ICT Basics: A Beginners Guide

Overview

• ICT (Inner Circle Trader) methodology focuses on price action.
• Popular in "The Strat" community.
• Minimal use of trend following or momentum indicators.

Key ICT Concepts

Liquidity

• Types:
  • Buy-side liquidity: Levels where short sellers place stops.
  • Sell-side liquidity: Levels where long-biased traders place stops.
• Often found near extremes (tops and bottoms of ranges).
• Smart money accumulates/distributes positions near these levels.

Displacement

• A powerful move suggesting strong buying/selling pressure.
• Appears as a series of candles in the same direction with large bodies and short wicks.
• Often follows a breach of a liquidity level.
• Leads to Fair Value Gap and Market Structure Shift.

Market Structure Shift

• Occurs when the previous trend is broken.
• In uptrend: shift at a lower low.
• In downtrend: shift at a higher high.
• Traders look for further trend change signs.

Inducement

• Refers to targeting short-term highs/lows during counter-trend moves.
• Signals areas where stops might be placed.
• Seen in formations like bull and bear flags.

Fair Value Gap

• Formed after price reaches a liquidity level and reverses.
• Indicates market inefficiencies or imbalances.
• Visualized as a three-candle sequence with a large middle candle.

Optimal Trade Entry

• Best entry points identified using Fibonacci retracement (61.8% - 78.6%).
• Occurs after Market Structure Shift.

Balanced Price Range

• Result of an aggressive move up followed by an aggressive move down (or vice versa).
• Double Fair Value Gap acts as a magnet for price.
• Can signal the beginning of a Market Structure Shift.

Utilizing ICT Concepts in TrendSpider

Fair Value Gap Indicator

• Auto-discovery of Fair Value Gaps via an indicator.
• Gap Factor determines size of the gap.

Fractal Trendlines and Broadening Range Patterns

• Fractal Trendlines indicator used in scanner.
• Broadening Range scanners identify price near liquidity levels.

Auto Fibonacci Drawing Tool

• Auto-Fib tool draws Fibonacci sequence on recent price moves.

Conclusion

• ICT methodology focuses on price action and important levels.
• TrendSpider tools help implement ICT concepts effectively.
• Markets based on price actions and trends.

Additional Resources

• Watch educational video with Trade For Opportunity for more insights on ICT concepts.
• TrendSpider offers a comprehensive suite of trading tools and educational material.