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The central premise of ICT is that the market is not random but is driven by an . This algorithm supposedly delivers price to specific areas of liquidity where large institutional orders can be filled. In this framework:
One of ICT's most famous concepts is the Judas Swing (or Spring). This occurs when the market breaks above a previous high (triggering retail breakout traders to buy) only to immediately reverse and smash lower. From the ICT perspective, the break above the high was not a breakout; it was a liquidity grab designed to fuel the institutions' sell orders.
Liquidity is the fuel of the market. It represents orders—specifically stop-losses and buy-stops—resting at specific price levels. inner circle.trader
His central thesis was simple yet revolutionary: They are rigged by "Smart Money"—large institutions, banks, and algorithms—to exploit the psychology of the retail herd.
Inner Circle Trader (ICT) methodology, developed by Michael J. Huddleston, is a comprehensive trading framework designed to align retail traders with "Smart Money"—the institutional banks and large-scale players that move financial markets. Instead of using lagging indicators, ICT focuses on price action The central premise of ICT is that the
Areas where many stop-loss orders are likely sitting, often above recent highs ( Buyside Liquidity ) or below recent lows ( Sellside Liquidity ).
Perhaps the most visual aspect of the ICT method is the Fair Value Gap (FVG). An FVG occurs when price moves so aggressively in one direction that it leaves "inefficiency" in the price delivery. On a candlestick chart, this usually appears as a gap between the wicks of three consecutive candles. ICT teaches that the market is akin to a rubber band; when it stretches too far, it must return to the "mean" or "fair value" to rebalance. Traders use FVGs as high-probability entry points, waiting for price to return to this gap before entering a trade. This occurs when the market breaks above a
At its core, is not a signal service or a standard trading course. It is a comprehensive trading philosophy that claims to decode the "algorithmic footprint" left by central banks, large financial institutions, and market makers (collectively referred to as "Smart Money").