Trading ConceptsGlossary

A Fair Value Gap that has been violated — when price trades back through an FVG and closes beyond it, that FVG flips into an Inverse FVG. The original bullish FVG that gets closed into becomes a bearish IFVG, and vice versa. IFVGs act as opposing reference levels — a bullish FVG turned IFVG now acts as resistance rather than support. Used by ICT traders to identify when a level has lost its original purpose and flipped to the other side.

A 3-candle imbalance where the high of the first candle doesn't overlap the low of the third candle, leaving a gap of unfilled orders. Price frequently returns to these areas to "fill" the imbalance before continuing in the original direction. Bullish FVGs form during upward displacement, bearish FVGs during downward displacement.

The last opposing candle before a significant move. Represents the area where institutional orders were placed to initiate a directional move. A bullish OB is the last bearish candle before a strong rally. Price tends to return to these zones for continuation entries.

A failed Order Block — when price takes out a swing point and the original OB loses its validity, it flips into a Breaker. Breakers act as support/resistance in the opposite direction. A bullish OB that price breaks through becomes a bearish Breaker.

The origin candle of a move that created an imbalance, where price returns to "mitigate" the undelivered orders before continuing. Similar to an Order Block but focuses specifically on the delivery of orders that were left behind during an aggressive move.

A Fibonacci retracement zone between 61.8% and 79% of a swing used to identify high-probability entry points. ICT uses the 62%, 70.5%, and 79% levels as the OTE zone. Entries within this range align with institutional entry models and offer favorable risk/reward.

A 3-phase market model: Accumulation → Manipulation → Distribution. During Accumulation smart money builds a position quietly. Manipulation is the false move that traps retail traders (the stop sweep). Distribution is the true directional move. This plays out on all timeframes.

High-probability trading windows aligned with institutional session activity. The four Kill Zones are: Asian KZ (8–10pm ET), London Open KZ (2–5am ET), NY Open KZ (7–10am ET), and London Close KZ (10am–12pm ET). The highest volume and most reliable moves occur within these windows.

Price reaching into an area of resting orders (buy stops above swing highs, sell stops below swing lows) to trigger those orders before reversing. Not a deliberate targeting of retail traders — rather, institutions need this liquidity to fill large positions. The sweep is the fuel for the real move.

A sudden, aggressive, high-momentum move that leaves behind imbalances (FVGs). Displacement confirms that smart money has entered the market with conviction. It's typically a large, impulsive candle or series of candles that moves price significantly away from a key level.

In ICT, a MSS is when price breaks through a significant swing point with displacement, signaling a change in the current trend. A bullish MSS occurs when price takes out a prior swing high with momentum. Used to identify the beginning of a new directional move or retracement.

A deliberately obvious level designed to attract retail traders before a liquidity sweep. Price creates a minor swing high or low that looks like a clean trade setup, inducing traders to enter or place stops there — only for price to sweep through it and then make the real move.

A pricing model using a range's midpoint (50% = equilibrium). Above 50% is Premium (where smart money sells), below 50% is Discount (where smart money buys). Institutional traders buy in discount and sell in premium. Never buy in premium or sell in discount.

The gap between Friday's close and Sunday's open (NWOG) or the gap between the previous day's close and current day's open (NDOG). These gaps act as magnets — price frequently revisits these areas to close them. Key reference points for intraday and weekly bias.

A ranked list of institutional reference levels used to identify where price is likely to react. Ordered by reliability: Old Highs/Lows → OBs → Breakers → Mitigation Blocks → FVGs → Strong Highs/Lows. Price seeks these arrays in premium/discount to deliver orders.

SIBI (Sell Side Imbalance, Buy Side Inefficiency) forms when a bearish candle's low is below the next candle's high, leaving unfilled buy orders. BISI is the inverse. These single-candle imbalances act as magnets and are often nested inside larger FVGs.

When price breaks beyond a prior swing high or low in the direction of the current trend. A BOS confirms trend continuation — in an uptrend, a BOS is a new higher high; in a downtrend, a new lower low. Used to stay aligned with institutional direction and avoid trading against the trend.

The first sign of a potential trend reversal — price breaks a swing point against the prevailing trend for the first time. In a downtrend, a CHoCH is when price breaks above a prior swing high. Unlike a BOS it goes against the trend, signaling smart money may be shifting direction.

