Learn ICT Concepts in 20 Minutes (Liquidity Sweeps& Order Blocks)

[00:01] felt completely overwhelmed by all the concepts? Liquidity, fair value gaps, order blocks, breaks of structure. It can feel like learning a new language. Well, in this video, I'm going to simplify everything for you. By the end

[00:14] of this video, you'll understand every major ICT concept and more importantly, you'll know exactly how to use them in your own trading. In this video, you'll learn buy side and sell side liquidity sweeps, bullish and bearish external

[00:29] bullish and bearish internal liquidity sweeps, break of structure, change of character, fair value gaps, order blocks. And to make everything crystal clear, I'll walk you through real chart examples and show you exactly how to

[00:44] own trading. Before we get started, if you enjoy this type of content and want to see more trading videos like this, make sure to hit the like button, subscribe to the channel, and turn on the notification

[00:57] bell so you never miss a new video. With that out of the way, let's get started. Let's start with the first ICT concept, buy side liquidity sweep. A buy side liquidity sweep happens when the market trades above an old high to trigger buy

[01:11] stop orders and attract breakout traders into the market before reversing lower. Remember, many traders who are short place their stop losses above resistance or above previous highs. At the same time, breakout traders often buy when

[01:25] they see price breaking above those highs. As a result, a large pool of buy orders builds up above the highs. Institutions can use this liquidity to enter or exit positions, which is why the market often runs above a high first

[01:39] and then reverses. Now, let's look at an example. This is the British pound versus the US dollar on the daily chart. The market was moving higher until it reached this level and reversed, creating a

[01:51] level and reversed, creating a resistance level. that resistance, traded above the old high, and then closed back below it.

[02:04] This is a classic buy-side liquidity sweep. The market first took the liquidity resting above the high, triggering stop losses and breakout buyers, and then reversed sharply to the downside. As you can see, what looked

[02:16] like a bullish breakout was actually the market collecting liquidity before making its real move lower. Now, let's talk about sell-side liquidity, or SSL. Sell-side liquidity is simply a pool of sell stop orders

[02:29] that sits below old lows in the market. These lows become important because stop losses. When traders buy the market, they usually protect their positions by placing their stop losses below support,

[02:42] or below the previous low. As more and more traders do this, a large pool of liquidity begins to build underneath those lows. Institutions know where this liquidity is resting. As a result, the market will often trade

[02:54] below these lows, trigger those stop losses, and make it look like the downtrend is about to continue. But many times, that move is simply the market collecting liquidity before reversing higher. This is called a sell-side

[03:06] liquidity sweep. Now, let's look at an example. The market was trending down until it reached this level and reversed, creating a support level. Look reversed, creating a support level. Look at what happened next.

[03:27] closed back above it. sweep. The market first took the liquidity resting below the support level, and then quickly reversed. Now,

[03:39] level, and then quickly reversed. Now, look at what happened next.

[03:54] upside. What looked like a bearish breakdown was actually the market collecting liquidity before making its real move higher. A bullish external liquidity sweep occurs below the support level of a range-bound

[04:08] market. When the market is trading sideways, many traders buy near support because they expect the support level to hold. To protect their positions, they usually place their stop losses just below the range low. As more traders do

[04:20] this, a large pool of sell-side liquidity begins to build underneath the trade below the support, triggering traders that the range is breaking to the downside.

[04:32] However, instead of continuing lower, price quickly reverses back into the range and starts moving higher. This is called a bullish external liquidity liquidity below the range before making a bullish move. Now, let's look at an

[04:46] As you can see, the market was initially trending higher. It then reached this level and reversed, forming a resistance level. Later, price declined, found higher. At this point, the market is trading

[05:01] inside a range with a clearly defined resistance and support level. Now, pay resistance and support level. Now, pay close attention to what happened next. level, taking the liquidity resting underneath the range low, and then

[05:14] the support. This is a clear bullish external liquidity sweep. Look at what happened next.

[05:29] range, the market rallied strongly and moved all the way back to the resistance illustrates an important principle of liquidity. Markets often sweep liquidity at one side of the range before moving toward

[05:42] the liquidity resting on the opposite side of the range. A bearish external resistance level of a range bound market. As the market trades sideways, many traders sell near resistance because they expect the level to hold.

