight visit can disqualify a London setup even if you were asleep. For a retest model, ask what happened on the previous visit: was there displacement away, little separation, or acceptance on the far side? If there was no fresh departure, a second order may just add risk to the same unresolved hypothesis. Track combined exposure rather than counting repeated fills as unrelated ideas.

The two replays use constructed five-minute candles and a controlled order model shared across this workbook series. Keeping the execution pattern comparable lets you isolate what the featured concept changes: the reference, the eligibility decision, or the management rule. These selected paths illustrate mechanics. They are not historical signals or a sample from which to estimate a winning percentage.

How to preserve an area when the chart gets busy

An area on a chart is an interval, not a single executable instruction. Give the interval a source candle or source sequence and a direction of approach. The same two prices can represent a fresh zone approached from above, a band traversed repeatedly in both directions, or a failed area now approached from below. A screenshot of the empty rectangle cannot distinguish those histories. Save a short event log beside the numbers.

Choose which edge is near before the approach, then store both bounds in increasing numeric order. This avoids a common spreadsheet mistake on bearish examples: subtracting an upper price from a lower one and reporting negative width as if the zone had reversed direction. Numeric width is always positive here. Direction belongs in a separate field. A return halfway through a band and a return halfway through the entire dealing leg are also different calculations.

When two areas overlap, ask which underlying observations they share. A single displacement candle can help identify a structure shift, contribute to a gap and supply the context for an order block. Counting these as three independent votes exaggerates the evidence. A more useful note records the order of events: the larger area was known, a local reference was taken, displacement followed, then a return offered or failed to offer an executable quote.

For a clean falsification exercise, copy the map at the moment the trade would first be allowed. Remove one area from the copy and rerun the decision without changing the target or stop. If the decision changes, state exactly which rule relied on it. If nothing changes except the visual confidence of the annotator, the area may be informative background but is not a necessary condition of this setup. This exercise often removes more clutter than adding a higher-timeframe filter.

Partial penetration is a measurement, not a visit number

For a bullish gap approached from above, measure penetration as the distance from the near upper edge to the lowest bid seen during the visit, divided by gap width. Save zero for an edge touch, one half for a midpoint reach and one for a full traverse. Record a price beyond the far edge separately so a deep breach is not confused with an exact fill to the far boundary.

Two visits can have the same maximum depth but very different histories. One may penetrate half the gap on its first candle and displace away immediately. Another may drift inside for six candles without separating. A rule that enters once per visit treats each as one opportunity; a rule that places a new order on every overlapping candle does not. The latter may accumulate several exposures to effectively one unresolved idea.

Write down when the gap ceases to be available to the original study. Is a wick beyond the far edge enough, is a close required, or does the source timeframe have to close? Choosing a stricter retirement rule can keep a gap alive for longer and increase later visit counts. State that choice before interpreting a second-touch win rate as evidence about freshness.

A particularly useful failed example is a gap that never returns. It does not belong in a comparison of first versus second filled entries, but it does belong in a report of how many newly formed gaps produced any opportunity. Keep counts for formation, first arrival, separation and later arrival to preserve both denominators.

Worked replay A: The larger gap has its own visit history

The older bullish gap spans 1.09792 to 1.09834. Price approaches its near edge from outside. The source log shows no overlap since the gap formed. This approach is eligible for a first-visit study. Formation time, bounds and source feed all precede the slice shown here.

The visit at 1.09805 is to the older location gap. Displacement then creates a different three-candle gap around 1.09905 on the execution timeframe. Its first return is used to model the order. Two gaps and two visit counts are involved. A second visit to the parent gap does not make the first return to the child gap a second return.

Reconstruct the decision before reading the outcome

Cover the candles to the right of 07:20. On this EUR/USD bid chart the test candle opens at 1.09879, trades down to 1.09805 and ends at 1.09844. The close tells you that bids recovered part of the excursion. It does not yet tell you that anyone bought a particular number of lots, or that the prior short-term high will give way. Mark the low as an observation and leave the order field blank.

