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What is ICT trading?
ICT trading is the set of price-action concepts taught by Michael J. Huddleston, who trades and teaches as the Inner Circle Trader (ICT). It reads a chart through where orders rest, where price moved out of balance, and when in the day it moved. This guide explains each concept in plain words, how the ICT models combine them, and links the page that covers each one.
The core ICT concepts
Most ICT setups are built from the same handful of ideas. None of them is a signal on its own; each describes something price did, and the models below put them in order.
Liquidity and liquidity sweeps
Liquidity is the orders resting at a price. Above a swing high sit buy stops: buyside liquidity (BSL). Below a swing low sit sell stops: sellside liquidity (SSL). Equal highs and equal lows are the clearest pools. A sweep is price trading through one of those levels and coming back, and in ICT models it is usually the first step of a setup.
What is a liquidity sweep · Free Liquidity Sweep indicator · Free Equal Highs & Lows indicator
Fair value gaps
A fair value gap (FVG) is a three-candle imbalance: the wicks of the first and third candles don't overlap, leaving a range the middle candle moved through in one direction. Price often comes back to it. A gap that price closes through and then respects from the other side is an inversion fair value gap (IFVG).
Order blocks and breakers
An order block is the last opposing candle before a displacement: the final down-close candle before a bullish move, or the final up-close candle before a bearish one. When price breaks through an order block instead of holding it, the failed block is a breaker, studied from the other side.
Market structure
Structure is the run of swing highs and lows. A break of structure (BOS) continues the trend; a change of character (CHoCH), often called a market structure shift, is the first break against it. ICT traders usually read structure on a higher timeframe for direction and act on a lower one.
Killzones and macros
ICT puts time beside price. The killzones are the session windows: Asia, London, New York AM, New York lunch and New York PM. Each session's high and low is marked as liquidity. Macros are shorter windows inside the sessions, such as 9:50 and 10:10 in New York.
Optimal trade entry (OTE)
OTE is a retracement zone measured on a displacement leg with Fibonacci levels, between 62% and 79% of the move. It is where an ICT trader looks to join a move after price pulls back, rather than chasing it.
SMT divergence
SMT divergence compares two correlated markets. When one makes a new high and the other doesn't, or one makes a new low and the other doesn't, the two have diverged. ICT traders look for it at liquidity levels both markets formed, as a hint that the move beyond the level may reverse.
Change in state of delivery (CISD)
A CISD is the candle where delivery flips direction after a liquidity sweep: price closes through the opening price of the displacement sequence that ran into the sweep. It is how many ICT traders confirm that a sweep has turned into a reversal.
ICT trading strategies: how the pieces fit together
An ICT model is a fixed order of these concepts. Three that our partner indicators are built on, each as its manual describes it:
- The 2022 model: a liquidity sweep, then a market structure shift, then a return to an order block or a fair value gap. The Unicorn is the case where an order block and a fair value gap overlap, and the Silver Bullet is another setup traded with the same pieces. 2022 Model Pro+ alerts both.
- A sweep and a CISD: a higher-timeframe level is tapped, liquidity is swept, then a CISD close confirms the turn in delivery. That is the first engine of Flow State Model Pro+, which triggers an entry when it fires inside your killzones.
- SMT and an inversion FVG: an external SMT divergence at a swing, an internal SMT at that same swing’s price, then the first inversion fair value gap in the same direction, as Motion Model+ sequences it.
In each, the concepts above are the parts and the model is the order they must happen in. A setup that skips a step isn’t the model.
ICT and smart money concepts
Many traders use smart money concepts (SMC) as a broader name for the same family of ideas: liquidity, imbalances, order blocks and structure. The vocabulary on this page is ICT’s.
Does ICT trading work?
ICT is a way of reading a chart, not a system that trades for you. The concepts describe what price did; whether a trader does well with them depends on how strictly they follow their rules, how they manage risk, and the market they trade. Two traders using the same concepts can get very different outcomes.
The honest way to answer it for yourself is to test one model, with written rules, on real history before risking money. The TP1 Backtester replays real market history bar by bar so you can do that, and a trading journal shows whether you followed the rules when you did take the trades.
Tools that mark ICT concepts
- Free ICT indicators: 13 free TradingView indicators, including OTE, liquidity sweeps, killzones, fair value gaps and SMT, each drawing one concept on your chart.
- ICT Pro+: one indicator that marks IFVGs, CISD, SMT divergence, session levels and higher-timeframe PD arrays as they form. A confluence tool; it gives no buy or sell signals.
Educational content. ICT concepts describe what price did; they don’t predict what price will do. Futures trading involves substantial risk of loss. See our risk disclosures.