[05:56] To protect their positions, they usually place their stop losses just above the range high. At the same time, breakout traders place buy orders above the resistance expecting the market to break out and continue higher. As a result, a

[06:10] large pool of buy side liquidity builds above the range high. The market will often trade above the resistance level triggering those stop losses and breakout orders. However, instead of continuing higher, price quickly

[06:23] reverses back into the range and starts moving lower. This is called a bearish external liquidity sweep because the market sweeps liquidity above the range before making a bearish move. Now, let's look at an example. As you can see, the

[06:37] market was initially trending higher. It then reached this level and reversed forming a resistance level. Later, price declined to this level and reversed again creating a support level. At this point, the market is trading inside a

[06:50] range with a clearly defined resistance and support level. Now, look at what and support level. Now, look at what happened next. level, it broke above it and then quickly closed back below it forming

[07:04] what we call a bearish external liquidity sweep. The market first took the liquidity resting above the range high and then reversed sharply lower. Look at what happened next. After sweeping the liquidity above the

[07:16] resistance level, the market sold off and moved all the way down to the support level. This example highlights another important principle of liquidity. Markets often sweep liquidity on one side of a range before moving

[07:28] toward the liquidity resting on the opposite side of the range. So far, we've looked at external liquidity which occurs at the boundaries of a range, but liquidity can also form during a trending market and this is known as

[07:41] internal liquidity. Internal liquidity refers to liquidity sweeps that occur inside a trend. These sweeps usually happen during pullbacks and often signal that the trend is ready to continue. In an uptrend, the market doesn't move

[07:54] higher in a straight line. It rallies, pulls back, and then continues higher. begin to believe that the trend is reversing. They enter short positions or close their long positions too early. As a result, liquidity starts to build

[08:10] The market will often break below these lows, trigger the stop losses of buyers and trap sellers into short positions upside. This is called a bullish internal liquidity sweep because the

[08:23] sweep occurs within an uptrend and leads to a continuation of the bullish move. Now, let's look at an example. As you can see, the market is clearly trending higher. It breaks above this resistance level and continues to the upside.

[08:37] next. The market pulls back toward the old resistance level, which is now acting as support. Price then breaks below that support level, but quickly closes back above it, forming a bullish internal

[08:50] liquidity sweep. This move indicates that sellers got trapped during the pullback and that buyers have regained control of the market. Look at what control of the market. Look at what happened next.

[09:04] pullback low, the market resumed its uptrend and continued moving higher. Now, let's look at a bearish internal liquidity sweep. As you can see, the market is clearly trending lower. It breaks below this support level and

[09:17] continues moving down, confirming the downtrend. Now, pay close attention to what happens next. The market pulls back toward the old resistance. At first glance, it looks like the

[09:31] market may be reversing to the upside. However, price breaks above the resistance level and then quickly closes back below it, forming a bearish internal liquidity sweep. This move indicates that buyers got trapped during

[09:44] the pullback, while sellers regained control of the market. In other words, the market used the liquidity resting above the pullback high to fuel the next leg lower. Now, look at what happened next.

[10:02] resistance level, the market resumed its downtrend and moved lower. Now, let's move on to another important ICT concept, the break of structure or BOS. A break of structure occurs when the market creates a new swing that is in

[10:16] the direction of the current trend. For example, in an uptrend, the market is making a series of higher highs and higher lows. As long as the market keeps creating new higher highs, the uptrend remains intact.

[10:29] Every time price breaks above a previous swing high and creates a new higher high, we have a bullish break of structure. On the other hand, in a downtrend, the market creates lower lows and lower highs.

[10:41] Every time price breaks below a previous swing low and creates a new lower low, we have a bearish break of structure. Simply put, a break of structure tells us that the current trend is still healthy and likely to continue.

[10:55] A change of character is the first sign that the current trend may be coming to an end. For example, if the market is in an uptrend, it keeps making higher highs and higher lows. But eventually, something changes.

[11:08] Instead of making another higher low, the market breaks below the previous swing low for the first time. This is called a bearish change of character. It tells us that sellers are starting to gain control and that the market may be

[11:20] preparing for a reversal. Likewise, during a downtrend, the market keeps making lower lows and lower highs. If price suddenly breaks above a previous swing high for the first time, we have a bullish change of character.

[11:33] This indicates that buyers may be taking control of the market. Look at this chart example. As you can see, the market is trending higher. structure, then another bullish break of structure, and finally a third bullish

[11:47] break of structure. At this point, the market is clearly in an uptrend. However, something changes here. For the first time, price breaks below a previous swing low, forming a bearish change of character. Now, this does not

[12:00] automatically mean that the trend has reversed. The market could simply be higher. To confirm that the market has truly shifted from an uptrend to a downtrend, we need to see another bearish break of

[12:12] structure. In other words, we need price to break below this swing low and create a new lower low. Look at what happened next.

[12:25] us a bearish break of structure and confirming the change of character. At this point, we have confirmation that the market is likely transitioning from an uptrend to a downtrend. Now, let's talk about one of the most important

[12:37] concepts in ICT trading, the fair value gap or FVG. A fair value gap forms when direction. Sometimes, price moves so quickly that it doesn't spend enough time trading at every price level.

