An FVG is the gap between the wicks of the first and third candle in a run of three consecutive bars. If the low of the third candle sits above the high of the first, the range between them is one the price crossed so fast that no trading happened inside it. That range is what gets marked as a zone.
Formally, here is our rule. For a bullish gap: the low of candle i is above the high of candle i−2, and the zone runs from the high of i−2 to the low of i. For a bearish gap it mirrors: the high of i is below the low of i−2, and the zone runs from the high of i to the low of i−2. The middle candle is usually the fast bar itself, but it takes no part in the definition at all.
Why not every gap is shown
Gaps under that rule turn up constantly, and most of them are noise a tick or two wide. So only those at least 0.3 ATR tall reach the chart — a third of the average daily range over the last 14 bars. The threshold is tied to the instrument's volatility rather than to absolute price: otherwise gold and a meme coin would need different settings.
When a zone counts as closed
A gap lives until price comes back inside it. As soon as a bar enters the range, the zone is marked as tested; once price crosses it all the way to the far edge, it is filled. The two states are displayed differently, because they are different events: touching an edge and passing straight through.
How it differs from an ordinary gap
An exchange gap is the break between one session's close and the next session's open, and it exists only where trading pauses. An FVG is not tied to a schedule and is found inside a continuous stream: on crypto, where the market never closes, there are no ordinary gaps at all and as many FVGs as you like.
The second difference matters more. A gap is a fact about two neighbouring candles. An FVG is a fact about three, and it describes not a pause in trading but the speed of a move: price crossed a stretch without leaving any trades on it.
What the zone does not mean
Marking a gap does not mean price will return to it. It is a description of what already happened: this stretch was crossed quickly and left untraded. How many such stretches later get filled is a question of statistics for a particular instrument, not a property of the marking itself.