Learn ICT Concepts in 30 Minutes!

Main Ideas & Lessons (ICT Fundamentals)

1) Swing points and liquidity

• Swing points are either:
  • Swing High: the center candle has a lower high to the left and a lower high to the right (relative to the center candle).
  • Swing Low: the center candle has a higher low to the left and a higher low to the right.
• Why swing points matter: many retail traders place orders around them:
  • Top orders just above swing highs
  • Bottom orders just below swing lows
  • Result: liquidity tends to be deeper around these levels.

2) Buy-side vs sell-side liquidity (and stops as the mechanism)

In ICT terms, the stop/target direction implies:

• Long trade: take-profit & stop-loss are sell orders
• Short trade: take-profit & stop-loss are buy orders

Buy-side liquidity

• Located just above a swing high
• Triggered by:
  • short stop orders above the high
  • longs’ breakout orders if price surpasses the high

Sell-side liquidity

• Located just below a swing low
• Triggered by:
  • long stop-loss orders below the low
  • shorts’ breakdown orders if price goes below the low

3) How to identify swing points on a chart (practice-focused)

The video demonstrates marking swing highs/lows on a 5-minute chart (mini S&P) and notes:

• Swing points can form in sequences (alternating highs/lows).
• Some swing candidates don’t qualify until the next candles confirm them.
• Eventually price may:
  1. take out prior swing highs,
  2. test them,
  3. then reverse.

4) Types of highs and lows: Equal vs old (isolated) levels

Equal highs/lows

• Multiple swing highs or swing lows cluster around the same area (not necessarily the exact same price).
• Example concept:
  • three swing highs clustering → equal highs
  • three swing lows clustering → equal lows

Old highs/lows

• More isolated/stand out levels.
• Important behavior: an old low can be pierced without closing below it, after which price may rise again.

Also referenced as potentially important depending on timeframe:

• Previous week higher low, previous day higher low
• Session highs/lows
• Intraday timeframe highs/lows

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Range, Premium/Discount, and Risk-Reward Logic

5) Premium vs discount zones

• Range = the distance between:
  • swing low → swing high, or
  • swing high → swing low
• Split the range into two equal halves:
  • Upper half = Premium
  • Lower half = Discount
• Trading guidance:
  • Long entries: look in Discount
  • Short entries: look in Premium
• Better R:R rule emphasized: the deeper the entry into the favorable zone (deeper discount for longs, higher premium for shorts), the better the potential risk-reward, assuming typical stops/targets at opposing swing points.

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Optimal Trade Entry (OT) Methodology (Fibonacci)

6) OT (Optimal Trade Entry) definition

• OT = a Fibonacci retracement zone
• It is defined as 0.62 to 0.79 retracement.
• Midpoint = 0.75 is highlighted as a key level inside the OT.

7) OT usage instructions (detailed)

For a long trade

1. Identify the swing low → swing high range.
2. Mark Premium/Discount from that range.
3. Plot the OT retracement zone (0.62–0.79) so it falls in Discount.
4. Watch for price reactions at the OT’s three levels, especially the midpoint (0.75). - Emphasis: entries deeper into discount (for longs) can improve extracted R:R.

For a short trade

1. Identify the swing high → swing low range.
2. Mark Premium/Discount.
3. Plot OT (0.62–0.79) so it falls into Premium.
4. Watch behavior around the OT levels, especially 0.75.

8) Example behavior described

• Short example (EURUSD on 4H):
  • Price reacts around OT but not optimally until later.
  • The video cites a potential ~2.4 R:R when entered at the midpoint, implying more could be extracted if price moves further into the zone.
• Long example:
  • Price touches OT within discount and reacts by moving toward the old high / buy-side liquidity level.

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Fair Value Gaps (FVG), Imbalance Concepts, and Inversion

9) Fair Value Gap (FVG) = 3-candle pattern

• FVG concept: the “gap” exists between the first and third candle shadows (not necessarily a visible chart gap).

Bullish FVG (often called BC)

• Buy-side in balance / sell-side in efficiency
• The upper shadow of the first candle does not overlap the lower shadow of the third candle → forms an FVG.

Bearish FVG (often called CB)

• Sell-side imbalance / buy-side inefficiency
• The lower shadow of the first candle does not overlap the upper shadow of the third candle.

10) Consequent encroachment (midpoint behavior)

• Consequent encroachment = price reacting to the midpoint of the FVG (described as the 50% retracement of the gap).
• FVGs can behave like support/resistance zones.

