You may have come across the term “ICT” in various forex trading websites, blogs, and communities. This term has been part of the trading landscape for several years but has gained significant popularity in the last few years.
ICT stands for Inner Circle Trading.
Inner Circle Trading is led by Michael Huddlestone, a well-respected trader with over 20 years of experience in the financial markets.
In this article, we will delve into the history of ICT, explore how you can adopt this trading style, and provide you with all the essential information you need. Let’s dive in!
ICT Trading in Forex
The methodologies and strategies associated with ICT were among the first of their kind in the online retail trading space. Previously, traders primarily focused on technical price action, fundamental analysis, or supply and demand dynamics.
However, ICT’s methodologies successfully integrate these elements into a cohesive trading approach. These strategies focus on identifying optimal prices and leveraging institutional footprints in the market to follow what Michael believes are the actions of market movers.
ICT strategies are executed during specific times of the trading sessions to ensure sufficient trading volume for swift price movements. There is a designated “killzone” during trading sessions where ICT traders prefer to place their trades.
While these methods essentially utilize supply and demand principles, they do so in a more sophisticated manner than what is typically seen in retail trading. Although many traders claim to read institutional order flow, ICT is one of the first groups that can substantiate their claims.
The strategies are somewhat subjective, which can make achieving profitability challenging. However, there are enough rules and methodologies for traders to develop robust rule-based systems from this style.
The ICT Trading Strategy – The Silver Bullet
Among the various trading strategies taught by ICT, the well-known “silver bullet” strategy stands out. This strategy boasts a high win rate and typically offers an excellent risk-to-reward ratio for traders.
To implement this strategy, you need to trade during periods of high market volume, such as 10 AM to 11 AM ET or 3 AM to 4 AM ET. Once you have identified the optimal timing, look for trade confluences.
You will aim for the price to breach the high or low of the previous one-hour candle in either direction. Once this occurs, you can trade back into the candle range.
Next, create your bias and find an entry point using the order confluences that ICT teaches. Setting your stop loss and take profit levels is essential, and you should consider various influencing factors when determining your take profit, including:
- Daily highs and lows
- Session highs and lows
- Weekly highs and lows
- Returning to NWOG (New York Open Gap)
- Movement away from NWOG
Backtesting this trading strategy is highly recommended to gauge its effectiveness.
The Origin of ICT Trading Methodologies
ICT-style trading has seen a surge in popularity in recent years, largely due to Michael’s consistent output of valuable content on YouTube. Over time, this attracted the attention of larger influencers within the online trading community. Many of these influencers transitioned from their existing support and resistance-based strategies to learn from Inner Circle Trading.
With their substantial followings, this shift helped popularize ICT trading, drawing thousands of traders eager to learn these strategies. Michael has produced thousands of YouTube videos, showcasing various trading sessions and achieving significant profits with remarkable market accuracy.
The clarity and depth of understanding regarding how banks move money through the forex markets have attracted many traders to explore this trading method.
Where to Learn the ICT Trading Style
If you’re interested in learning ICT trading methodologies, you have several options:
- Directly from Michael Huddlestone: Learning from the creator of the methodologies is arguably the best option. However, many traders find that the content is not always presented in an easily digestible manner, which can prolong the learning process.
- From Michael’s Students: Some of Michael’s former students have developed their own courses, sharing insights from their experiences. They can often deliver the content in a more accessible format, having learned from their mistakes.
Ultimately, while learning directly from ICT may take longer, it is likely to be the most beneficial approach.
Is ICT Trading Profitable?
The pressing question remains: is ICT trading actually profitable?
The answer is not straightforward. The “strategies” Michael teaches are more about methodologies than complete strategies. It typically requires traders to invest hundreds or thousands of hours piecing together and digesting the content to develop a profitable trading strategy.
The reality is that ICT trading methodologies can be profitable for some traders, but not for all. This variability is inherent in learning a trading strategy that some may perceive as subjective or manual. Trader A will likely have different results than Trader B.
Thus, while ICT methods can be profitable, they require refinement, backtesting, and dedicated study over several months. If you expect to simply copy and paste strategies and achieve immediate profitability, you will likely be disappointed.
Can ICT Trading Work for Prop Firm Funding?
If you’re considering getting funded by a prop firm like The5ers, can ICT trading strategies help you achieve that?
In theory, yes! If you can effectively apply the methodologies and become a profitable trader, they align well with what most prop firms seek.
The strategies emphasize tight stop losses, sensible risk management, trailing stops, and avoiding overnight holds—practices that fit neatly into the rules set by most prop firms.
In fact, many funded traders successfully utilize these approaches while trading with prop firm capital.
In Summary – What is ICT Trading in Forex?
In conclusion, ICT is a trading methodology developed by Michael Huddleston, a renowned forex trader with over 20 years of experience. The strategies and methodologies focus on identifying optimal prices, utilizing timely execution, and following institutional order flow to capitalize on market opportunities with a high risk-to-reward ratio and an impressive win rate.
The growing popularity of these strategies has led many traders to achieve prop firm funding and success in their trading careers!
