Trading Glossary

A phase where institutional traders quietly build positions before a significant price move. Price consolidates in a range as smart money absorbs available liquidity.

ICT concept describing the three phases of institutional price delivery: building positions, triggering stops, then delivering price to the target.

The lowest price at which a seller is willing to sell an asset. The difference between ask and bid is the spread.

A volatility indicator that measures the average range of price movement over a specified period. Used for stop loss placement and position sizing.

The price range formed during the Asian/Tokyo trading session (7:00 PM - 12:00 AM EST). Often used as a reference for London session manipulation.

A market condition or sentiment indicating prices are expected to fall. Bearish candles close below their open price.

A two-candle reversal pattern where a bearish candle completely engulfs the previous bullish candle body, signaling potential downside reversal.

The highest price a buyer is willing to pay for an asset. Retail sell orders execute at the bid price.

When price breaks a significant swing high (in uptrend) or swing low (in downtrend), confirming trend continuation. The most important confirmation signal in SMC.

A failed order block that gets violated and then acts as support/resistance from the opposite side. Forms when an order block fails and price returns to mitigate it.

When price moves beyond a defined support, resistance, or consolidation range with momentum. Valid breakouts show displacement and volume.

A market condition or sentiment indicating prices are expected to rise. Bullish candles close above their open price.

A two-candle reversal pattern where a bullish candle completely engulfs the previous bearish candle body, signaling potential upside reversal.

Stop-loss orders sitting above swing highs, equal highs, and resistance levels. Institutions target these pools before reversing price lower.

A chart representation showing open, high, low, and close prices for a specific time period. The body shows open-close range, wicks show high-low extremes.

The first break of market structure against the prevailing trend, signaling a potential reversal. It's the first lower low in an uptrend or first higher high in a downtrend.

Price making higher lows into resistance or lower highs into support, building energy for an explosive move. Indicates orders being absorbed.

When multiple technical factors (order block, FVG, fib level, liquidity) align at the same price zone, significantly increasing trade probability.

A period where price moves sideways within a defined range. Smart money uses consolidation to accumulate or distribute positions.

A price pattern that suggests the prevailing trend will resume after a brief pause (flags, pennants, wedges).

The statistical relationship between two trading instruments. DXY and EUR/USD are negatively correlated; ES and NQ are positively correlated.

The expected directional move for the current trading day based on higher timeframe analysis, previous day's close, and institutional order flow.

The range between a significant swing high and swing low that contains the current price action. Used for premium/discount analysis.

The lower half (below 50%) of a dealing range where price is considered cheap. Institutional buyers look for entries in discount zones.

A strong, impulsive price move with large-bodied candles that creates fair value gaps. Indicates aggressive institutional activity and commitment.

A phase where institutions sell/unload their previously accumulated positions, typically at premium prices before a significant decline.

When price makes new highs/lows but an indicator (RSI, MACD) fails to confirm, suggesting weakening momentum and potential reversal.

A candlestick with nearly equal open and close prices, creating a very small body. Indicates indecision between buyers and sellers.

The percentage decline from peak equity to the lowest point before a new high is made. A 10% drawdown means losing 10% from your highest balance.

An index measuring the US dollar's value against a basket of 6 major currencies. Key reference for forex directional bias.

A technical analysis theory that identifies recurring fractal wave patterns in price movements (5 impulse waves + 3 corrective waves).

A specific set of rules defining when and where to enter a trade. ICT models include Silver Bullet, Unicorn, 2022 Model, etc.

Two or more swing highs at approximately the same price level. Represent buy-side liquidity pools that institutions will target.

Two or more swing lows at approximately the same price level. Represent sell-side liquidity pools that institutions will target.

The 50% level of any dealing range. Price at equilibrium is at 'fair value' — neither premium nor discount.

A phase where price moves aggressively and directionally after a period of consolidation or manipulation. The distribution/delivery phase.

A three-candle imbalance where candle 1's high and candle 3's low don't overlap (bullish) or candle 1's low and candle 3's high don't overlap (bearish). Represents institutional imbalance.

A false breakout where price briefly penetrates a level to trigger stops before reversing sharply. A key manipulation technique used by institutions.

