Free Resource
What Is ICT in Trading? (Meaning, ICT Models, and Basics)
I’ll be honest: the first time I heard “ICT,” it sounded like one of those internet-trader secret handshakes. People throwing around terms like liquidity sweep and fair value gap like they were born on a trading desk.
If you’re here because you Googled “what is ICT”, you’re probably in one of two moods:
- “This might finally explain why price keeps dunking on me.”
- “Is this another guru rabbit hole?”
Good news: ICT can be useful.
Bad news: the internet turned it into a cult in places.
Let’s make it simple, practical, and not cringe.
Key takeaways (read this if you’re impatient)
- ICT stands for Inner Circle Trader. It’s a trading framework popularized by Michael J. Huddleston through years of educational content online.
- ICT isn’t “one strategy.” It’s more like a lens: it tries to interpret price through liquidity and institutional behavior rather than indicators.
- Common ICT models include: liquidity sweeps, order blocks, fair value gaps (FVGs), market structure shifts, and kill zones (time windows traders watch).
- It can work across markets (forex, indices, stocks, crypto), but it’s not magic. Markets are huge, messy, and driven by liquidity. (For context: FX alone averaged $7.5T per day in April 2022.)
What does ICT stand for in trading?
ICT stands for “Inner Circle Trader.”
It’s both:
- the name/brand used by Michael J. Huddleston, and
- the methodology people refer to when they say “I trade ICT.”
That’s the clean definition. Everything else is interpretation, marketing, or people trying to sound like they have “access.”
What is ICT trading, in plain English?
ICT trading is a framework built around one core idea:
Price moves to find liquidity.
That sounds abstract until you realize what “liquidity” means in real trading life: orders. Stop losses. Entries. Take profits. Big pools of them sitting at obvious levels.
Retail traders tend to think price moves because of patterns or indicators. ICT tries to explain price movement as a process of:
- engineering liquidity, then
- delivering price to areas where large orders can be filled efficiently.
If you’ve ever watched price tap a “perfect” level, wipe people out, then reverse like it was personal, ICT attempts to explain that behavior.
No conspiracy required. Just incentives.
Why ICT got popular (and why people talk about it like it’s forbidden knowledge)
Markets are big. Like absurdly big.
Forex turnover alone averaged $7.5 trillion per day (April 2022).
So when large participants need to buy/sell size, they can’t just smash a button and hope for the best. Execution matters.
ICT became popular because it offers retail traders a story that feels more “real” than:
- “RSI is overbought so it must fall”
- “This candlestick pattern guarantees reversal” (it doesn’t)
And honestly, that’s fair. A framework that talks about liquidity and structure usually feels closer to how markets actually behave than a pile of lagging indicators.
ICT models (the main ones you’ll keep seeing)
People say “ICT models” like it’s a standardized textbook. It’s not. But there are repeating building blocks most ICT-style traders use.
Here are the main ones, translated into human.
1) Liquidity sweeps (aka stop hunts, raids)
This is when price pushes into an obvious high/low (where stops cluster), triggers a wave of orders, then reacts.
Common places liquidity sits:
- equal highs / equal lows
- previous day high/low
- session high/low
- obvious swing points
The point isn’t “they’re hunting you.” The point is: that’s where the orders are.
2) Market structure (and structure shifts)
This is the backbone: higher highs/higher lows vs lower highs/lower lows.
ICT traders often focus on moments where structure changes (you’ll see terms like “break of structure” or “change of character” depending on the flavor of the internet you wandered into).
Basic idea:
- Identify trend/structure
- Spot a break/shift
- Look for a retracement into a “model” area (like an order block or FVG)
3) Order blocks
An order block is usually described as the last bullish or bearish candle before an impulsive move that later acts like a reaction zone.
In normal-person terms:
- price makes a strong move
- later comes back
- reacts near the “origin” area
Are order blocks always perfect? No. But they’re a way to mark potential institutional interest zones.
4) Fair Value Gaps (FVGs)
An FVG is basically an imbalance: price moved too fast, didn’t “trade fairly” through an area, and sometimes returns to rebalance it.
You’ll often see this on fast impulsive candles where the market leaves a clean void.
Think:
- fast move = sloppy fill
- market sometimes comes back to clean it up
5) Kill zones (time windows)
ICT “kill zones” are time periods traders watch because liquidity and volatility often increase around major session opens/overlaps.
Different sources list slightly different windows depending on market (forex vs indices) and timezone framing, but the common idea is the same: timing matters, especially around London and New York activity.
If you’re new: don’t obsess over the exact minute. Use kill zones as a context tool, not a religion.
What is ICT trade?
When someone says “an ICT trade”, they usually mean a trade built from a checklist like this:
- Identify higher timeframe bias (bullish/bearish context)
- Mark where liquidity is likely sitting (obvious highs/lows)
- Wait for price to sweep liquidity (stop run)
- Look for confirmation via structure shift
- Enter on a “model” area (order block or FVG)
- Place stop beyond the invalidation level
- Target the next liquidity pool
That’s the typical story.
