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What is ICT? Core concepts and how to trade it

The Inner Circle Trader method: liquidity, market structure shifts, FVGs, order blocks, premium/discount, OTE, killzones and a step-by-step entry model.

What ICT is

ICT (Inner Circle Trader) is the name of Michael J. Huddleston's channel and method. The core idea: price moves to take liquidity (the clusters of stop losses above old highs and below old lows) and then seeks out imbalances. ICT traders read pure price action and use almost no indicators.

Core concepts

Liquidity (BSL / SSL)Buy-side liquidity sits above old highs and equal highs; sell-side liquidity below old lows and equal lows. That is where the crowd's stops cluster.
DisplacementA strong, fast move with large candle bodies showing that institutions stepped in.
MSS / BOSMarket Structure Shift: price breaks the most recent short-term high/low in the new direction after a liquidity sweep. BOS: a break of structure in the existing trend direction.
FVG (Fair Value Gap)A 3-candle pattern where the wicks of candle 1 and candle 3 don't overlap, leaving a gap at candle 2. Price often returns to fill part of it.
Order Block (OB)The last down candle before a strong move up (or the last up candle before a strong move down).
Breaker BlockAn order block that failed and then flips role (support becomes resistance and vice versa).
Premium / DiscountSplit the current dealing range at 50%. Buy in the lower half (discount), sell in the upper half (premium).
OTEOptimal Trade Entry: the 62–79% Fibonacci retracement zone, sweet spot 70.5%.
Power of Three (AMD)A session or day often has three phases: Accumulation, Manipulation (a liquidity sweep, the "Judas swing") and Distribution (the real move).

Killzones (high-liquidity windows)

ICT uses New York time. Convert to your own time zone, and remember US daylight saving shifts these by an hour twice a year.

Asian killzone20:00–00:00 New York
London killzone02:00–05:00 New York
New York killzone07:00–10:00 New York
Silver Bullet03:00–04:00, 10:00–11:00, 14:00–15:00 New York

How to trade ICT: a step-by-step model

  1. Set the bias on D1/H4: which liquidity is price drawn to, the old high or the old low?
  2. Wait for a killzone, London or New York.
  3. Wait for a sweep of the opposite liquidity: for a bullish bias, price takes the Asian low or the previous day's low.
  4. Wait for an MSS with displacement on M5/M15: price breaks the latest short-term high with a strong candle and leaves an FVG.
  5. Enter when price returns to the FVG or OB in discount; stop below the swept low.
  6. Target the opposite liquidity (the old high). Take partial profit at 2R and move the stop to break-even.
Watch outICT has a lot of jargon and makes it easy to "see setups everywhere". Pick one model, journal it and test at least 50–100 trades on past data before risking real money. Risk 0.5–1% per trade.
TipSee the Smart Money Concepts lesson for mapping BOS/CHoCH, and the Fibonacci lesson for the OTE zone.

Try it on a chart

Educational content only, not investment advice. Practise on a demo account before using real money.