Tool drawing horizontal lines at key ratios (23.6%, 38.2%, 50%, 61.8%, 78.6%) between swing high and low. The 61.8-78.6% zone is the OTE.

An order type that must be executed immediately in its entirety or cancelled completely.

A continuation pattern where price consolidates in a channel against the trend before breaking out in the original trend direction.

The foreign exchange market where currencies are traded. The largest financial market with $7.5 trillion daily volume.

A concept where market patterns repeat at every timeframe. The same structure visible on the daily chart appears on the 1-minute chart.

In crypto perpetual futures, the periodic payment between longs and shorts to keep the contract price close to spot price.

A price area where no trading occurred, visible as a space between candles. Weekend gaps in forex and overnight gaps in stocks are common.

When the 50-period moving average crosses above the 200-period moving average, traditionally considered a bullish signal.

A bullish reversal candlestick with a small body at the top and a long lower wick (at least 2x body). Shows strong rejection of lower prices.

A bearish reversal candlestick identical in shape to a hammer but occurring at the top of an uptrend, signaling potential reversal.

Opening opposite positions to reduce risk exposure. Example: Long EUR/USD and long DXY to partially hedge dollar exposure.

A swing high that exceeds the previous swing high, confirming bullish market structure and trend continuation.

A swing low that forms above the previous swing low, showing buyers stepping in at higher prices. Key uptrend confirmation.

Timeframes above your execution timeframe used for directional bias and key level identification (Daily, Weekly, Monthly).

A trading methodology developed by Michael J. Huddleston focused on institutional order flow, time-based models, and market maker algorithms.

An area where aggressive one-sided trading created inefficient price delivery. FVGs and volume imbalances are types of imbalances that price tends to revisit.

A strong directional price move with large candle bodies and minimal wicks. Indicates institutional commitment and often creates FVGs.

Minor swing highs/lows that lure retail traders into positions before price reverses. Small liquidity pools that get swept before the real move.

A candle whose entire range (high to low) is within the previous candle's range. Indicates consolidation and potential breakout.

The footprint of large players (banks, hedge funds) in the market, identified through displacement, FVGs, order blocks, and liquidity sweeps.

Liquidity created by minor swing points within a dealing range. Contrasted with external liquidity at the range extremes.

A fair value gap that has been fully traded through and now acts as a potential support/resistance zone from the opposite side.

A bullish reversal candle with a small body at the bottom and long upper wick. Found at the bottom of downtrends.

ICT concept: a false move at session open designed to trap traders before the real directional move. Named after Judas's betrayal — the market 'betrays' early entries.

Specific high-probability time windows: London (2:00-5:00 AM EST), NY (7:00-10:00 AM EST), London Close (10:00-12:00 PM EST). When institutions execute their orders.

Using borrowed capital to increase position size. 1:100 leverage means $1,000 controls $100,000. Amplifies both profits and losses.

An order to buy below or sell above the current market price. Used for entries at predetermined levels (order blocks, FVGs).

Clusters of resting orders (stop losses, pending orders) at key price levels. Institutions need liquidity to fill their large positions.

When price quickly moves to take out stop losses at a key level before reversing. The fuel institutions need for their entries.

A concentration of stop-loss orders at obvious technical levels (swing highs/lows, round numbers, trendlines).

Price taking out a liquidity level (running stops) before reversing. Confirmation comes from displacement after the sweep.

An area on the chart where price moved so quickly that very little trading occurred. Price tends to return to fill these voids.

Buying an asset with the expectation that its price will increase. Profit is made when selling at a higher price.

Standard lot = 100,000 units, Mini lot = 10,000 units, Micro lot = 1,000 units, Nano lot = 100 units. Determines pip value.

A swing high that forms below the previous swing high, indicating sellers are gaining control. Key downtrend structure.

A swing low that breaks below the previous swing low, confirming bearish continuation and downtrend structure.

Timeframes below your analysis timeframe used for precise entries (1m, 5m, 15m). Also called execution timeframes.

Institutional price engineering to trigger retail stops and create liquidity before the real move. The 'M' in AMD.

The collateral (deposit) required to open and maintain a leveraged position. Margin call occurs when equity falls below maintenance margin.

