Core ICT terminology and concepts — the language of the methodology. Reference, not a full education. PHASE 2 ICT
Last bearish (down) candle before an up-move. Price returns there → institutions buy.
Price returns here → look for long entries
← last opposite-color candle before displacement
Last bullish (up) candle before a down-move. Price returns there → institutions sell.
Price returns here → look for short entries
← last opposite-color candle before displacement
ICT trade setup targeting liquidity grabs during a specific session window. Three official Silver Bullet windows:
Entry: Wait for MSS (Market Structure Shift) in direction of next liquidity draw → enter on break of range with displacement candle confirmation on 1M/3M.
Stop: Below range low (long) / above range high (short).
Target: Next major liquidity pool — equal high/low or prior session range boundary.
A candle that displaces (closes beyond) a previous candle's range — breaches above the high or below the low of the prior candle by at least one tick.
Displacement = institutional activity. When you see it, the market is telling you the direction institutions are pushing.
On a 5-minute chart: a candle that closes above the high of the previous 5-min candle = first sign of bullish displacement.
Measured wick-to-wick: candle-1 high → candle-3 low on a 5-min chart. Price moved up too fast — a void where price didn't trade.
Price often returns to fill the gap before continuing up
Trade the fill, not the gap itself
Measured wick-to-wick: candle-1 high → candle-3 low on a 5-min chart (same as bullish; direction tells you which). Price moved down too fast — institutional selling left a void.
Price often returns to fill the gap before continuing down
Trade the fill, not the gap itself
Institutional stops sitting just above/below previous highs and lows. Price targets these stops before reversing.
Pattern: price approaches prior high/low → displaces through it → reverses. The break was a stop hunt, not a real move.
Before a directional move, price often runs into the nearest liquidity pool — equal highs/lows, or stop clusters from the prior session's range.
| Term | Meaning | Bias |
|---|---|---|
| Premium | Price above 50% of the dealing range (equilibrium); above = premium | Sell setups preferred |
| Discount | Price below 50% of the dealing range (equilibrium); below = discount | Buy setups preferred |
| Equilibrium | 50% retracement of the chosen range (e.g. prior session, daily, or custom range) | Reference — not a magnetic target |
In the NY killzone, price tends to trade from discount to premium or vice versa — don't fight the direction of the session's opening auction.
The first 30 min of the killzone sets the session's character. High volume, price discovery, institutional positioning.
Range extension = when price displaces beyond the opening range (OR high/low).
Last 30 min of regular session. Institutions adjust positions. Can be exploitable if you know the pattern.
Time Price Opportunity — letters on the chart showing where price spent the most time. The Value Area (70% of activity) is where institutions did the most business.
| Concept | Description |
|---|---|
| Daily 50% retracement | Midpoint of the prior session's range — support/resistance reference |
| Previous day high/low | Monitored by institutions — breaks lead to momentum |
| Opening range high/low | Set in first 15–30 min; range extension targets are significant |
| Asia high/low | Tokyo session range — liquidity pool for London/NY sessions |
A Breaker Block is a failed Order Block that flips polarity — price returns to an OB, sweeps it, and invalidates it, causing the OB to become a support-turned-resistance (or vice versa).
Source: ICT methodology (Inner Circle Trader) — verify all concepts against official ICT materials at innercircletrader.net