Now reveal the candle beginning 07:30. Its close at 1.09979 is above the earlier pivot at 1.09944. This is the completed break used by the exercise. Look two candles apart: the high of the bar beginning 07:25 is 1.09889 and the low of the bar beginning 07:35 is 1.09921. Their separation forms the bullish fair value gap in this model. One strong green candle alone would not establish those two outside prices.

A resting buy at their midpoint, 1.09905, can first be submitted at 07:40 under a next-bar convention. The 07:35 candle is named for its opening time, so its low cannot supply a fill for an order that depends on its close. This matters whenever the same screenshot appears to show both confirmation and a cheap entry. Write the order time before revealing the next low, not after finding a favourable one.

Assume a constant 0.9-pip spread throughout this small slice. On the return, bid reaches 1.09873 and the corresponding ask reaches 1.09882. The latter is at or below the requested buy price. We book 1.09905 as the fill, with no price improvement, no delay after activation and enough available size. Those are transparent simulation assumptions. A real candle, even from the correct side of the spread, is not a broker’s confirmation.

What the order would risk in cash

Give the practice account a USD balance of 1720. Its hypothetical cap of one half of one percent is $8.60 for this decision. For a USD-quoted pair with a 100,000-unit standard contract, one pip at one standard lot is $10. Adding 0.7 pip for assumed round-trip commission and other execution friction gives $124.00 of modelled downside at one lot. The spread is already present in the entry and exit quote rules and is not charged a second time.

Divide $8.60 by $124.00 and round down to the next permitted hundredth of a lot. That leaves 0.06 lots, risking about $7.44 under these assumptions. A gap or worse stop fill can exceed that number. Position sizing changes the money exposed; it cannot turn a missing confirmation into a valid entry. When the minimum tradable size exceeds the cap, the worksheet records a pass.

Change just one fact

Remove the whole-bar separation requirement and substitute a close outside the band. A session containing wicks that straddle the edge could gain several apparent visits. Before claiming retests perform differently, determine whether the change creates independent approaches or merely renumbers candles in the same auction. Store the reset bar alongside the visit number.

Worked replay B: The larger gap has its own visit history

The older bearish gap spans 1.27911 to 1.27881. Price approaches its near edge from outside. In the earlier session it already entered this band and then printed a whole bar clear of it. This approach is a retest, so it belongs to a retest policy only. Formation time, bounds and source feed all precede the slice shown here.

The visit at 1.27905 is to the older location gap. Displacement then creates a different three-candle gap around 1.27829 on the execution timeframe. Its first return is used to model the order. Two gaps and two visit counts are involved. A second visit to the parent gap does not make the first return to the child gap a second return.

Audit the short from the exit side of the quote

Read the second tape independently. The 07:25 bid high is 1.27905. By the end of the bar starting 07:35, bid has closed at 1.27775, below the pre-existing pivot at 1.27798. The workbook calls that downward displacement. It does not require a guess about which institution initiated the move. The mark is useful because a different reviewer can identify the same closing price on the same feed.

The low of the 07:30 candle is 1.27843 and the high of the 07:40 candle is 1.27815. The later high remains below the earlier low, leaving a bearish execution gap between them. Halving this interval gives 1.27829. A sell limit resting there becomes eligible only after 07:40 has finished. When bid subsequently reaches 1.27852 the paper order can fill at its stated price. No favourable slippage is credited.

It is tempting to score this short from the lowest red wick, because that is what the bid chart displays. The position actually has to buy back. With an assumed spread of 1.0 pip, an ask target at 1.27579 requires a bid at or below 1.27569. An ask stop at 1.27914 needs only a bid at or above 1.27904. Marking these two conversions before scoring prevents a one-spread error on both exits.

Keep the original order record even when the outcome is obvious from the last candle. A reviewer needs the decision price, the reference quote and the activation time, not just a screenshot captioned “short”. If the platform would have rejected a resting order this close to market, or the feed lacks quotes in the return interval, the correct response is to change the fill status. It is not to claim a market execution at the old limit price.

Score the path, then challenge the assumption

The deciding candle opens at 08:00. Its bid range is 1.27849 to 1.27921. With the assumed spread, the ask range is 1.27859 to 1.27931. The upper stop is reached before the other exit without requiring a guess about two exits inside this bar. A later movement cannot reverse a booked exit. In particular, a later visit to the original target would not repair a prior stop.

