ICT Optimal Trade Entry (OTE)

OTE = Optimal Trade Entry.

It’s a Fibonacci-based entry model ICT uses to enter trades at a discount (for buys) or at a premium (for sells) within a valid market move.

62% – 79% Fibonacci retracement

Most commonly:

• 0.62 / 62%

• 0.705 / 70.5%

The sweet spot = 0.705 (70.5%)

A swing high and swing low are simply the market’s most recent obvious turning points—the points that define structure.

Bullish Swing Point

A bullish swing point, also called a swing low, forms when:

1. A candle creates a low.

2. The candle to its left has a higher low.

3. The candle to its right also has a higher low.

This creates a three-candle formation with the lowest candle in the middle.

A bullish swing point may become:

• Sell-side liquidity.

• A support level.

• The beginning of a bullish price leg.

• A structural low that price must protect to remain bullish.

Bearish Swing Point

A bearish swing point, also called a swing high, forms when:

1. A candle creates a high.

2. The candle to its left has a lower high.

3. The candle to its right also has a lower high.

This creates a three-candle formation with the highest candle in the middle.

A bearish swing point may become:

• Buy-side liquidity.

• A resistance level.

• The beginning of a bearish price leg.

• A structural high that price must protect to remain bearish.

These formations are basic market structure pivots. However, identifying them is only the first step.

The next step is understanding which swing points actually matter.

A clean way to identify swing highs/lows without overcomplicating it is to use structure confirmation.

You don’t assume a swing is a swing while price is still pushing. You confirm it after the market proves it turned.

For a swing high, the confirmation is that price forms the high and then starts making lower prices (often breaking a minor low or creating a bearish shift). For a swing low, confirmation is that price forms the low and then starts making higher prices (often breaking a minor high or creating a bullish shift).

A relevant swing is a swing point that plays an important role in the delivery of price.

For example, imagine price trades below the London low, takes sell-side liquidity, reaches a 4-hour bullish order block, and then creates strong bullish displacement.

The swing low formed during this reaction is important because it:

• Took liquidity.

• Reached a higher-timeframe level.

• Created displacement.

• Started a new bullish leg.

This swing low is much more relevant than a random swing low that formed in the middle of consolidation.

A failure swing occurs when price creates a swing point but fails to produce meaningful continuation.

For example, price creates a bullish swing low, moves slightly higher, but fails to break an important swing high. Price then trades back below the swing low.

That swing low failed to create a meaningful bullish expansion.

The same idea applies to a bearish swing high.

The main difference is what happened after the swing point formed.

Ask the following questions:

1. Did the swing point take liquidity?

2. Did it form at a higher-timeframe level?

3. Did it create displacement?

4. Did it break an important opposing swing?

5. Did it leave an imbalance?

6. Did it form during an important time window?

7. Did price continue away from it?

If the answer to several of these questions is yes, the swing point is more likely to be relevant.

If the swing formed in the middle of consolidation and produced no displacement or structural break, it is probably less important.

A swing point becomes significant because of the price delivery that follows it.

1. Identify a valid bullish/bearish impulse

• Higher High / Lower Low + Higher Low / Lower High

• Strong displacement up/down

• Ideally breaks a prior high/low (liquidity taken)

2. Draw Fibonacci

• Swing low/high → swing high/low

• Mark the OTE zone

• 62% – 70.5% (you can include 79%) retracement

3. Look for confluence

Price should tap OTE AND align with:

• Fair Value Gap (FVG)

• Order Block

• Previous low/high

• Session timing (London / NY)

4. Wait for entry confirmation

• CISD

• Market structure shift (LTF)

• SMT divergence

• Strong displacement candle

I personally use LTF IFVG or CISD for my entry after we got OTE retracement.

1. You can aim BSL after we got a retracement or SSL after we got the retracement

2. You can aim for -50% (-0.5) extension

3. You can aim for STDV projections

First: Understand the Purpose of the Swing.

OTE is not about finding any retracement. OTE is about finding where smart money re-enters AFTER manipulation.

That means:

The swing you choose MUST represent displacement after liquidity/HTF level is taken.

If that’s not true — it’s the wrong swing.

Rule #2: Use the Displacement Leg (Not Random Candles)

What Is the Correct Swing?

The correct swing is:

• The impulsive move

• The move that breaks structure

• The move that follows the liquidity raid

Rule #3: The Swing Must Create Market Structure Shift

Key Concept : A valid swing changes the narrative.

Ask:

Did this move create a higher high (bullish)?

Did this move create a lower low (bearish)?

If price just moved but:

• Didn’t break anything

• Didn’t change structure

That swing is invalid for OTE.

Rule #4: Higher Timeframe Defines the Swing

This Is Critical. The swing must align with HTF bias.

The Wick Is the Manipulation Zone. The Close Tells You If It Was Rejected.

When wick-based OTE is valid (and when it’s not)

Valid (use wick OTE) when:

• Wick is on HTF (at least M15; best is 1H/4H)

• Wick is obvious (stands out vs previous candles)

• It occurs at liquidity (equal highs/lows, old swing points, PDA)

• Ideally aligns with HTF context

When wick-based OTE is valid (and when it’s not)

Not valid (skip it) when:

• Wick is small / normal noise

• No clear liquidity was taken

• Market is dead hours / no volatility (often produces fake wicks)

• You’re forcing it against strong HTF trend without a reason

Wick OTE Is NOT a Signal — It’s Context

Wick OTE defines a zone of interest, not an entry.

You must wait for:

• Lower timeframe market structure shift

• Displacement away from the wick

• CISD or FVG reactions (normally on M3 or M5 charts)