A broker notification that account equity has fallen below maintenance requirements. Positions may be forcibly closed if additional funds aren't deposited.

ICT concept: the complete cycle of how institutions engineer price — original consolidation, smart money reversal, break of structure, and delivery to the opposing liquidity pool.

An order to buy or sell immediately at the current best available price. Provides certainty of execution but not price.

The arrangement of swing highs and lows that defines trend direction. Bullish = HH+HL, Bearish = LH+LL, Ranging = equal levels.

A decisive break in market structure with displacement, stronger than CHOCH. Indicates institutional commitment to the new direction.

When price returns to a level where institutions have resting orders or where previous losses need to be recovered.

A price zone where institutions previously lost money and where they will place orders to break even when price returns.

The rate of acceleration of price movement. Strong momentum = large candles with small wicks. Weakening momentum = smaller candles, larger wicks.

A three-candle bullish reversal pattern: large bearish candle, small-bodied candle (indecision), then large bullish candle.

ICT concept analyzing how price typically behaves within a month — expansion in first week, consolidation mid-month, reversal in final week.

An unmitigated order block, FVG, or breaker block that price hasn't retested yet. These are high-priority zones for future entries.

Trading around high-impact economic events (NFP, CPI, FOMC). Price often sweeps liquidity in both directions during news releases.

The trading session from 8:00 AM to 5:00 PM EST. Highest volume period for USD pairs and often provides trend continuation or reversal.

ICT's premium entry zone between the 62% and 79% Fibonacci retracement of an expansion leg. The highest probability entry within a retracement.

The last opposing candle (or group of candles) before a significant displacement move. Represents the zone where institutional orders were placed.

The analysis of buying and selling pressure through price action, volume, and market microstructure rather than traditional indicators.

A condition where price has risen too quickly and may be due for a correction. RSI above 70 is traditionally considered overbought.

A condition where price has fallen too quickly and may be due for a bounce. RSI below 30 is traditionally considered oversold.

ICT reference points used to frame buy and sell opportunities: order blocks, FVGs, breaker blocks, mitigation blocks, and liquidity voids.

A candlestick with a very long wick on one side and small body on the other. Shows strong rejection and potential reversal at key levels.

Point In Percentage — the smallest standard price movement. For most forex pairs, 1 pip = 0.0001. For JPY pairs, 1 pip = 0.01.

A specific price zone identified for potential trade entries, typically an order block, FVG, or breaker block combined with other factors.

Calculating the correct lot size based on account balance, risk percentage, and stop loss distance. The cornerstone of risk management.

ICT concept describing the three phases within any session or candle: Accumulation (open), Manipulation (false move), Distribution (real move to close).

The upper half (above 50%) of a dealing range where price is expensive. Institutional sellers look for entries in premium zones.

The study of raw price movement without indicators. Analyzing candlestick patterns, market structure, and supply/demand zones.

A temporary retracement against the trend direction. Healthy pullbacks retrace 38.2-61.8% of the previous impulse leg.

ICT concept where major market reversals tend to occur at quarterly boundaries (March, June, September, December).

A horizontal price channel where price bounces between defined support and resistance levels without establishing a clear trend.

A consolidation within an uptrend where institutions add to existing long positions before the next expansion leg upward.

A consolidation within a downtrend where institutions add to existing short positions before the next expansion leg downward.

When price sharply reverses after touching a level, leaving a long wick. Strong rejection at key levels often precedes significant moves.

A price level where selling pressure historically prevents further upward movement. In SMC, seen as liquidity above that will be swept.

Price formations signaling a change in trend direction: head & shoulders, double top/bottom, evening/morning star.

The practice of limiting potential losses through position sizing, stop losses, and maximum drawdown rules. Risk 1-2% per trade maximum.

The ratio between potential loss (stop loss distance) and potential profit (take profit distance). A 1:3 RRR means risking $100 to make $300.

A momentum oscillator measuring the speed and magnitude of recent price changes on a scale of 0-100. Used for divergence confirmation.

A trading style taking many quick trades for small profits (5-20 pips). Requires fast execution, tight spreads, and precise entries.