Ideal/valid reactions described

• For a bullish FVG (support-like):
  • price pierces and closes above the upper limit of the gap, or
  • price behaves similarly at the midpoint (pierces midpoint and closes above)
• For a bearish FVG:
  • mirror behavior (flipped upside down)

11) Inversion (when FVG fails and flips)

• If price “re-tests the other side” after disrespecting the original FVG behavior, it’s called FVG inversion.
• The video frames inversion as an analogous “switch and test” concept.

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Related Patterns: Volume Imbalances and Gaps

12) Volume imbalance vs gap (definitions)

• Volume imbalance:
  • A gap exists between open and close of adjacent candles,
  • but trading activity occurs within the zone due to overlapping shadows.
• Gap (true price gap):
  • There is a space between highs and lows of adjacent candles,
  • with no trading activity between them.

(Notes from subtitles) A bullish vs bearish description is provided via candle relationship/shadow-based logic.

13) Instructional takeaway

• Practical message: FVGs, volume imbalances, and gaps can be used in a similar way as reaction zones.

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Order Blocks (OB) Methodology

14) Order blocks = before/after liquidity sweeps + break of structure

Two main types:

1. High probability OB: large body candles
2. Low probability OB: small body candles with larger shadows

15) High probability order block rules (detailed)

Bullish high-probability order block

• Formed by:
  • a large-bodied bearish candle (or series) that sweeps sell-side liquidity
  • followed by a Break of Structure (BOS) to the upside (breaking an old high)
• Order block zone location:
  • sits at the open of the large bearish candle
• After BOS:
  • price often retraces back into the order block before moving higher.

Bearish high-probability order block

• Formed by:
  • a large-bodied bullish candle (or series) that sweeps buy-side liquidity
  • followed by a Break of Structure to the downside (breaking an old low)
• Order block zone location:
  • at the open of the large bullish candle
• After BOS:
  • price often retraces into the order block before moving lower.

Additional structural note

• High-probability OBs are linked to simple expanding pivot formations:
  • bullish case: lower low → higher high
  • bearish case: higher high → lower low

16) Low probability order block rules (detailed)

• Formed by small body candles with prominent shadows in the middle of a price move.

Bullish low-probability OB

• A small body bearish candle inside mostly bullish candles
• OB sits between the high and open of that bearish candle

Bearish low-probability OB

• A small body bullish candle inside mostly bearish candles

• OB sits between the low and open of that bullish candle

• Price often retraces into the defined zone before continuing.

17) “Mean threshold” / alternative threshold usage (example detail)

• In one bearish OB example, the video uses:

  • the 50% Fibonacci retracement of the candle body (open → close) instead of using the candle open as the OB reference.

• Setup described:

  1. anticipate a liquidity sweep,
  2. wait for price to break structure,
  3. then look for price to retrace back to the mean threshold,
  4. confirmation occurs when price continues in the expected direction.

18) Intersection of techniques

• The video emphasizes finding confluences between concepts (e.g., liquidity sweep + OB + threshold logic) to improve the “best setups.”

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Daily Bias (Directional Bias from Prior Day Extremes)

19) What daily bias is

• Daily bias determines whether the next day is expected to be bullish or bearish.
• It’s based on:
  • the previous day’s high and low
  • what price does at those extremes (break + close behavior or failure to close through)

20) Bullish daily bias rules

Next day bullish bias is generated if:

• Price breaks and closes above the previous day’s high, OR
• Price breaks the previous day’s low but fails to close below it (suggesting buyers defend the level and/or bullish continuation is more likely)

21) Bearish daily bias rules

Next day bearish bias is generated if:

• Price breaks and closes below the previous day’s low, OR
• Price breaks the previous day’s high but fails to close above it

22) Practical updating process (as described through examples)

The logic is repeated in examples:

1. Mark the current day’s high and low.
2. Based on how the next candle closes relative to the previous day’s key extreme, set or change bias.
3. After each new candle/day, update the high and low to the current context.
4. Continue expecting price to:
   • at minimum reach the relevant extreme, or
   • break and close beyond it (if the bias remains valid).

The method is described as working “most of the time,” with exceptions such as when an inside bar appears (where conditions aren’t satisfied).

23) Applicability to intraday charts

• Daily bias can also be used on lower timeframes as a framing tool, using the same core principle.

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Speakers / Sources Featured

• No individual speakers are identified in the subtitles.
• Source referenced: “ICT’s channel” (implied creator/brand associated with the ICT method).