ICT Trading Explained: Concepts, Terminology & How to Apply ICT Strategies

by Prodigy Team January 17, 2026

Advanced ICT Trading Strategies: Liquidity, Order Blocks, FVGs, Kill Zones & Smart Money Execution

Many traders have heard the terms “ICT trading,” “smart money concepts,” or “institutional trading strategy,” but few truly understand how to apply these ideas in a repeatable way.

This guide goes beyond the basics. We break down the most practical ICT strategies — including order blocks, breaker blocks, fair value gaps (FVGs) and inverse FVGs, kill zones, and timing — so you can visualize how price moves, why it does, and how to trade it with discipline and clarity.

Developed by Michael J. Huddleston (Inner Circle Trader), ICT is a framework for reading how large participants move price through liquidity and imbalance. Unlike typical technical patterns, ICT focuses on where orders are resting, how price collects them, and how the market rebalances after aggressive moves.

ICT Terminology & Why It Matters

Before we dive into strategies, let’s define the core ICT terms every trader needs to internalize. These are not just “buzzwords” — they describe repeatable behaviors that show up across all markets and timeframes.

Liquidity: Pools of resting orders (stops and breakout entries) that price often seeks before the true move begins.
Buy-Side Liquidity: Stops and breakout orders above swing highs/equal highs.
Sell-Side Liquidity: Stops below swing lows/equal lows.
Market Structure: The swing logic of price (HH/HL vs LH/LL) that defines trend and bias.
BOS (Break of Structure): Structure break confirming trend continuation.
MSS (Market Structure Shift): Structure break signaling a change in directional bias.
Displacement: A strong impulsive move that shows commitment/intent (often institutional participation).
FVG (Fair Value Gap): An imbalance created by fast price movement, often revisited for rebalancing.
IFVG (Inverse FVG): When an FVG “flips” and becomes support/resistance after a shift in behavior.
Order Block (OB): A price zone where large orders likely entered before an impulsive move.
Breaker Block: A failed order block that flips roles and acts as support/resistance on retest.
Kill Zones: Time windows when volatility/liquidity is high (often London and New York sessions).
Premium/Discount: Value zones based on the 50% equilibrium of a range (premium = above 50%, discount = below 50%).

Core ICT Logic: Liquidity → Structure → Execution

ICT is easiest to understand when you think like this:

Liquidity: Where are the stops and breakout orders?
Structure: Is price trending up or down — and did it shift?
Execution: Where is the best “value” entry (FVG/OB) after displacement?

Institutions need liquidity to enter. Retail behavior creates predictable liquidity pools. Price often runs those pools first, then shows intent via displacement and structure change.

Strategy 1: Liquidity Sweep → MSS → FVG Entry (Core ICT Model)

This is the most widely used ICT execution model because it combines the three pillars: liquidity, structure confirmation, and value entry.

How to Spot It

Price approaches an obvious high/low (or equal highs/lows).
Price briefly breaks that level (stop run / sweep).
Price rejects quickly and breaks structure in the/jobs direction (MSS).
A strong displacement move forms, creating a clear FVG.

How to Visualize It (No Chart Needed)

Imagine price grinding up toward a well-known high. Traders are watching it. Then you get a fast push above the high — breakout traders buy and stops trigger. Within minutes (or a few candles), price snaps back under the high and then breaks a prior higher low. That break is your MSS. The aggressive candle(s) that follow are displacement. Now you mark the FVG created by the displacement and wait for price to retrace into it.

Execution Rules

Entry: Place a limit near the midpoint of the FVG.
Stop: Beyond the swept high/low (true invalidation area).
Target: The next opposing liquidity pool (e.g., prior lows if short, prior highs if long).

Pro Tip: The best sweeps often look “too perfect” — the obvious level gets taken by a sharp wick, then intent reveals itself after the MSS.

Strategy 2: Order Block + FVG Rebalancing (Precision Confluence)

Order blocks are zones where large orders likely entered before an impulsive move. The core idea: price often returns to those zones to rebalance or continue filling orders.

How to Spot a Valid Order Block

Identify a strong impulsive move (displacement) that breaks a key level.
Find the last down candle before a bullish displacement (bullish OB) or last up candle before bearish displacement (bearish OB).
Look for clean reaction when price returns (not random chop).

How to Trade It

Step 1: Mark the order block zone.
Step 2: Mark the FVG created by displacement.
Step 3: Highest probability is when OB and FVG overlap or sit very close.
Step 4: Enter at value (discount for longs, premium for shorts) with a stop beyond the OB.

Secret: Don’t treat every “last candle” as an order block. A real OB is validated by displacement + structure + clean reaction.

Strategy 3: Breaker Block Retest (Failed OB That Flips)

A breaker block forms when an order block fails and price closes beyond it. That same zone often becomes a powerful flip level — support becomes resistance or resistance becomes support.

How to Spot It

Price respects an order block initially.
Later, price breaks through it with displacement and closes beyond.
On the retest, that zone acts as the new barrier (breaker).

Execution

Entry: Retest of the breaker zone (often with small rejection candles).
Stop: Above the breaker high (for shorts) or below breaker low (for longs).
Target: Liquidity pools in the direction of the break.

Pro Tip: Breakers become much stronger when the retest aligns with premium/discount and a nearby FVG.

Strategy 4: Inverse Fair Value Gap (IFVG) – “Flip” Zones

Sometimes an FVG doesn’t act as continuation. Instead, price trades through it, shifts behavior, and that same imbalance becomes a reversal reference. That’s the concept behind an IFVG.

How to Spot an IFVG

Mark a clear FVG created during an impulse move.
Price later trades through it with conviction and structure changes.
When price returns, the previous FVG acts like a flip level.

Execution

Entry: Retest of the flipped FVG zone.
Stop: Beyond the zone that invalidates the flip.
Target: Opposing liquidity.

Tip: IFVGs are best used when you see clear MSS + displacement — not just a random pass-through.

Kill Zones: Timing Your ICT Entries

ICT traders often emphasize trading during high-liquidity windows because that’s when sweeps and displacement are more likely to show intent.

London session: Often sets up liquidity and directional clues.
New York session: Often delivers the “real move” after liquidity is taken.

The best habit: mark key highs/lows from the prior session, wait for a sweep during a kill zone, then look for MSS + FVG/OB alignment.

Why These Strategies Work (The Real Logic)

Institutions need liquidity — retail clusters provide it.
Liquidity sweeps clear stops and create fuel.
Displacement shows commitment and creates imbalance (FVG).
Order blocks and FVGs offer value-based re-entry points.
Targets are often opposing liquidity pools because that’s where orders rest.

Execution Tips & “Hidden Gems” Most Traders Miss

Don’t trade concepts — trade alignment. One signal alone is weak. Confluence is power.
MSS is the filter. Sweeps happen all day. MSS confirms intent.
Value matters. Entries in premium/discount outperform chasing mid-range.
Stops belong where you are proven wrong. Not where it’s comfortable.
Targets should be obvious. Opposing liquidity is the “magnet.”
Less is more. The best ICT trades are often 1–2 high quality setups per session.

Learn ICT Concepts Applied in Real Time

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Disclaimer

Disclaimer: All information is for educational purposes only and is not financial advice. Trading involves risk, and you should always do your own due diligence and use proper risk management on any trade ideas or strategies discussed.