Credit: Original Video by Wize Forex on YouTube – “How to trade ICT Concept FOREX for Beginners (Tutorial)”
Title: Understanding and Applying ICT Concepts in Forex Trading: A Beginner’s Guide
In the world of Forex trading, countless strategies and trading methodologies aim to give traders an edge in the marketplace. One of the most talked about in recent years is the ICT (Inner Circle Trader) concept, developed by Michael J. Huddleston. The ICT approach to trading Forex has gained popularity for its unique organizational framework and its focus on institutional-level trading behavior.
This article is a comprehensive beginner’s guide to understanding how to trade using the ICT concept as presented by Wize Forex on YouTube. It covers key foundational principles, practical applications, and strategic insights designed to empower traders with smart, risk-managed market participation.
What is ICT in Forex Trading?
ICT stands for Inner Circle Trader, a trading mentorship approach founded by Michael J. Huddleston. The ICT methodology focuses on teaching traders how to emulate institutional trading behavior and avoid common retail trading mistakes. Rather than relying heavily on indicators or traditional chart patterns, ICT emphasizes price action, liquidity, and market structure.
According to ICT principles, understanding how “smart money” — institutional traders and big banks — maneuver within the market is crucial for identifying high-probability trading opportunities.
Core Concepts of ICT Trading
1. Market Structure
One of the foundational elements of the ICT approach is understanding market structure. This involves identifying how price is trending based on the movement of highs and lows.
– Bullish market: Higher highs and higher lows
– Bearish market: Lower highs and lower lows
– Consolidation: Sideways price action within range boundaries
Higher timeframe analysis is critical to determine the market bias. Typically, daily and 4-hour charts are used to determine structure. This framework helps traders anticipate market movements and avoid entering trades against the prevailing momentum.
2. Liquidity Pools
Liquidity is a crucial component in understanding how price moves. According to ICT, institutional entries frequently occur at liquidity pools, where large numbers of retail stop-loss orders accumulate.
Types of liquidity setups:
– Buy-side liquidity: Stops above previous highs
– Sell-side liquidity: Stops below previous lows
Institutions often push the price into these zones to trigger liquidity consumption and initiate their own entries. Recognizing where this liquidity lies can offer clues as to where price may be drawn.
3. Order Blocks
Order blocks are unmitigated price ranges where institutions have entered large positions. These blocks typically act as supply or demand zones.
– Bullish Order Block (Demand): Last down candle before a strong upward move
– Bearish Order Block (Supply): Last up candle before a strong downward move
Price often returns to these zones, providing potential retracement entries. Understanding how to identify and mark these areas is critical in the ICT framework.
4. Fair Value Gaps (FVG)
Fair Value Gaps, also known as imbalance zones, show areas where price moved rapidly, leaving a gap that was not tested on both sides. According to the ICT methodology, price often returns to fill these imbalances and then continues in the primary direction.
How to identify an FVG:
– Look for a gap between the wicks of the candles.
– Typically spotted between candles 1 and 3 of a three-candle sequence.
– FVG forms when the second candle’s high is below the first candle’s low (for bearish gaps) or the second candle’s low is above the first candle’s high (for bullish gaps).
5. Time of Day and Trading Sessions
ICT emphasizes the importance of trading during specific sessions when market liquidity is at its peak. These include the London Open, New York Open, and the London Close.
Key trading times:
– London Session (2 AM to 5 AM EST)
– New York Session (8:30 AM to 11 AM EST)
– Asia Session is typically not preferred for major moves, as it
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