Increase the estimated round-trip friction by another half pip as a sensitivity check, while leaving entry, stop and target fills fixed. Planned risk:reward becomes 1:2.53, obtained by dividing 24.0 pips of possible net reward by 9.5 pips of downside. This answers a cost question only. If widening the actual bid/ask spread changes whether an order is triggered, reconstruct the path instead of merely reducing the result by a fee.

Change just one fact

Remove the whole-bar separation requirement and substitute a close outside the band. A session containing wicks that straddle the edge could gain several apparent visits. Before claiming retests perform differently, determine whether the change creates independent approaches or merely renumbers candles in the same auction. Store the reset bar alongside the visit number.

What can go wrong in the review?

A revisit shown on bid data can differ from an executable buy-limit fill on the ask. Keep the zone state measured on the chart separate from the order state measured on the appropriate quote. Both fields can be correct even when they disagree.

Reader exercise: Is this arrival a valid fresh-gap observation?

Try the following classification without using profit or loss as a clue. Measure the number of earlier distinct visits since the gap formed. For this worksheet, the value must be at most 0 visits. Also require this separate fact: the gap existed before the observed arrival and coverage is complete. These are conditions for admitting a row to a study. They do not replace the order trigger, size calculation or exit plan. The six records are constructed cases, not a report of observed market frequencies.

Cover the answer column and decide which facts you would request before admitting each record. A passes the numerical test at 0 visits and has the other required evidence. B has the other evidence but measures 2 visits. Under the stated rule that is enough to exclude B. A clean-looking reaction after B cannot change the comparison number of earlier distinct visits since the gap formed ≤ 0. If you want to study a wider definition, write it as a new version and rerun every observation.

C is the deliberate boundary case. Its value of 0 visits equals the threshold. This worksheet uses an inclusive comparison, so C passes. A version that demands strictly less would exclude it. Keep exact prices or timestamps in the original record before rounding for display; values that look equal on a chart may still differ at the feed’s actual precision. The most efficient place to look for a disagreement between two reviewers is often an equality case like this.

D has a larger value than allowed, so it fails even though the separate prerequisite is unknown. E demonstrates the opposite error: the measured 0 visits is acceptable, but the prerequisite is known to be false. F lacks the numerical evidence and its remaining condition is satisfied. There is no basis to call it either a clean pass or a measured failure. Keeping “unresolved” distinct from “no” preserves what data collection could still settle.

A touch during formation is not a later return. An overnight visit still counts even if the trader was not watching.

Keep a disagreement log beside the price map

For a disputed row, save a chart cropped at the decision time plus the raw prices used in the calculation. Hand both to a second reader without revealing where the trade later went. A second opinion based on the final move is not an independent classification of the original area. Ask first whether both readers agree on the source object, next whether they used the same measurement, and only then whether the threshold was satisfied.

For this lesson the minimum useful packet is the gap confirmation time, entry edge and list of separated visits. Preserve the original precision and include the clock used. If another reader can reproduce the number but not the label, examine the equality rule and prerequisite. If they cannot reproduce the number, settle the input discrepancy first. These are different faults, and only the second can be repaired by retrieving better data.

Read the six rows as a small audit of definitions. Two are eligible, three have a demonstrated reason for exclusion and one is undecidable from the available fields. If the missing value is recovered, there will be either two or three eligible observations out of six. Do not turn that ratio into an expected win rate. No entry, stop or profit is being scored here; the experiment asks only whether a proposed context can be reproduced.

A test you can run on unseen sessions

Compare first and subsequent independent visits with the same entry trigger and equal time horizons. Count each originating gap once as a cluster so a single choppy morning does not dominate the result.

Make one dated record for each session you inspect, including those in which the required condition never appears. Keep a count of eligible signals, orders placed, orders filled and positions closed. A result per fill answers a different question from a result per session. Separate them before comparing this rule with another way of reading visit history of a fair value gap.

Frequently asked questions

To put this worksheet beside a live chart, use the guides to London Kill Zone timing and the Judas Swing to define the session question. Then compare market structure shifts for confirmation, fair value gaps for the return price, and order blocks for the larger area behind the move.