Market analysis using the ICT style follows a multi-timeframe approach. In this type of analysis, the market structure and price direction are identified from higher timeframes (HTF), and key reversal points are detected on lower timeframes (LTF).
What Is a Timeframe?
A timeframe is the time interval each candlestick represents on the chart. Each timeframe displays price movement over a specific period.
In financial markets, any time span can be used as a timeframe, but generally, certain timeframes are more widely used in markets like the Forex Market, including:
- 5-Minute Timeframe (M5)
- 15-Minute Timeframe (M15)
- 1-Hour Timeframe (H1)
- 4-Hour Timeframe (H4)
- Daily Timeframe (Daily)
- Weekly Timeframe (Weekly)
- Monthly Timeframe (Monthly)
Optimal ICT Timeframe Selection
In ICT, market analysis is conducted using the Top-Down Analysis method. ICT timeframes are categorized into three types:
- Higher Timeframe (HTF): Used to determine the overall trend direction;
- Intermediate Timeframe (ITF): Applied to confirm the market structure;
- Lower Timeframe (LTF): Used to identify precise trade entry points.
The choice of ICT timeframe directly correlates with the trading strategy. For example, the Daily timeframe is the lowest for position trading, whereas the H4 timeframe is the highest used for day trading.
Position Trading
Position trading involves long-term trades that may last for weeks or even months. In the ICT style, it's recommended to use three specific timeframes:
- Monthly as the Higher Timeframe (HTF)
- Weekly as the Intermediate Timeframe (ITF)
- Daily as the Lower Timeframe (LTF)
Monthly Timeframe (Monthly)
Monthly timeframe is used to identify the overall market trend and detect key levels such as swing highs and swing lows.
Weekly Timeframe (Weekly)
Weekly time frame in Position trading is used to detect directional changes by identifying ICT concepts such as market structure shifts and validating patterns recognized on lower timeframes.
Daily Timeframe (Daily)
Daily intervals are used to identify entry points using ICT concepts like Fair Value Gap (FVG).
Swing Trading
Swing trading consists of trades that typically last a few days to a few weeks. In the ICT style, the recommended timeframes are:
- Daily as the Higher Timeframe (HTF)
- 4-Hour (H4) as the Intermediate Timeframe (ITF)
- 1-Hour (H1) as the Lower Timeframe (LTF)
Daily Timeframe (Daily)
Daily timeframe in Swing trading is used to detect the weekly trend and define key levels such as swing highs and swing lows.
4-Hour Timeframe (H4)
4-hour intervals identify directional shifts or key level breaks using ICT concepts like Change in State Delivery (CISD).
1-Hour Timeframe (H1)
1-hour timeframe is used to detect potential trade entry points based on ICT concepts like Change in State Delivery (CISD) in Swing trading.
Day Trading
Day trades typically last for several hours and are closed by the end of the trading day. In ICT day trading, it's common to use:
- 1-Hour (H1) as the Higher Timeframe (HTF)
- 15-Minute (M15) as the Intermediate Timeframe (ITF)
- 5-Minute (M5) as the Lower Timeframe (LTF)
1-Hour Timeframe (H1)
1-hour intervals help to identify the daily bias and major support/resistance levels of the primary trend.
15-Minute Timeframe (M15)
M15 timeframe is used to identify directional shifts or key level breaks using ICT concepts.
5-Minute Timeframe (M5)
A 5-minute timeframe helps to identify entry points, stop-loss levels, and ICT patterns such as liquidity grabs in Day trading.
Scalping
Scalping involves short-term trades that last a few seconds to a few minutes. The goal is to execute numerous trades with small profits.
The recommended ICT timeframes for scalping are:
- 1-Hour (H1) as the Higher Timeframe (HTF)
- 5-Minute (M5) as the Intermediate Timeframe (ITF)
- 1-Minute (M1) as the Lower Timeframe (LTF)
1-Hour Timeframe (H1)
1-hour intervals help to identify the short-term market trend and daily support/resistance levels in scalping style.
5-Minute Timeframe (M5)
5-minute timeframe detects key level breaks and signals for continuation or reversal of price direction.
1-Minute Timeframe (M1)
1-minute intervals allow for quick entries and exits using ICT patterns.
Conclusion
The multi-timeframe approach in ICT enables traders to analyze key levels on higher timeframes (HTF) and execute precise entries on lower timeframes (LTF).
This method is built on detecting hidden liquidity in higher timeframes and precise order management in lower ones.
