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ICT Terms and Abbreviations
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• Alphabetical terms and abbreviations — P through S
P (or PP, or CP) — pivot, or pivot-point, or central piviot (computed from pivot-point formulas) — see ICT Pivot-Point Formulas on page 5
PA — (see price action)
PSLO — (see protective stop-loss order)
pac-man — slang term referring to smart money “gobbling up” stops (like Pac-Man gobbling up pac-dots in the 1980’s arcade game)
PerfChart — (see Performance Chart)
Performance Chart — chart tracking %-change in price (or yield, etc.) over a selected time period, starting from a 0% base-line — see list of symbols on page 5
pin — shorthand for pin-bar
pin-bar — a candlestick, of either color, having a long upper or lower wick (or both), signaling market “hesitation” in the direction of the long wick
point 1, point 2, point 3, point 4, and point 5 — the 5 consecutive short-term price swing points which constitute a classic Wolfe Wave set-up
position trade — a trade in which the entry and exit are expected to occur weeks, months (or even years) apart, and the profit target is 1,000 pips or more
pound — informal name of the U.K. currency (proper name: pound sterling); also, one of the nicknames of the GBP/USD pair
pound sterling — proper name of the U.K. currency, symbol £
Power of Three — entry immediately after the close of a three-bar high (or low) at a key resistance (or support) level on a Daily chart (an advanced technique)
price action — a method of analyzing and/or trading any market, based only on price patterns and simple price measuring tools, but excluding indicators
profit release phase — in a typical accumulation/distribution scenario, this is the price range between the accumulation phase and the distribution phase
protective stop-loss order (PSLO) — formal term meaning the price at which a stop-loss is initially placed, or the price(s) to which the stop-loss is moved (trailed)
Pro Traders’ Club — Michael’s active thread on the “Newbie Island” forum, devoted to daily reviews and ICT tool application
PTC — (see Pro Traders’ Club)
pull a fib — use a fibonacci tool to delineate a price swing (from initial price to final price) showing fibonacci retracement levels and fibonacci extension levels
R1, R2, R3, etc. — resistance levels (computed from pivot-point formulas) — see ICT Pivot-Point Formulas on page 5
range contraction — the tendency for a series of large range days to be followed by one or more small range days
range expansion — the tendency for a series of small range days to be followed by one or more large range days
reflection pattern — a pattern in which price retraces beyond the OTE zone, the 100% fib retracement, and the 127% fib extension, creating a “reflected” OTE
regular divergence — trend-reversal divergence (see type 1 divergence)
relative strength index I[/I] — one of 3 price oscillators (RSI, stochastics, and W%-R) included in the ICT tool-set; use one of these (or use MACD)
reversal profile — an early-day price swing (up or down), taking out a key Daily or Weekly S/R level, followed by a reversal and a larger late-day price swing
rip-tide reversal — similar to a turtle soup reversal, but based on a false breakout of a SH or SL which formed more than 20 periods prior
risk — the size of the loss (in pips or in dollars) which will be sustained if a stop-loss is hit; note that risk is not the probability of sustaining such a loss
risk management (or equity management) — the combination of money management plus trade management
risk off — widespread trader attitude (or sentiment) in which high-risk positions are abandoned in favor of lower-risk-lower-return safe-haven positions
risk on — widespread trader attitude (or sentiment) in which low-risk safe-haven positions are abandoned in favor of higher-risk-higher-return positions
RR (or R/R, or R:R) — risk/reward ratio (e.g., SL/TP), or reward/risk ratio (e.g., TP/SL), depending on the order in which the numbers are stated
RR tracks — railroad tracks (refers to two, long, side-by-side candle bodies, with opposite colors, denoting an engineered price reversal)
RSI — (see relative strength index)
running stops — (see stop hunt)
S1, S2, S3, etc. — support levels (computed from pivot-point formulas) — see ICT Pivot-Point Formulas on page 5
S&D — (see seek and destroy)
scalp (or scalping trade) — a trade in which the entry and exit are expected to occur seconds or minutes apart, and the profit target is 30 pips or less
search and destroy — (see seek and destroy) — note that Michael uses both terms interchangeably
