ICT Daily Bias refers to predicting price movement within a single trading day. This prediction indicates whether the price tends to rise (Bullish) or fall (Bearish) and is crucial in successfully implementing the ICT trading strategy.
How to Identify Daily Bias?
To correctly identify the daily bias (ICT Daily Bias), focus on the following elements:
#1 Daily Timeframe Order Flow
This is one of the primary factors for identifying the market's daily movement direction.
Banks and institutional traders use daily charts to execute their orders precisely; thus, analyzing daily order flow can help identify the primary market direction.
#2 Imbalance to Rebalance
One reason for price movements is to balance imbalances in the market. By understanding this concept, traders can identify market imbalance zones, as prices will likely correct these imbalances by moving upward or downward.
#3 Draw on Liquidity
The second reason for price movement is the Liquidity Hunt. To utilize this concept, identify previous highs or lows, as prices often target these levels to capture liquidity.
Features of Daily Bias
- Correctly identifies the overall market direction, preventing major mistakes
- Enables trading only in the correct market direction (buy during an uptrend and sell during a downtrend)
- Helps identify precise entry and exit points for trades
How to Identify Order Flow in the Daily Timeframe?
Order flow reflects the current structure of price movement in the market. Follow these steps to identify order flow:
#1 Bullish Order Flow
In bullish order flow, prices create higher highs and higher lows while moving upward to absorb liquidity or resolve market imbalances.
In such conditions, focus on buying opportunities and set the daily bias toward a price increase.
#2 Bearish Order Flow
In bearish order flow, prices create lower lows and lower highs while moving downward to capture liquidity and resolve market imbalances.
In such conditions, focus on selling opportunities and set the daily bias toward a price decrease.
Importance of Daily Bias
This concept is a cornerstone of ICT and holds significant importance for the following reasons:
#1 Better Decision-Making
Identifying market direction (bullish or bearish) prevents trades that go against the market trend.
#2 Higher Accuracy in Trades
Focusing on the correct market direction allows for more precise entry and exit points, eliminates losses from counter-trend trades.
#3 Improved Risk Management
Understanding the overall market direction protects traders from unexpected movements and enhances risk management.
#4 Liquidity Alignment
The market typically moves toward high-liquidity zones; daily bias helps identify these areas.
Bullish Daily Bias
Bullish order flow or the pursuit of high liquidity indicates the likelihood of upward price movement, which signifies increased buying pressure in the market.
To trade bullish daily bias, follow these steps:
- Identify the bullish bias and key levels (e.g., Order Blocks, Breaker Blocks, or Fair Value Gaps)
- On smaller timeframes, wait for the price to reach key levels and show signs of a Market Structure Shift
- Once confirmed, act to capture liquidity or resolve market imbalances
Bearish Daily Bias
Bearish order flow or the pursuit of high liquidity indicates the likelihood of downward price movement, which signifies increased selling pressure in the market.
To trade bearish daily bias, follow these steps:
- Identify the bearish bias and key levels (e.g., Order Blocks, Breaker Blocks, or Fair Value Gaps).
- On smaller timeframes, wait for the price to reach a key level and show signs of a Market Structure Shift.
- Once confirmed, act to capture liquidity or resolve market imbalances.
Conclusion
The ICT Daily Bias is a key component of the ICT trading method, helping traders to determine the market's overall direction for the day.
By leveraging concepts like liquidity and order flow, this method allows traders to align with the market trend and avoid counter-trend trades.
