ICT × SMC Concept Library
ICT Concept Library — Smart Money Concepts Reference
Original ICT/SMC concept library by TradingEdge — every page has a short definition + original diagram + how to trade it + common mistakes + the free e-book. Written by an IC-licensed pro trader who has used this framework on real Funded accounts since 2014.
Market Structure· 8
Order Block (OB)
A consolidation zone on a chart immediately preceding a strong directional move, marked as the area where larger participants are believed to have positioned before pushing price.
Fair Value Gap (FVG)
A 3-candle pattern where the high of candle 1 and the low of candle 3 do not overlap — leaving a price "gap" the market often returns to fill.
Market Structure Break (MSB)
When price breaks a previous swing high (in an uptrend) or swing low (in a downtrend), confirming continuation of the prevailing direction.
Change of Character (CHoCH)
The first signal of a potential trend reversal — when price breaks the most recent swing low in an uptrend (or swing high in a downtrend).
Displacement
A sharp impulsive move with strong momentum and clean candles, typically creating Fair Value Gaps — the signature of large-participant intervention.
Breaker Block
A former Order Block that has been broken through — now acts as resistance/support from the opposite side when revisited.
Mitigation Block
A zone where price returns to allow trapped large participants to exit at break-even — creating a known reaction zone in the same direction as the recent move.
Dealing Range (Inside the Range)
A Dealing Range is the higher-timeframe consolidation between a clear swing high and swing low that price is currently operating inside. The two boundaries define the ERL targets; everything inside is IRL. Mapping the range correctly turns chaotic price action into a structured set of objectives.
Liquidity· 7
Liquidity Sweep / Liquidity Grab
A move where price spikes past a visible swing high/low to trigger pending stop orders, then reverses sharply in the opposite direction.
Inducement
A pool of liquidity (typically a minor swing high/low) placed BEFORE a major level to lure retail traders in before sweeping their stops.
Turtle Soup (Failed Breakout)
A trade that fades a false breakout — entering against the direction of the apparent break once it fails to follow through.
Sweep and Reclaim
A two-step pattern: price sweeps liquidity past a swing point, then closes back through the swing level, signaling a high-probability reversal.
Internal Range Liquidity (IRL)
Internal Range Liquidity (IRL) is everything that sits inside the boundaries of a defined dealing range — internal swing highs and lows, Fair Value Gaps, and inefficiencies. It is the price's short-term magnet; algorithms rebalance and collect IRL before delivering price to external range liquidity.
External Range Liquidity (ERL)
External Range Liquidity (ERL) is the pool of stop loss orders that sit at the extreme highs and lows of a higher-timeframe range. Smart money targets ERL because it represents the largest, deepest liquidity available — the true destination of every algorithmic delivery.
Price Has Two Objectives
Price moves for two reasons only — to seek liquidity (pools of resting orders) and to rebalance inefficiency (Fair Value Gaps). Fair Value Gaps are NOT liquidity; they are inefficiencies. Understanding this distinction is the single biggest mental shift in becoming a price-action trader.
Time / Session· 4
Killzone (Session Timing)
High-volatility windows during the forex day when most directional moves happen — London open, New York open, and the London-NY overlap.
Power of Three (AMD)
A three-phase model of price action: Accumulation (range), Manipulation (false move / sweep), Distribution (true move) — repeats on daily and intraday cycles.
Silver Bullet (London/NY Killzone Window)
A specific 1-hour window during the London or NY session known for producing the day's cleanest directional moves — typically 10:00-11:00 NY time.
Daily Bias
The expected directional lean for the trading day based on higher-timeframe structure — bullish, bearish, or neutral.
Entry / Confluence· 3
Premium / Discount Zone
Dividing a price range into upper half (premium — favored for selling) and lower half (discount — favored for buying), with the midpoint called equilibrium.
Optimal Trade Entry (OTE)
A Fibonacci retracement zone between 62% and 79% of an impulsive move where high-probability continuation entries are taken.
FVG Mitigation
When price returns to fill a previously-formed Fair Value Gap — typically a high-probability reaction zone if it occurs in the right context.
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Frequently asked questions
8 questions traders ask most about ICT
What is ICT (Inner Circle Trader)?
ICT is a price-action framework developed by Michael J. Huddleston (ICT). It explains where smart money positions, how they push price, and how retail enters back into positions. Core focus: Liquidity, Imbalance, Order Block, and Market Structure. Works on Forex, Gold, Indices, and Crypto.
How is ICT different from Smart Money Concept (SMC)?
ICT is the original framework name. SMC is what the retail community now calls a cleaned-up, more digestible version. Core concepts (Order Block, FVG, Liquidity) are nearly identical, but SMC drops ICT-specific jargon (IPDA, MMXM, etc.) and emphasizes setups that are tradeable day-to-day.
What is an Order Block and how do you use it?
An Order Block is the last opposite-color candle (or candle cluster) before a strong displacement move. Bullish OB = last red candle before a strong push up. Bearish OB = last green candle before a strong push down. Traders mark this zone, wait for price to retrace into it, and look for a reaction. Stop loss behind the OB; target the opposite-side liquidity.
What is a Fair Value Gap (FVG)?
A Fair Value Gap is the price gap between 3 consecutive candles where the middle candle has a strong wick and candles 1 and 3 do not overlap. It signals an imbalance — price delivered too fast. Traders expect price to return to "fill" the gap, using it as an entry or as confluence with an Order Block.
What time are the Killzones in different timezones?
London Killzone: 07:00–10:00 UTC (14:00–17:00 Bangkok). NY AM Killzone: 12:30–15:30 UTC (19:30–22:30 Bangkok). NY PM Killzone: 18:00–19:30 UTC (01:00–02:30 Bangkok next day). These are the windows when smart money positions hardest — best for Gold, EURUSD, GBPUSD, and NAS100.
Where should a beginner start with ICT?
1. Master Market Structure (BOS / CHoCH) first. 2. Learn Liquidity (highs/lows everyone is watching). 3. Order Block + FVG. 4. Practice marking zones on real charts — 100+ trades. 5. Demo first, then live. TradingEdge offers a 500-page Inner Circle Trader compendium covering every concept and entry pattern, delivered as a single Google Docs link with lifetime access.
Can I use ICT to pass a prop firm Challenge?
Yes. ICT is well suited to prop firm Challenges because most setups have favorable R:R (1:3+), tight stops, and concentrated entries inside the Killzones. Many funded traders use ICT setups at FTMO, E8 Markets, and FundingPips. TradingEdge runs a $750K funded portfolio at Topstep on this exact framework — used live since 2014.
How long until ICT actually works?
Typical timeline: 3–6 months to master the core concepts (Order Block, FVG, Liquidity, Killzone). 200+ backtested trades before live. Consistent returns inside 6–12 months. Prop firm Challenge pass usually 12–18 months in. ICT is not a "get rich fast" framework — it is a long-term skill that requires deliberate practice and discipline.
Next step
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