seasonal tendencies — tendencies of many markets (currencies, equities, commodities, bonds) to make LTH’s or LTL’s at specific times of year
seek and destroy — a smart money tactic (which savvy retail traders can stalk) of systematically gunning stops above and below a consolidation range
sell program — a trending market profile in which the directional bias is down (bearish), and trades in the direction of the trend are short (sells)
sell zone — given either (1) a HTF bearish bias, or (2) a ranging market, a sell zone is the price range above the pivot I[/I], or above the TT fair-value zone
session — daily period of high-volume forex trading in a particular market, generally 8am-5pm local time (see Asian session for an exception to this rule)
SH — (see swing high)
shorter time frame — a time frame shorter than the time frame being discussed; “shorter time frame” is not necessarily synonymous with lower time frame (LTF)
short-term high — a fractal high which has not evolved into an intermediate-term high (ITH) or a long-term high (LTH)
short-term low — a fractal low which has not evolved into an intermediate-term low (ITL) or a long-term low (LTL)
short-term trade — a trade in which the entry and exit are expected to occur within 2 to 5 trading days, and the profit target is 100-300 pips
SL — def.1 (see stop-loss)
SL — def.2 (see swing low)
SM — (see smart money)
SMA — simple moving average (see moving average)
small range day — a day whose H-L price range (the day’s high minus the day’s low) falls substantially short of the day’s ADR
smart money — large banks and certain other institutions which have information on resting (stop and limit) orders – information not available to street money
Smart Money Tool — an overlay of line charts of 2 (or 3) correlated instruments, on which short-term price divergences are readily seen — see list on page 5
SMT — (see Smart Money Tool)
SMT div — (see SMT divergence)
SMT divergence — deviation from the normal positive or negative correlation between instruments on an SMT chart, signaling a potential price move
sniper — a trader “lying in wait” for a trade set-up to come into range
S/R (or S-R, or S&R) — (see support and resistance)
sterling — informal name of the U.K. currency (proper name: pound sterling); also, one of the nicknames of the GBP/USD pair
STF — (see shorter time frame)
STH — (see short-term high)
STL — (see short-term low)
stinger — in an upmove, a bullish type 1 divergence nested inside a bullish type 2 divergence; in a downmove, nested bearish type 1 and type 2 divergences
stoch — (see stochastics)
stochastics — one of 3 price oscillators (stochastics, RSI, and W%-R) included in the ICT tool-set; use one of these (or use MACD)
stock index SMT — (see the list of Smart Money Tools on page 5)
stop hunt — a price move engineered by smart money in order to trigger stop and limit orders resting above or below the current market price
stop-loss — the price level at which a resting order has been placed to close a position at a loss; or, the anticipated loss, in pips, when that price is hit
stops — a loose term referring to buy-stop or buy-limit orders resting above the current market, or sell-stop or sell-limit orders resting below the current market
street money — market participants other than smart money; street money is not privy to the inside information (resting orders) on which smart money trades
Sunday gap — price difference between Friday’s close and Sunday’s open, representing price movement over the weekend, while the retail market was closed
support and resistance — significant levels below and above the current market where price has reacted in the past, and might do so again in the future
sweet spot — the center of the target area for an OTE, at the 70.5% retracement level (which is midway between the 62% and 79% retracement levels)
swing high — any of the following: a three-bar high, a standard 5-bar fractal high, an intermediate-term high (ITH), or a long-term high (LTH)
swing low — any of the following: a three-bar low, a standard 5-bar fractal low, an intermediate-term low (ITL), or a long-term low (LTL)
swing point — a swing high or a swing low
swing projection — given a price swing (in the direction of a clear trend), swing projection uses fibonacci ratios to estimate the extent of the next price swing
swing trade — a trade in which the entry and exit are expected to occur a week or more (up to several weeks) apart, and the profit target is 300-1,000 pips
Swissy — nickname of the USD/CHF pair
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