A broad term for any key area on the chart where price is likely to react — could be a supply/demand zone, order block, FVG, or major swing point. Traders mark POIs as target areas to watch for entries or reactions. Used interchangeably with "area of interest" or "key level."

Supply zones are areas where large sell orders exist (price dropped sharply from here). Demand zones are where large buy orders exist (price rallied sharply from here). When price returns to these zones, unfilled institutional orders are still present and price tends to react. The origin of a strong move defines the zone.

Any area on the chart where buying and selling were not equally matched, leaving unfilled orders in the market. Markets have a tendency to return to imbalances to "rebalance" before continuing. Includes FVGs, wicks, and gaps. Price is efficient and seeks to fill these areas over time.

A Swing High is a candle with lower highs on both sides (a peak). A Swing Low is a candle with higher lows on both sides (a valley). These levels mark where resting orders accumulate — buy stops sit above swing highs, sell stops below swing lows. Key reference points for structure and liquidity.

Internal Range Liquidity (IRL) includes FVGs and imbalances within a price range. External Range Liquidity (ERL) is the liquidity resting beyond the range's extremes — the swing highs and lows. Price typically draws from IRL to ERL, and smart money uses this flow to build and exit positions.

Two or more swing highs or lows at approximately the same price level. These are significant liquidity pools — retail traders see them as double tops/bottoms and place stops just beyond them. Smart money sweeps these levels before reversing. The more obvious the equal highs/lows, the more likely they get swept.

A classic institutional model describing four market phases: Accumulation (building long positions), Markup (trending up), Distribution (offloading positions), and Markdown (trending down). SMC borrows heavily from Wyckoff — the Power of 3 and liquidity concepts map directly onto these phases.

The average price weighted by volume throughout the trading session. Institutions use VWAP as a benchmark — they aim to execute large orders at or near VWAP to minimize market impact. Price above VWAP is bullish intraday, below is bearish. Retail traders use it to gauge institutional interest and mean reversion setups.

The high and low of the prior trading session. These are key institutional reference levels — large amounts of resting orders sit just beyond these levels. A break and hold above PDH is bullish; below PDL is bearish. Frequent intraday targets, especially during the NY Open Kill Zone.

The high and low formed during the Asian trading session (approximately 8pm–12am ET for futures). The Asian range is typically a low-volatility consolidation that sets the stage for the London session. London and NY often target one or both extremes of the Asian range as liquidity before making their directional move.

The start of the London trading session (approximately 3am ET). One of the highest-volume windows of the day. London frequently sweeps Asian session liquidity before establishing the directional bias for the day. The London Kill Zone (2–5am ET) is a primary setup window for ICT traders.

The NY trading session open — either the Futures open continuation (6pm ET Sunday) or the NYSE open (9:30am ET). The NY Open Kill Zone (7–10am ET) is when the highest-probability setups form. NY frequently aligns with or reverses London's move, often targeting the opposite side of Asian range liquidity.

Accumulation is the process of institutions quietly building large positions over time in a ranging market without moving price significantly. Distribution is the process of offloading those positions into retail buying. Both phases require liquidity — retail order flow — to execute without slippage.

A broad term for large institutional participants — banks, hedge funds, proprietary trading firms, central banks — whose order sizes are large enough to move markets. Smart money does not chase price; they engineer liquidity conditions to fill positions efficiently. Understanding their behavior is the foundation of ICT and SMC.

An ICT framework describing how prices are algorithmically delivered from one liquidity pool to another. The model suggests price moves in a predictable sequence: seek buy side liquidity → displace down → fill sell side liquidity → displace up. Understanding where price is in this cycle defines directional bias.

A weekly CFTC report showing the net positioning of commercial hedgers, large speculators, and small speculators in futures markets. Commercials (smart money) are typically net short near tops and net long near bottoms. Used as a macro sentiment tool to align with institutional positioning over weeks and months.

A market profile concept showing how much time price spent at each level. High-volume nodes (HVN) are areas of acceptance where price spent a lot of time — strong support/resistance. Low-volume nodes (LVN) are areas of rejection that price moves through quickly. Used by institutional traders to assess fair value and auction areas.