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ICT Theory

ICT (Inner Circle Trader) reveals how institutional traders manipulate price to accumulate positions. Understanding this lets you trade WITH the banks, not against them.

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What is ICT?

ICT theory shows how large institutions (banks, hedge funds) move price in 3 phases: Accumulate positions → Manipulate price to trigger retail stops → Distribute by driving price in their intended direction. Trading WITH this cycle dramatically improves your edge.

Order Blocks (OB)

An Order Block is the last opposing candle before a strong impulse move. It marks where institutional orders were placed.
  • Bullish OB: Last red candle before a strong upward move
  • Bearish OB: Last green candle before a strong downward move
  • Price returns to OB to fill remaining institutional orders
  • Entry: confirmation candle inside the OB zone
  • SL: just below/above the OB
  • Once fully tested, an OB loses its power

Pro Tip: An OB combined with a Fair Value Gap inside it is the highest-probability ICT setup. Wait for price to fill the FVG within the OB.

Fair Value Gaps (FVG)

A 3-candle pattern where candle 2 moves so fast it leaves a gap between the wick of candle 1 and the wick of candle 3.
  • Bullish FVG: high of candle 1 to low of candle 3 (gap above)
  • Bearish FVG: low of candle 1 to high of candle 3 (gap below)
  • Price tends to return to fill these gaps before continuing
  • Enter at 50% of the FVG for best risk/reward
  • Daily and H4 FVGs are stronger than lower timeframe ones

Liquidity & Stop Hunts

  • Buy-side Liquidity: stops above equal highs (from short sellers). Banks sweep these before selling.
  • Sell-side Liquidity: stops below equal lows (from buyers). Banks sweep these before buying.
  • Equal Highs/Lows: retail traders put stops just beyond them — prime institutional targets
  • Trade AFTER the liquidity sweep: wait for the sweep, then trade the reversal back inside the range

ICT Killzones

Killzone Time UTC Best Pairs Notes
Asia 11PM-1AM JPY pairs Mark range for liquidity
London 8AM-10AM GBP/EUR Most important session
NY AM 1PM-3PM USD pairs High probability setups
NY PM 6PM-8PM Any Often reverses NY AM
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Key Takeaways

  • ICT reveals bank and institutional order flow
  • Order Blocks = origin of large institutional orders
  • Fair Value Gaps = imbalanced price areas that fill
  • Liquidity Sweeps = stop hunts by smart money
  • BOS confirms trend continuation
  • CHoCH signals early trend reversal
  • Killzones are the best time windows to trade
  • Mark Weekly and Daily levels first always

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