[12:52] market leaves behind an imbalance between buyers and sellers. This imbalance creates a gap between three candles. the third candle is above the high of the first candle. For a bearish fair

[13:06] value gap, the high of the third candle is below the low of the first candle. But, why does this matter? A fair value gap represents an area in one direction and didn't spend enough time facilitating trade. You can think

[13:21] chart. Because of this, price often returns to these imbalances later to rebalance the market before continuing its move. This doesn't mean that every fair value gap will hold, and it certainly doesn't mean

[13:34] that you should blindly buy or sell every time price reaches one. Instead, a fair value gap simply tells us the market moved too fast here, and there is a good chance that price may revisit this area in the future. When

[13:47] price returns to a fair value gap, traders watch closely to see how the market reacts. Will buyers step back in? Will sellers regain control? The answer to those questions often provides high probability trading opportunities,

[14:01] aligns with other concepts such as liquidity and market structure. Now, let's put everything together and see how we can actually trade a fair value The first thing we want to identify is the market structure. In this example,

[14:15] the market was initially creating higher highs and higher lows, showing a bullish trend, but then something changed. Price made an aggressive move to the downside and broke below the previous swing low. That break tells us something important.

[14:29] The market has shifted from bullish to bearish, and sellers are now in control. Next, focus on the move that caused the break of structure. Notice how price moved sharply lower. During this impulsive move, the market

[14:41] didn't trade efficiently, leaving behind an imbalance. That imbalance created a You can clearly see the three candle formation where the first and third candles do not overlap, leaving an area of inefficient pricing. This fair value

[14:56] gap becomes our area of interest. Now, we add another layer of confluence by We're not using Fibonacci to predict where price will go. Instead, we're using it to measure the strength of the impulsive move. To do this, we draw the

[15:11] Fibonacci retracement from the beginning of the bearish move to its lowest point. Then we ask one simple question. Does the fair value gap align with the 50% or the 61.8% retracement level. If it does, we refer

[15:25] to it as a golden fair value gap. As you can see in this example, the fair value gap aligns perfectly with the 61.8% Fibonacci level giving us additional confluence. Now look at what happens next.

[15:53] gap and begins to rebalance the inefficiency that was left behind during the impulsive move. After testing the zone, sellers step back into the market and price continues lower. This is exactly the type of setup we're looking

[16:05] However, there is one important thing to remember. Even if a fair value gap forms after a break of structure and aligns with the 50% or the 61.8% Fibonacci level, that still does not mean we should enter immediately.

[16:20] Instead, we wait for price to retrace into the fair value gap and then observe how the market reacts. That reaction is what provides confirmation and separates one. Now that you understand liquidity,

[16:34] market structure, and fair value gaps, let's move on to another important ICT concept, order blocks. An order block is a refined version of a supply or demand zone. The difference is that an order block attempts to identify areas where

[16:48] the market. When institutions place large orders, they create a strong imbalance between buyers and sellers causing price to move This imbalance is often visible through

[17:02] a fair value gap or FVG. A fair value gap forms when price moves so quickly that some price levels are barely traded leaving behind an inefficiency or imbalance in the market. The market frequently revisits these imbalances

[17:15] later to rebalance price. In practice, we identify an order block by marking the last candle before the impulsive move that created the imbalance. This candle becomes our order block zone because it likely represents

[17:27] the area where institutions made their trading decisions. If price returns to that level in the future, it often reacts sharply because large market participants may still have unfilled orders there or may be

[17:40] interested in defending that area. Now, let's put everything together and see how to trade an order block in real market conditions. In this example, the market is clearly trending higher, creating a series of higher highs and

[17:52] higher lows. Next, we identify a bullish order block. This zone is important because it represents the last bearish candle before an aggressive move to the upside that created a fair value gap. Since the imbalance originated from this

[18:05] candle, we mark it as our order block zone. Now, we wait patiently. the order block, but we don't enter immediately. Instead, we want to see

[18:19] evidence that buyers are still defending the zone. Look at what happens next. As price trades into the order block, it forms a pin bar candlestick, rejecting lower prices and closing back to the upside. This rejection tells us that

[18:33] and that the uptrend may be ready to resume. However, before entering the trade, we need to make sure that the higher time frame agrees with our idea. Since this setup is forming on the

[18:45] 1-hour chart, our higher time frame will be the daily chart. When we switch to that the market structure is bullish highs and higher lows. This gives us additional confidence

[18:59] aligned with the higher time frame trend. With the higher time frame confirming our bullish bias, we return to the 1-hour chart and plan our trade. Entry at the close of the pin bar. Stop loss, below the low of the order block.

[19:16] Target, a minimum reward to risk ratio of two to one. At this point, there is nothing left to do except let the market play out.

[19:30] from the order block. Buyers take control and the market rallies higher, eventually reaching our profit target and delivering an excellent reward to risk ratio. And that's it for this complete guide to ICT concepts. I hope

[19:43] this video helped simplify these ideas and showed you how to actually apply If you found value in this video, don't forget to hit the like button, subscribe to the channel, and turn on the notification bell so you don't miss

[19:56] future trading content. Thanks for watching and I'll see you in the next watching and I'll see you in the next video.