A Glossary of ICT Terms and Abbreviations

Page 5

Selected Lists and Resources

High probability price patterns — listed in the order in which Michael presented them; for definitions, refer to the alphabetical listing (pages 1-4)

doji
hammer
hanging man
tweezers
RR tracks
head-and-shoulders top
inverted head and shoulders bottom
three Indians climax reversal
triangle
bull flag
bear flag
coil expansion pattern
turtle soup reversal
rip-tide reversal
reflection pattern
outside day with a down close
inside day

Smart Money Tools (SMT’s)

Yield triad SMT’s — in each of the following, the SMT consists of an overlay of line charts (of yields, not prices) of the positively correlated instruments listed:

US Treasury yield triad SMT — the U.S. 2-yr, 5-yr, and 10-yr T-notes; (the U.S. 30-yr T-bond may be included in this overlay, as well)
US/UK/German 2-yr yield triad SMT — the U.S. 2-yr T-Note, the U.K. 2-yr Gilt, and the German 2-yr Bund
US/UK/German 5-yr yield triad SMT — the U.S. 5-yr T-note, the U.K. 5-yr Gilt, and the German 5-yr Bund
US/UK/German 10-yr yield triad SMT — the U.S. 10-yr T-note, the U.K. 10 yr Gilt, and the German 10-yr Bund

USDX SMT’s — in each of the following, the SMT consists of an overlay of line charts (of closing prices, unless noted otherwise) of the instruments listed:

USDX/fiber SMT — the U.S. Dollar Index and the EUR/USD pair; note that the USDX is negatively correlated with the fiber
USDX/cable SMT — the U.S. Dollar Index and the GBP/USD pair; note that the USDX is negatively correlated with the cable
USDX/yield triad SMT — the U.S. Dollar Index price, the U.S. 5-yr T-note yield, and the U.S. 10-yr T-note yield; note the positive correlations

Correlated pair SMT’s — in each of the following, the SMT consists of an overlay of line charts (of closing prices) of the positively correlated pairs listed:

fiber/cable SMT — the EUR/USD and the GBP/USD
aussie/kiwi SMT — the AUD/USD and the NZD/USD

Stock index SMT — this SMT consists of an overlay of line charts (of closing prices) of three positively correlated stock indices

US stock index triad SMT — the DJIA, the S&P500 index, and the Nasdaq index

ICT Session Times and Kill Zones — expanded descriptions of the session times and kill zones defined in the alphabetical listing (pages 1-4)

1. The London Session is defined as the normal business day in London, 8am-5pm London time. During northern hemisphere winter, London time is GMT; during summer, it is GMT+1. The London Open Kill Zone is a (minimum) 2-hour period which brackets the 8am opening of the session. The London Close Kill Zone is a (minimum) 2-hour period which brackets the 5pm close of the session.

2. The New York Session is defined as 8am-5pm New York time, which is GMT-5 in the winter, and GMT-4 in the summer.
The New York Open Kill Zone is a (minimum) 2-hour period which brackets the 8am opening of the New York Session.

There is no New York close kill zone, because the New York close (5pm New York time) occurs at the lowest-volume time of the entire 24-hour trading day. Typically, worldwide forex trading volume is lowest between 5pm and 6pm New York time each trading day. By contrast, the London Close occurs at the end of the London/New York Overlap period (1pm-5pm London time, and 8am-noon New York time), which is the highest-volume 4-hour period of the trading day.

3. The Asian Session — as its name implies — does not fit the pattern of the other two trading sessions. It comprises the trading sessions in Tokyo (and Seoul) in the GMT+9 time zone, plus the trading sessions in Singapore and Hong Kong (and several smaller markets) in the GMT+8 time zone. Tokyo is no longer the largest Asian forex market — Singapore has recently captured that distinction. Together, Singapore and Hong Kong (which operate simultaneously) account for 76% more daily forex trading volume than Tokyo.

The Asian Session is 10 hours long, unlike the London and New York sessions, which are each 9 hours long. The Session begins at 9am Tokyo time (8am in Singapore and Hong Kong), and ends at 7pm Tokyo time (6pm in Singapore and Hong Kong).

The 5-hour Asian Range is defined as the first half of the 10-hour Asian Session. The Asian Range has special significance as a bellwether of the new trading day which has begun in Asia. (Newcomers to the ICT methodology often confuse the Asian Session and the Asian Range.)