The real skill is not memorizing steps. It’s learning when a setup is clean vs when you’re forcing it because you’re bored.
Does ICT work? (The adult answer)
ICT can work as a framework because:
- liquidity and execution are real forces in markets
- structure matters
- timing matters
- reactive zones exist
But there are three reasons people fail with ICT:
- They try to learn everything at once.
Order blocks + FVGs + kill zones + OTE + 14 other acronyms. Your brain melts. You start seeing patterns everywhere. - They treat it like prediction instead of probabilities.
ICT is not “price must do X.” It’s “if liquidity is here and structure shifts, this setup becomes interesting.” - They ignore risk.
You can have the cleanest model in the world and still blow up by oversizing. Markets don’t reward confidence. They punish it.
If you want a one-sentence truth:
ICT can give you a cleaner way to read price, but it won’t save you from bad execution.
Is ICT good for beginners?
Yes, but only if you approach it the right way.
If you’re brand new, ICT is helpful because it teaches you to stop chasing indicators and start paying attention to:
- levels people actually place orders around
- structure
- timing
It’s harmful if you:
- obsess over jargon
- search for the “secret model”
- think watching 400 hours of videos equals skill
Beginners need a constraint.
Here’s the beginner-safe approach.
Step-by-step: how to learn ICT without drowning
Step 1: Learn market structure first
If you can’t clearly mark:
- trend direction
- swing highs/lows
- basic break/shift
…then everything else is noise.
Step 2: Add liquidity (one concept)
Pick one: previous day high/low is a good start.
Mark it daily. Watch how price reacts around it. Journal it.
Step 3: Add ONE entry model
Choose either:
- order blocks, or
- fair value gaps
Not both. Not yet.
Step 4: Add timing (optional)
Use kill zones as a filter:
- “I look for my best setups during higher-liquidity windows.”
Do not become the person who refuses to trade because it’s 12 minutes outside a kill zone. That’s how people cosplay discipline.
Step 5: Build a repeatable checklist
Here’s a simple template you can steal:
| Checklist Item | Yes/No |
|---|---|
| HTF bias clear? | |
| Key liquidity marked? | |
| Liquidity sweep happened? | |
| Structure shift confirmed? | |
| Entry model present (OB or FVG)? | |
| Stop location logical? | |
| Target is next liquidity pool? | |
| Risk is fixed (example: 1R)? |
If you can’t check most boxes, you don’t have a setup. You have hope.
What’s the difference between ICT and SMC?
In practice, SMC (Smart Money Concepts) is the broader umbrella internet term for “institutional-style price action.” ICT is one popular branch with its own vocabulary and emphasis (including timing concepts like kill zones).
A lot of content overlaps. The key difference is usually:
- SMC: simplified, generalized concepts
- ICT: more specific “models” and naming conventions, and heavy emphasis on session timing
What is ICT trade strategy?
ICT isn’t one strategy, but here’s a common “strategy-like” skeleton you’ll see again and again:
- Daily bias from higher timeframe
- Price runs liquidity (raid)
- Market structure shifts
- Entry on retracement into OB or FVG
- Target opposite liquidity pool
- Risk stays constant, always
That’s the core engine.
Everything else is refinement.
Common mistakes I see (and how to avoid them)
- Drawing 50 boxes on the chart
If everything is a zone, nothing is a zone. Mark less. - Entering before confirmation
Beginners love guessing tops/bottoms. Wait for the shift. Patience is a cheat code nobody wants to use. - Oversizing because “this one is perfect”
Perfection is how accounts die. - Using ICT as an excuse to avoid simplicity
Some people flee indicators just to replace them with 17 new ICT buzzwords. Same addiction, different branding.
FAQ
What does ICT stand for in trading?
Inner Circle Trader. It refers to both the creator’s brand and the methodology traders use.
What is ICT trade?
A trade built around liquidity, structure, and one or more ICT entry models (like order blocks or fair value gaps).
What are ICT models?
Common models include liquidity sweeps, order blocks, fair value gaps, structure shifts, and kill zones.
Is ICT only for forex?
No. The concepts get applied to forex, indices, stocks, and crypto. Just remember: each market has different liquidity behavior and news sensitivity. (Forex is particularly liquid, as shown by BIS turnover data.)
Is ICT a shortcut?
No. It’s a framework. The shortcut fantasy is how people get scammed and how they scam themselves.
Final thoughts
If you came here for a secret code, ICT will disappoint you.
If you came here because you want a cleaner explanation for why price behaves the way it does, ICT can be worth learning. But you have to keep it grounded:
- start with structure
- add liquidity
- pick one model
- manage risk like you actually want to survive