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ICT Methodology

Order Block
Lecture Analysis

Key principles, concepts, and trading rules extracted from the ICT lecture on order blocks, dealing ranges, and liquidity dynamics.

01 / 10

Dealing Range Definition

A dealing range requires BOTH buy-side and sell-side liquidity to be engaged before it becomes valid for analysis.
BUY SIDE LIQ SELL SIDE LIQ DEALING RANGE SWEEP SWEEP 50% Both sides swept = Valid Dealing Range
"a dealing range is a high that has engaged buy side and a low that has engaged sell side... a dealing range is not a dealing range unless it takes both sides of liquidity period and story"

The dealing range forms the foundational framework for all subsequent analysis. Without establishing this range first, any technical analysis becomes arbitrary.

"if you don't have a directional bias you don't have a dealing range you're just using Randomness"

02 / 10

Order Block Definition

An order block marks the precise point where the state of liquidity delivery changes—it pinpoints a specific time and unambiguous price range.
BEARISH ORDER BLOCK OB ZONE DISPLACEMENT BULLISH ORDER BLOCK OB ZONE DISPLACEMENT Consecutive same-direction candles before displacement = Order Block
"What is an order block it's the change in the state of liquidity... where it pinpoints a very specific time... that provide you a very unambiguous range in price"

Bearish Order Block: Consecutive up-closed candles before displacement lower

Bullish Order Block: Consecutive down-closed candles before displacement higher

"your order block is what it's a dealing range but it's very specific"

03 / 10

Premium vs Discount Arrays

Arrays above equilibrium (50%) are premium; below are discount. This determines whether you're paying fair price or getting value.
PREMIUM ZONE (Sell shorts here) DISCOUNT ZONE (Buy longs here) HIGH 79% 70.5% SWEET SPOT 62% OTE ZONE 50% EQUILIBRIUM 38.2% 29.5% 21% LOW SELL BUY Arrays above 50% = Premium | Below 50% = Discount
"what makes it a premium array well the fact that we return back up into it... the fair value Gap is above the 50% so that means what that's a premium array"
Equilibrium 50%
Entry Level 62%
Sweet Spot (OTE) 70.5%
Maximum Extension 79%
"70.5 because that's the sweet spot you can use a 79% retracement level but if you're demanding that or just below it as your entry you're going to miss a whole lot of sweet trades"

04 / 10

Mean Threshold

The midpoint of an order block or inefficiency is critical—price behavior at this level indicates strength of the anticipated move.
MEAN THRESHOLD BEHAVIOR MEAN THRESHOLD OB HIGH OB LOW STRONG SIGNAL Fails to reach Strong move follows WEAKER SIGNAL Reaches MT Less conviction Price failing to reach mean threshold = Stronger directional conviction
"if it's a Candlestick that makes an order block the midpoint is mean threshold... if it can go to just half of it or fall short of half of it when you're bearish... it indicates a signature in terms of strength of the move"

When price fails to reach the mean threshold before reversing, it signals exceptional strength in your anticipated direction.

"the best setups are going to form below mean threshold which is the middle of the entirety of the multiple candlesticks that make up my ICT bearish order block"

05 / 10

Volume Imbalance

Volume imbalance is the gap between candle bodies (not wicks) on consecutive candles—where majority trading volume occurred.
VOLUME IMBALANCE (VI) BEARISH VI CLOSE OPEN VI ZONE GAP Wicks may overlap Bodies don't touch = VI BULLISH VI CLOSE OPEN VI ZONE GAP Can be passed through multiple times (flexible) Volume Imbalance = Gap between consecutive candle BODIES (ignore wicks)
"volume imbalance is the difference between the candle that you're looking at and the one prior to it... a measurement of the open or closing price that do not touch"

Volume Imbalance Rules

  • Measure body to body, not wick to wick
  • Can be passed through multiple times (flexible)
  • Stop loss must account for the candle creating the imbalance
  • Extend to the right—they will influence future price
"volume imbalances you have to be what flexible they can pass through them and be used multiple times"

06 / 10

Time Frame Rules for High-Impact News

On high-impact news events, the minimum chart time frame is 5 minutes. Anything lower exposes you to noise.
"if you're looking at high impact news driver days at the time of the release minimum 15 minutes you can't be underneath a 5-minute chart otherwise you're going to get beat up with the spottiness in price action"

07 / 10

Time Distortion

Price waits for key sessions (like the 9:30 opening bell) before displacing—this creates consolidation that tests patience.
"all of this right here is time Distortion that means you have to submit to where you entered where your initial stop loss would be... it's waiting for something what's it waiting for 9:30 opening bell"

During time distortion, maintain your position and stop loss placement. The consolidation is the market waiting for the next session catalyst.

08 / 10

Confluence = Strongest Setups

The strongest setups have multiple independent reasons pointing to the same directional outcome.
CONFLUENCE EXAMPLE (BEARISH) DEALING RANGE HIGH DEALING RANGE LOW 50% (EQUILIBRIUM) ENTRY CONFLUENCE FACTORS ✓ Order Block ✓ Fair Value Gap ✓ OTE Level (70.5%) ✓ Premium Zone ✓ MSS Confirmed ✓ Below Mean Threshold HIGH PROBABILITY ORDER BLOCK FVG Multiple factors aligning = Highest conviction trades
"the strongest setups are going to be the ones that you can see have multiple reasons why it should do one thing and not the other"

Confluence Example from Lecture

  • Breaker in lower half of order block
  • Fair value gap present
  • Optimal trade entry level aligned
  • All indicators pointing same direction
"how many things are there saying that this is going to go lower multiple right"

09 / 10

Order Block Entry Rules

ENTRY RULE CAVEATS ❌ WRONG ENTRY 50% UPPER HALF LOWER HALF FVG EXISTS Drops to FVG If FVG in lower half, don't buy upper OB ❌ NEVER DO THIS PREVIOUS RANGE RANGE HIGH OUTSIDE RANGE Never buy OB outside a just-broken range These entry mistakes will result in being stopped out Wait for price to reprice to inefficiency or confirm new structure

Critical Caveat

If a fair value gap exists in the lower half of your dealing range, do NOT buy a down-closed candle in the upper portion—it will drop to reprice to the inefficiency.

"if there is a fair value gap on the time frame you're looking at in this range or the lower half you do not buy a down closed candle in the upper portion because it won't hold it will drop down and reprice to the inefficiency"

Never Trade Outside Broken Range

Never enter on a candle outside a range that was just broken—you lack experience to know if the break will sustain.

"you absolutely do not buy a down closed candle that's outside of the range that just broke... you don't have the experience to know if that range being broken to the upside is going to be sustained"

10 / 10

Stop Loss Placement

Stops must be outside the order block parameters, with additional buffer for any volume imbalance within the range.
STOP LOSS PLACEMENT (SHORT EXAMPLE) ORDER BLOCK VI OB HIGH VI CANDLE HIGH STOP LOSS (+1 tick above VI candle) ENTRY ZONE ENTRY RISK STOP PLACEMENT RULES 1. Above OB high (basic) 2. If VI exists → above VI candle high + 1 tick 3. Allow for "static price" on news days Volume Imbalance extends stop loss requirement beyond simple OB parameters "Price can color outside the lines on high impact news days"
"your stop loss has to be outside the parameters of the order Block... if you have a volume imbalance inside of your dealing range... you have to factor in the fact that yeah price should only go into that volume imbalance but the rules for using it is you have to allow for static price action"
"your stop has to be where if you're going to use that as your entry your stop has to be above this candle's High by one tick"