Finally, the Asian Kill Zone can be thought of as the Asian “open” kill zone. It begins one hour earlier than the start of the Asian Session, but it continues for a (minimum) 4 hours (rather than the minimum 2 hours of the other 3 kill zones). Basically, the Asian Kill Zone extends throughout the morning stock-trading sessions in Tokyo, Singapore and Hong Kong, prior to their lunch-time recesses.

ICT pivot-point formulas — these formulas are commonly referred to as “Classic” pivot-point formulas; they are built into many trading platforms.

H, L, and C represent the High, Low, and Close of the previous time period (yesterday, for example, in the case of Daily pivots).
P, R1, S1, etc. are price levels computed from H, L, and C, which are projected onto the current time period (today, in the case of Daily pivots).

Here are 9 ICT pivot-levels and their formulas, listed in order from highest price to lowest price (as they would appear plotted on a chart):

Second major resistance level — R2 = P + H - L
Second intermediate resistance level — MR2 = (R1 + R2) / 2
First major resistance level — R1 = 2P - L
First intermediate resistance level — MR1 = (P + R1) / 2
Pivot (also called pivot-point, or central pivot) — P = (H + L + C) / 3
First intermediate support level — MS1 = (P + S1) / 2
First major support level — S1 = 2P - H
Second intermediate support level — MS2 = (S1 + S2) / 2
Second major support level — S2 = P - H + L

(Note that Michael does not use, or refer to, these resistance levels: R4, MR4, R3, MR3; or these support levels: MS3, S3, MS4, or S4)

Top-tier investment banks (10 largest in the interbank network) — showing each bank’s country of domicile and share of the currency market

CitiGroup (USA) — 10.74%
JPMorgan (USA) — 10.34%
UBS AG (Switzerland) — 7.56%
Bank of America Merrill Lynch (USA) — 6.73%
Deutsche Bank (Germany) — 5.68%
HSBC (UK) — 4.99%
Barclays Investment Bank (UK) — 4.69%
Goldman Sachs (USA) — 4.43%
Standard Chartered (UK) — 4.26%
BNP Paribas (France) — 3.73%

(Note that these 10 banks transact more than 63% of the world’s currency trading volume; source: Euromoney, May 2017)

Central banks (a partial list)

BdeM — Bank of Mexico
BOC — Bank of Canada
BOE — Bank of England
BOJ — Bank of Japan
ECB — European Central Bank (presides over the central banks of the 18 countries which are members of both the EU and the EuroZone)
FRS (or Fed) — Federal Reserve System (the central bank of the U.S., consisting of 12 regional Federal Reserve Banks)
HKMA — Hong Kong Monetary Authority
MAS — Monetary Authority of Singapore
NY Fed — Federal Reserve Bank of New York (the largest and most powerful of the 12 regional Federal Reserve Banks in the U.S.)
PBOC — People’s Bank of China
RBA — Reserve Bank of Australia
RBNZ — Reserve Bank of New Zealand
SNB — Swiss National Bank

ICT book recommendations — books that Michael has recommended in his threads and/or in his videos

Intermarket Technical Analysis (1991) — John J. Murphy
Technical Analysis of the Financial Markets (1999) — John J. Murphy
Intermarket Analysis (2004) — John J. Murphy
The Visual Investor: How to Spot Market Trends (2009) — John J. Murphy

Market Wizards (1988) — Jack D. Schwager
The New Market Wizards (1994) — Jack D. Schwager
Stock Market Wizards (2003) — Jack D. Schwager
Market Wizards - Updated (2012) — Jack D. Schwager

Trade Stocks and Commodities with the Insiders: Secrets of the COT Report (2005) — Larry Williams
The Commitments of Traders Bible (2008) — Stephen Briese

Trading for a Living: Psychology, Trading Tactics, Money Management (1993) — Alexander Elder
Street Smarts: High Probability Short-Term Trading Strategies (1996) — Linda Bradford Raschke and Laurence A. Connors
The Trading Game: Playing by the Numbers to Make Millions (1999) — Ryan Jones
Trade What You See: How To Profit from Pattern Recognition (2007) — Larry Pesavento and Leslie Jouflas

The Babypips Glossary — definitions of 1,000 standard forex, finance and economic terms and abbreviations (most with detailed explanations)

Terms - Forex Trading Information & Articles | Forexpedia

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Powerslave’s quote, above, is from the original “Glossary” thread. That thread has been replaced by this one, so I think it makes sense to move the conversation from there to here. That (original) thread should be allowed to sink out of sight.