Stop-loss orders resting below swing lows, equal lows, and support levels. Institutions target these pools before reversing price higher.

A defined period of market activity: Sydney (5:00 PM-2:00 AM EST), Tokyo (7:00 PM-4:00 AM EST), London (3:00 AM-12:00 PM EST), New York (8:00 AM-5:00 PM EST).

A bearish reversal candlestick with small body at the bottom and long upper wick. Shows sellers rejected higher prices at the top of a move.

Selling an asset with the expectation its price will decline. Profit is made by buying back at a lower price.

ICT time-based entry model targeting FVGs created during specific 1-hour windows: 3-4 AM, 10-11 AM, or 2-3 PM EST.

The difference between expected execution price and actual fill price. Common during high volatility and news events.

A trading methodology reverse-engineering how institutional players (banks, hedge funds) operate in the market through specific footprints they leave.

Smart Money Technique: when correlated pairs fail to make corresponding highs/lows simultaneously, indicating manipulation and potential reversal.

The difference between bid and ask price. Your cost of entering a trade. Variable spreads widen during low liquidity and news events.

When price is driven to obvious stop-loss levels to trigger those orders, providing liquidity for institutional entries in the opposite direction.

A protective order that automatically closes your position at a predetermined loss level. Essential for capital preservation.

A swing point created with displacement and that hasn't been swept yet. Protected by institutional interest and unlikely to be easily broken.

A price area where significant selling occurred previously. When price returns, remaining sell orders may push price down again.

A price level where buying pressure historically prevents further decline. In SMC, seen as liquidity below that will be swept.

The interest charged or earned for holding a position overnight, based on interest rate differentials between the two currencies.

A price peak with lower highs on both sides (at least one candle lower on each side). Represents a local maximum.

A price trough with higher lows on both sides (at least one candle higher on each side). Represents a local minimum.

A style holding trades for days to weeks, targeting larger moves (100-500+ pips in forex). Uses daily/4H charts for analysis.

An order to automatically close a position at a predetermined profit level. Often placed at opposing liquidity pools or FVG targets.

A reversal pattern with three pushes to a high/low, each with decreasing momentum. Similar to Elliott Wave with exhaustion.

The duration each candle represents. Common timeframes: 1m, 5m, 15m, 1H, 4H, Daily, Weekly. Higher timeframes take priority.

Asian market hours (7:00 PM - 4:00 AM EST / 5:00 AM - 2:00 PM BD). Key for JPY pairs and establishing the Asian range.

A stop loss that automatically moves with price to lock in profits as the trade moves in your favor.

The general direction of price movement. Uptrend = HH+HL, Downtrend = LH+LL. 'The trend is your friend until the bend.'

ICT concept of fading false breakouts at old highs/lows (20-day). When price takes out an old high/low and reverses, trapping breakout traders.

Two candles with matching highs (top) or lows (bottom) showing rejection at the same level, signaling potential reversal.

ICT setup where a breaker block perfectly overlaps with a fair value gap, creating an ultra-high-probability entry zone.

The current profit or loss on open positions. Only becomes realized when the position is closed.

ICT concept using a specific FVG within a displacement leg as the entry point, named for its precision and effectiveness.

The degree of price movement variation. High volatility = big moves, Low volatility = small moves. Measured by ATR, Bollinger Band width.

The number of contracts/shares traded in a period. High volume confirms moves; low volume questions sustainability.

A gap between one candle's close and the next candle's open (in the same direction), showing aggressive institutional activity.

The average price weighted by volume for the day. Institutional benchmark — trades above VWAP are considered bullish.

A swing point created without displacement/momentum that is likely to be swept. Has sell-side or buy-side liquidity resting beyond it.

The thin lines above and below a candle body showing the high/low extremes reached during that period. Long wicks show rejection.

A market analysis approach studying accumulation, markup, distribution, and markdown phases. The foundation that SMC concepts are built upon.

The ticker symbol for Gold priced in US Dollars. One of the most traded commodities, moves 200-500+ pips daily.

The return on an investment expressed as a percentage. Bond yields significantly impact forex markets (higher yields = stronger currency).

A price area (not just a single line) where significant activity occurred. Order blocks, supply/demand zones, and FVGs are all zones.