Glossary · 41 terms
ICT & SMC glossary for gold traders.
Fair value gaps, order blocks, liquidity sweeps, killzones and the rest, each explained in plain words with an example on a gold (XAUUSD) chart.
Basics
ICT (Inner Circle Trader)ICT is the name of the trading education created by Michael J. Huddleston, and of the concepts he teaches: fair value gaps, order blocks, liquidity, killzones, optimal trade entry and many more.Smart Money Concepts (SMC)Smart Money Concepts is a style of price-action trading built on the idea that large institutions leave footprints: liquidity sweeps, breaks of structure, order blocks and fair value gaps.
Structure
Break of structure (BOS)A break of structure happens when price takes out the previous swing high in an uptrend or swing low in a downtrend, confirming that the trend is continuing.Change of character (CHoCH)Change of character is the Smart Money Concepts name for the first break of structure against the trend.DisplacementDisplacement is a strong, fast move made of large-bodied candles that usually leaves fair value gaps behind.Market structure shift (MSS)A market structure shift is the first break of structure against the current trend, made with displacement.Swing high and swing lowA swing high is a candle with a lower high on each side; a swing low has a higher low on each side.
Liquidity
Buy-side liquidity (BSL)Buy-side liquidity is the pool of buy orders above swing highs and equal highs: stop losses of short sellers and buy-stop breakout entries.Equal highs and equal lowsEqual highs or lows are two or more swing points at nearly the same price.InducementInducement is a small, obvious level that tempts traders to enter early, such as a minor pullback low before a real order block.Internal and external liquidityExternal liquidity sits outside a dealing range: its swing high and swing low.LiquidityIn ICT and SMC trading, liquidity means clusters of pending orders, mostly stop losses and breakout entries, resting above highs and below lows.Liquidity sweepA liquidity sweep is a quick move beyond a high or low that triggers the stops resting there, followed by a fast return inside the range.Previous day high and low (PDH/PDL)The previous day's high and low are among the most-watched levels on any chart.Sell-side liquidity (SSL)Sell-side liquidity is the pool of sell orders below swing lows and equal lows: stop losses of buyers and sell-stop breakout entries.
Entries (PD arrays)
Balanced price range (BPR)A balanced price range is the overlap between a bullish and a bearish fair value gap.Breaker blockA breaker block is an order block that failed.Consequent encroachment (CE)Consequent encroachment is the 50% level of a fair value gap.Fair value gap (FVG)A fair value gap is a three-candle pattern where the middle candle moves so fast that the wicks of the first and third candles don't overlap.Inversion fair value gap (IFVG)An inversion fair value gap is a gap that price closes through.Mitigation blockA mitigation block is similar to a breaker, but forms when price fails to make a new high or low before breaking the order block.Optimal trade entry (OTE)The optimal trade entry is a pullback into the 62%–79% Fibonacci retracement of a swing, with the 70.5% level as the reference.Order blockAn order block is the last opposite-colour candle before a strong move that breaks structure.PD arrayPD array is ICT's umbrella term for the price levels used for entries and targets: order blocks, fair value gaps, breakers, mitigation blocks, old highs and lows, and rejection blocks, ranked by whether they sit in premium or discount.Premium and discountSplit any price range at its 50% level.
Time
Asian rangeThe Asian range is the high and low gold makes during the quiet Asian session.Daily biasDaily bias is your expectation of whether today's candle will close up or down, based on the higher-timeframe structure and the next liquidity target.ICT killzonesKillzones are the times of day when ICT expects the biggest moves: Asian 20:00–00:00, London 02:00–05:00, New York AM 07:00–10:00, London close 10:00–12:00 and New York PM 13:30–16:00, all in New York time.ICT silver bulletThe silver bullet is an ICT setup taken in one of three one-hour windows: 03:00–04:00, 10:00–11:00 or 14:00–15:00 New York time.Judas swingA Judas swing is a false move early in a session, usually around the London open or New York open, that runs liquidity in one direction before price reverses into the day's real direction.New York midnight openThe New York midnight open is gold's price at 00:00 New York time.Power of three (AMD)Power of three describes how a daily candle often forms: accumulation (a quiet range), manipulation (a false move that sweeps liquidity) and distribution (the real move).
Risk & execution
BreakevenMoving a stop to breakeven means placing it at your entry price, so the trade can no longer lose (apart from spread and slippage).DrawdownDrawdown is the fall from an account's peak to its lowest point before a new peak.Gold pip valueFor gold, most traders count in dollars of price rather than pips.Lot sizeLot size is how much gold you trade.Partial profitsTaking partial profits means closing part of a position at a first target and letting the rest run.R-multiple (risk-reward)R is the amount you risk on a trade.SpreadThe spread is the difference between the buy (ask) and sell (bid) price.Stop lossA stop loss is an order that closes your trade at a set price to cap the loss.Trailing stopA trailing stop is moved in the direction of the trade as price advances, locking in more profit while letting the trade run.
A–Z
A · Asian range
B · Balanced price range (BPR) · Break of structure (BOS) · Breaker block · Breakeven · Buy-side liquidity (BSL)
C · Change of character (CHoCH) · Consequent encroachment (CE)
D · Daily bias · Displacement · Drawdown
E · Equal highs and equal lows
G · Gold pip value
I · ICT (Inner Circle Trader) · ICT killzones · ICT silver bullet · Inducement · Internal and external liquidity · Inversion fair value gap (IFVG)
J · Judas swing
L · Liquidity · Liquidity sweep · Lot size
M · Market structure shift (MSS) · Mitigation block
O · Optimal trade entry (OTE) · Order block
P · Partial profits · PD array · Power of three (AMD) · Premium and discount · Previous day high and low (PDH/PDL)
S · Sell-side liquidity (SSL) · Smart Money Concepts (SMC) · Spread · Stop loss · Swing high and swing low
T · Trailing stop
Want to see these on a live chart? Today's gold key levels · Killzones in your time zone · US economic calendar