Powerslave,

My apologies for the long delay in replying to your post.

Regarding your question about the order in which you should watch the ICT videos, I think there are really two separate questions here —

• First, what is the best order in which to watch the videos?

• And second, what is the best order in which to incorporate the various ICT tools into your trading.

In my opinion, the answer to the first question is simply to watch the videos in the order in which Michael has presented them. That order is not random. Michael has been using these tools for a long time, and he knows how to introduce them to you in a logical and sequential way. He’s not only teaching you how to use each individual tool, but he’s also teaching you how all the tools work together as a tool-set.

The answer to the second question is not so clear-cut. When you watch the videos, some of the tools presented will appeal to you immediately; you will easily understand what they do and how they do it; and you will be eager to try them out. And that’s exactly what you should do — try them out. Start using them. Practice with them.

I think it’s pretty clear that the simplest and most intuitive tools — the ones you are likely to be most comfortable with — are the most fundamental and essential tools, as well. For most traders, time-and-price considerations, support and resistance, pivots, fibonacci levels, and OTE will be in this category.

There will be other tools in Michael’s toolbox which will confuse you, or even intimidate you. Which tools those are will depend on your personality, your education, your prior trading experience, your comfort-level with certain math or finance concepts, etc. You might feel bewildered by the COT report, or by Treasury-yield analysis, or by other highly-specialized ICT tools. Chances are that the tools which scare you most are the ones you can safely ignore for now.

But, you won’t know which tools appeal to you, and which tools don’t, until you have had a look at all of them. And that’s what the videos are for — to introduce you to the tools. That’s why I think you need to watch all the videos, in the order in which Michael has presented them; and then choose which tools to begin practicing with.

I’m convinced that, if you begin gradually, and master a few of the simpler tools, then when you experience success with those tools, you will want to add more and more tools to your own personal toolbox. At that point, you will have the newly-acquired knowledge, experience and confidence to tackle those tools which intimidated you initially.

Aside from the purely technical tools, like S/R, pivots, OTE, SMT, etc., there are three major subjects addressed in the ICT videos which you must study, grasp and incorporate into your thinking and into your trading —

(1) the nature of the forex market

(2) the minefield of emotions inside your head, and how to control them, and

(3) the related disciplines of money management and trade management

Several videos are devoted specifically to one, or another, of these three subjects. But, every video in Michael’s video archive touches on one or more of these basic subjects. These three subjects are pervasive. They will affect every trade you take, regardless of the technical tools you use. You need to glean every bit of information you can on these three subjects, from every single video in the archive.

If you have gone through the Babypips School, you can probably relate your experience there to the advice that I’m giving you here. In each case — in the Babypips School curriculum, and in the ICT “curriculum” — you can’t absorb all of it, all at once. Presumably, as you worked your way through the School, you practiced what you were learning on your demo-account charts. You should do the same thing with the tools you are about to learn in the ICT curriculum.

Whenever you open your charts, direct your focus first to the higher time frames (4-hour, and up) — in order to see the “forest”, before you start looking at “trees”.

On your “working time frame” (say, the 1-hour chart), learn how to divide your charts into trading days, sessions, and kill zones. Figure out a simple and intuitive way that you can indicate these things on your charts, so that you can keep them always up to date, and easy to read.

Look for the patterns and set-ups that Michael is teaching you. Train you eye to see directional bias, basic market structure, basic candlestick patterns, OTE’s, price reversals, and stop-raids (and other manipulations).

Keep in mind the things you have seen in the videos, but have put on the “back burner” for use at a later time. As you begin to see how those things fit into, and augment, your trading, be sure that you can go back and find them, when you want them. Taking notes as you watch the videos is the best way to create your own “index” of ICT subjects.

Finally, I recommend that you focus on one pair. Period. Forget all the others. Apparently, many traders find it almost impossible to do this — Oh, no! what if I miss a great opportunity on a particular pair, because I’m not watching it?

Well, what if you impede your learning, because you’re trying to watch too many things, all at once? It’s all too common for newbie traders to chase after everything in sight — like sailors on shore-leave, chasing every skirt that walks by.

