The Interbank Price Delivery Algorithm or IPDA is one of the liquidity concepts in the ICT style. This concept refers to the rules that determine the price in the market.
The Interbank Price Delivery Algorithm (IPDA) is presented over three time periods [20-day, 40-day, and 60-day] with 20-day intervals. The highs and lows formed in these periods represent liquidity accumulation zones, where Smart money alters the market to reach them.
What is the Interbank Price Delivery Algorithm (ICT IPDA)?
According to the ICT style, price movement in the instrumets like Forex market occurs due to the presence of liquidity or imbalance zones.
In this context, The price moves towards liquidity, and once gathered, it proceeds to balance the imbalance.
Market movement begins toward a liquidity zone once the imbalance is balanced by price. This cycle continuously and consistently occurs in financial markets.
In the diagram below, the price first gathers Buy Side Liquidity, then balances the imbalance and proceeds towards the Sell Side Liquidity.
The IPDA concept discusses how price is determined by Smart money. Therefore, price is not chosen randomly but is governed by the rules of Market Makers
These rules generally refer to liquidity accumulation and imbalance adjustment. At specific time intervals, key points on higher timeframes are used by smart money to determine and adjust prices.
How does the Interbank Price Delivery Algorithm (IPDA) work?
Smart money uses specific key levels to collect the necessary liquidity for price determination. In the IPDA approach, starting from the beginning of the month, it look back three times at 20-day intervals.
Identifying Key Levels for Liquidity Collection
the most recent 20 days, then the 40-day interval, and finally, the 60-day interval. Thus, three 20-day ranges are defined, where the highs and lows of each range represent critical liquidity accumulation areas.
In the diagram below, the important liquidity collection areas [40-day highs and lows along with 60-day highs and lows] are visible:
Price Movement After Liquidity Collection
After gathering liquidity above the 60-day high, the move towards the 40-day low liquidity begins. Subsequently, the price adjusts an imbalance zone and moves towards the 60-day low liquidity. After collecting liquidity, the direction reverses toward the opposite side.
What are IPDA Seasonal Shifts?
Another important concept for understanding the Interbank Price Delivery Algorithm (IPDA) is recognizing the seasonal shifts in higher timeframes.
These shifts occur every 3 to 4 months; hence, they are referred to as seasonal or quarterly shifts.
This approach relates to the changes made by smart money or market makers. In other words, price movement is not random and constantly rotates between Internal Liquidity Range (IRL) and External Liquidity Range (ERL).
Conclusion
The Interbank Price Delivery Algorithm (IPDA) is a key concept in the ICT style that explains price movements based on liquidity and market rules.
This algorithm analyzes specific periods (20, 40, and 60 days) and identifies highs and lows to determine liquidity accumulation points.
In this model, price movements are not random but are controlled by smart money to collect liquidity and adjust imbalance zones.
