Comprehensive Guide to ICT Trading Concepts
Market Structure (Trend Analysis)
Markets move in trends that traders must understand. An uptrend forms when price creates higher highs and higher
lows, while a downtrend occurs with lower highs and lower lows. Observing market structure shifts (MSS) is critical to
spotting reversals. For example, if an uptrend breaks by creating a lower low, it might indicate a bearish reversal.
Liquidity
Liquidity zones are areas where large volumes of buy or sell orders are concentrated. Swing highs and lows are
common liquidity zones. Institutions aim for these areas to capture orders, causing sharp price movements.
Example: Liquidity
Imagine price is oscillating between $100 and $105, forming a swing high at $105. Many traders place their stop-loss
orders above this level, believing it's a resistance zone. Institutions push the price to $106 to trigger those orders before
reversing to $100, capturing liquidity and creating a trading opportunity.
Manipulation
Manipulation occurs when institutions move the market to generate liquidity by triggering stop-losses or enticing retail
traders. These moves are often sudden and sharp, such as a price spike that reverses immediately.
Order Blocks
Order blocks are zones where institutions accumulate positions before large price moves. They act as significant
support or resistance areas. Bullish order blocks appear as the last bearish candle before an uptrend, while bearish
order blocks are the last bullish candle before a downtrend.
Comprehensive Guide to ICT Trading Concepts
Market Maker Model (MMM)
The market maker model illustrates how institutions operate: accumulating liquidity, manipulating price, and then
distributing it in their desired direction. This model helps traders align their strategies with institutional activity.
Breaker Blocks
A breaker block occurs when price invalidates a previous order block, signaling a shift in market intent. For instance, a
bearish order block might become invalidated, turning into a bullish breaker block.
Fair Value Gaps (FVG)
Fair value gaps are inefficiencies in the market where price has moved too quickly, leaving gaps between candle wicks.
Markets often revisit these gaps to balance liquidity, making them useful for entry and exit points.
Displacement
Displacement is a strong price movement resulting from institutional activity. These moves are characterized by large
candles with minimal wicks and often break significant levels, indicating strong momentum.
Optimal Trade Entry (OTE)
Using Fibonacci retracement levels (e.g., 61.8%-78.6%), traders can find the most efficient entry points. OTE combines
technical analysis and liquidity concepts for high-probability setups.
Balanced Price Range (BPR)
BPR occurs when opposing displacements create a balanced range, often preceding significant price breakouts or
reversals. These areas represent equilibrium before large market moves.