I trade the GBP/USD. Period. That’s all. I watch the EUR/USD for confirmations and divergences, but I don’t trade it. As for all the other pairs, I don’t have a clue what the Yen, or the Aussie, or the Loonie, or any other pair is doing.

I’m not pushing the GBP/USD at you. I’m just suggesting that you limit the distractions around you, by focusing on one pair, or two at most, and leave the others for another time.

Sorry for the long-winded speech. I hope that somewhere in that wall of text you find something useful.

Clint

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I have added the following to page 4 * of the Glossary:

• ICT pivot-point formulas

• a link to a YouTube index of ICT videos (March 2012 - present)

• links to ICT Livestream (webinar) channels

  • Edit — Ignore the page reference above —
    the Glossary has been reorganized several times since that page reference was posted.
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I’ve been toying with the idea of doing this but I wouldn’t have done it nearly as comprehensively. Very nice.

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Siiiiiiiiiiiiiick!! thanks :slight_smile:

Absolutely amazing work, Clint!
Thank you very much.

Personally, i’m become more like u than ICT, Clint. Ahaha :slight_smile:

Coz u like FX police officer here. And u wrote ur thread here just like police rules, arranged that very structured.

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I’ve been called a lot of things.

This is the first time I’ve ever been called “FX police officer”.

I’m not sure what to make of that compliment (?).

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This is excellent Clint - many thanks for your time and effort.

Clint - thank you for collecting all this information into one thread - your efforts are well appreciated!

[B]Vinster, DroneTrading, kubio, spidypips, mapman, and Randomusername —[/B]

Thanks for your kind words, and for your encouragement.

The Glossary isn’t finished — there are some loose ends to be tied up. But, it’s nearly up-to-date.

As Michael continues to teach, there likely will be new terms and abbreviations to be added. So, it remains a work-in-progress. I’ll keep at it.

I’m glad to know that it’s useful to you guys.

As I mentioned before, if you find mistakes, or things that I have overlooked, let me know.

Peter (screen-name [I]peterma[/I]), a member of this community and a frequent contributor to the ICT threads, has compiled a massive list of ICT Video Notes, and has offered his Notes as an addition to this Glossary. Naturally, I said, “Bring it on!”

His previous (and much smaller) list is currently [I]linked[/I] on page 4 of the Glossary. In the near future, that previous list will be blended into Peter’s main list, at which time all of his note-taking and indexing work will be right here on this thread.

But, you won’t have to wait for that to be done. Later this evening (New York time), I’ll add 2 new pages to the Glossary, and I’ll post Peter’s ICT Video Notes, just as he sent them today. Glossary pages 5 and 6 (posts 5 and 6 on this thread) will be devoted to his Notes.

Then, in the coming days and weeks, we’ll probably do some editing and re-formatting of the Notes. But, in the meantime (starting tonight), you’ll have everything you [I]need[/I] (and [I]just about[/I] everything you could [I]want[/I]) right at your fingertips.

Edit — see Page 1 of the Glossary for information about Peter’s Video Notes.

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Peter and Clint, I do not understand how you gents do this, but I am extraordinarily grateful that you do and humbled by your extreme generosity…‘thank you’ seems rather inadequate for the amount of material and contributions you provide. It gives people like me the confidence to get started with a demo trading platform because of the legacy you give so altruistically. Your time is worth it. Thank you, Jacqui

Thank you, Jacqui.

A few people have been asking for the link below to the ICT Index Videos, also many thanks to Clint for his help.

http://forums.babypips.com/newbie-island/49172-glossary-ict-terms-abbreviations.html

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I very much appreciate what Clint and yourself have done. It really helps a lot - thank you.

Way to go Clint, you made my day!

Clint… just a quick thank you for all the time/effort you have put into this seemingly non exhaustive collation of ICT’s work.
Peter also a big thanks to you.
Respect where its due!

Amazing, amazing, amazing!!! I’ve been so overwhelmed by the sheer size of ICT’s material that I’ve been paralyzed. This is just ridiculous and will help me organize the material into sizable and meaningful “chunks” that can be digested very thoroughly. I can not thank you enough for all of your hard work putting this together. Thank you, thank you, thank you!!

Clint,

Dont know where you found the time but I am, like so many others, eternally indented to you. I wish you the best in all your endeavours.