ICT Smart Money Concepts
A visual guide to algorithmic price delivery, liquidity targeting, and session-based trading.
Foundation CORE PRINCIPLE
Before considering entries, stop losses, or profit targets, answer one question: Where is price likely to go next?
If you don't know how to determine where the market is likely to go next, it doesn't matter where you're going to buy or sell, where your stop loss is going to be, or where your target is going to be.
Price moves for two reasons: to reach liquidity (stop losses) or to fill inefficiencies (gaps in price delivery).
This is not buying/selling pressure. The algorithm offers prices regardless of whether buyers or sellers are present.
Why would everybody stop wanting to go short at one specific price level and only go long? The algorithm targets liquidity and fills inefficiencies by design.
The Dealing Range FRAMEWORK
The dealing range is the defined price territory within which you operate. It provides boundaries that remove the pressure to predict breakouts.
Consists of a significant swing high (or relative equal highs) and swing low (or relative equal lows).
Upper half is premium (look for shorts), lower half is discount (look for longs).
| Level | Calculation | Significance |
|---|---|---|
| Range High | Swing high or REH | Maximum upside expectation |
| 3/4 Level (OTE) | 75% from low to high | Optimal Trade Entry zone |
| Equilibrium | 50% of range | Bias shift line |
| 1/4 Level | 25% from low to high | Lower quadrant |
| Range Low | Swing low or REL | Maximum downside expectation |
When multiple highs or lows exist in close proximity, use the smaller reference point as your target. The obvious level may be protected.
Liquidity Pools TARGETING
Liquidity = resting orders in the market. These exist because traders must protect positions with stop losses.
Buy stops resting above swing highs. Created by protective stops on shorts and breakout entry orders.
Sell stops resting below swing lows. Created by protective stops on longs and breakdown entry orders.
After jagged movement in one direction, look for smooth levels in the opposite direction. That's where price will draw to next.
Fair Value Gaps PD ARRAYS
An FVG occurs when price moves so aggressively that it leaves a gap between candles. These inefficiencies act as magnets.
Inversion FVG ADVANCED
An Inversion FVG occurs when price trades through an FVG and the role inverts—a bearish FVG becomes support.
The wick of the reversal candle must clear the prior candle's high/low. If the wick stays inside the prior candle's range, it's NOT an inversion FVG.
| Behavior | Interpretation |
|---|---|
| Bodies hold above/below level | Strong S/R, trade continues |
| Only wicks probe through | Acceptable, still valid |
| Bodies close through | Level failed, look elsewhere |
Time Framework SCHEDULE
The algorithm operates on a schedule. Specific times trigger algorithmic price runs regardless of news.
| Time (ET) | Event | Behavior |
|---|---|---|
| 00:00 | Midnight Open | New day begins, opening price established |
| 07:00 | Pre-market | Overnight range forms |
| 08:30 | News / Algo time | Volatility injection, manipulation |
| 09:30 | RTH Open | New range, opening price magnetic |
| 10:00 | Range Set | First 30 min establishes AM bias |
| 12:00-13:30 | Lunch | Avoid trading, reassess |
| 15:00 | Power Hour | Final session activity |
| 16:00 | RTH Close | Settlement price established |
Imagine a race. Everybody lines up at the start. Boom. The gun goes off. Everybody starts running. That's what happens at 8:30 and 9:30.
8:30 Framework MANIPULATION
At 8:30, volatility injects. The algorithm reveals its hand—which side is it targeting?
When price sweeps liquidity but fails to reach an expected level, the move in that direction is complete. The opposite side becomes the draw.
9:30 Opening RTH OPEN
The gap between today's 9:30 open and yesterday's settlement creates the opening range gap. The opening price acts as a magnet.
| Gap Fill | Interpretation |
|---|---|
| 1/4 fill | Minimal interest, continuation likely |
| 1/2 fill | Equilibrium reached, watch for reversal |
| 3/4 fill | Strong interest, full fill possible |
| Full fill | Gap closed, reassess from settlement |
| No fill + break opposite | Abandon gap, expect continuation |
If gap partially fills (3/4 or less), then price breaks outside the opening price and starts running—abandon gap closure for the AM session.
Market Maker Model ADVANCED
The Market Maker Model explains how price can retrace to the 3/4 level and continue without returning to the original consolidation.
Complete A+ Setup CONFLUENCE
An A+ setup combines: liquidity sweep, failure to reach expected level, structure shift, inversion FVG, and clear target.
Base hits make millionaires. I promise you.
Checklists REFERENCE
Use these checklists before and during each trading session.
- Prior RTH settlement price marked
- Prior RTH opening range gap with eighths
- Overnight structure classified (jagged vs smooth)
- Dealing range defined (high and low)
- 3/4 level (OTE) calculated
- Inefficiencies marked
- Liquidity pools identified
- Identified which liquidity was targeted
- Noted if expected level was reached or failed
- Observed structure shift (if any)
- Marked entry zone that formed
- Determined opposite side draw
- Calculated realistic target within range
- Original FVG identified
- Price traded completely through FVG
- Reversal candle wick cleared prior high/low
- Price returned to FVG level
- Bodies holding (not closing through)
- Opposite liquidity exists as draw
- Liquidity has been swept
- Failure to reach expected level observed
- Structure has shifted
- Entry zone identified and price returned
- Stop loss placement is clear
- Target is defined
- Risk is appropriate (micro contracts)
Glossary REFERENCE
Key terms and definitions used in ICT methodology.