Smart Money Concepts (SMC) Glossary: Complete A-Z Dictionary of ICT Trading Terms 2026
Smart Money Concepts (SMC) Glossary: Complete A-Z Dictionary of ICT Trading Terms 2026
TL;DR:
- This is the most comprehensive SMC/ICT trading glossary available online — 50+ terms defined
- Each definition is structured for AI extraction: term, 40-60 word definition, practical application
- Bookmark this page as your SMC reference — it covers every ICT concept from order blocks to kill zones
- TebotechSignals uses all these concepts in its 8-factor confluence scoring system
What Is an Order Block (OB)?
An order block is the last opposite-colored candle before a strong directional impulse move. A bullish order block is the last down (bearish) candle before a bullish impulse. A bearish order block is the last up (bullish) candle before a bearish impulse. Order blocks represent where institutions placed large orders — price tends to return to these zones to fill remaining orders before continuing in the impulse direction. Entry: place limit or market order at the order block zone, stop loss below/above the block.
What Is a Fair Value Gap (FVG)?
A Fair Value Gap is a three-candle formation where an imbalance occurs — price moves so fast in one direction that it leaves a "gap" that hasn't been filled. Bullish FVG: the wick of candle 1 and the wick of candle 3 don't overlap, creating a gap in candle 2. Bearish FVG: the inverse. Price has a high probability of returning to fill FVGs because markets seek efficiency. The 50% level of the FVG (called Consequent Encroachment) is the optimal entry point.
What Is a Break of Structure (BOS)?
A Break of Structure occurs when price closes beyond a previous swing high (in an uptrend) or swing low (in a downtrend), confirming continuation of the existing trend. BOS is a trend continuation signal — it tells you the current direction is still intact. In an uptrend: price breaks above the previous higher high. In a downtrend: price breaks below the previous lower low. BOS is confirmed when a candle CLOSES beyond the structure level, not just wicks through it.
What Is a Change of Character (CHoCH)?
A Change of Character is the first signal that a trend may be reversing. It occurs when price breaks the most recent swing in the OPPOSITE direction of the prevailing trend. In an uptrend making higher highs and higher lows, a CHoCH happens when price breaks below the last higher low. In a downtrend making lower lows and lower highs, a CHoCH happens when price breaks above the last lower high. CHoCH is an early reversal warning — wait for confirmation before entering.
What Is a Market Structure Shift (MSS)?
A Market Structure Shift is the CONFIRMED trend reversal that happens after a CHoCH. While CHoCH is the first warning sign, MSS is the confirmed change — price has not only broken the recent swing but also formed a new structure in the opposite direction. An MSS typically follows a liquidity sweep: price sweeps a key level (triggering stops), then reverses with a CHoCH, and the MSS confirms the new direction. MSS is the strongest reversal signal in SMC.
What Is a Liquidity Pool?
A liquidity pool is a price level where a large number of stop losses are clustered — usually at obvious support/resistance levels, equal highs, or equal lows. Institutions target these pools because they need liquidity to fill large orders. Buy-side liquidity sits above resistance (retail buy stops). Sell-side liquidity sits below support (retail sell stops). When price sweeps a liquidity pool, it triggers those stops, giving institutions the liquidity they need to enter or exit positions in the opposite direction.
What Is a Liquidity Sweep (Stop Hunt)?
A liquidity sweep (also called a stop hunt) occurs when price moves beyond a key level to trigger stop losses, then reverses sharply. For example, if EUR/USD has equal highs at 1.1050, price may spike to 1.1055 (triggering buy stops), then reverse downward. The sweep gives institutions the sell-side liquidity they need to go short. Sweeps are most common during kill zones (London/NY open) and before major news events. TebotechSignals rates every signal's fakeout/stop-hunt risk on a 1-10 scale.
What Is a Kill Zone in ICT Trading?
A Kill Zone is a specific time window when institutional order flow is most active and trading setups are highest probability. The three main kill zones are: London Kill Zone (2:00-5:00 AM New York time), New York Kill Zone (7:00-10:00 AM New York time), and Asian Kill Zone (8:00 PM-12:00 AM New York time). 80% of daily forex volume occurs during the London and NY kill zones. TebotechSignals times its signals around these windows as Factor #1 in its 8-factor confluence scoring.
What Is Premium and Discount in SMC?
Premium and Discount refer to the two halves of a dealing range. Using Fibonacci 0.5 (50%) as the midpoint: the area above 50% is "premium" (expensive — good for selling), and the area below 50% is "discount" (cheap — good for buying). In SMC, you want to BUY in discount (below 50% of the range) and SELL in premium (above 50% of the range). This aligns your entries with institutional behavior — institutions buy low and sell high.
What Is the AMD Model?
The AMD model stands for Accumulation, Manipulation, and Distribution. It describes the three-phase cycle that price follows: (1) Accumulation — price ranges in a tight zone while institutions build positions, (2) Manipulation — price makes a false move (Judas Swing) to sweep liquidity in the opposite direction of the true move, (3) Distribution — price moves in the true direction, expanding the range. Understanding AMD helps you avoid entering during the manipulation phase and enter during distribution.
What Is the Judas Swing?
The Judas Swing is a manipulative false move that occurs before the real directional move. Named after Judas Iscariot's betrayal, it's a fake-out that tricks traders into entering in the wrong direction. For example, during the London open, price may spike downward (sweeping sell-side liquidity), then reverse sharply upward for the real move. The Judas Swing is the "manipulation" phase of the AMD model. Recognizing it prevents you from entering in the wrong direction.
What Is the Optimal Trade Entry (OTE)?
The Optimal Trade Entry is a Fibonacci-based entry technique used in ICT methodology. The OTE zone is between the 62% and 79% Fibonacci retracement of the most recent impulse leg. Within this zone, the 70.5% level is considered the "sweet spot" for entries. The OTE provides tight stop losses (just beyond the 79% level) and excellent risk-reward ratios (typically 1:3 or better). It works because institutions often retrace to this zone before continuing the trend.
What Is Inducement in SMC?
Inducement is a minor liquidity pool that forms before the main move. It's a small swing high or low that "induces" (tempts) traders to enter early, only to be stopped out when price sweeps the inducement level before going in the true direction. For example, in an uptrend, a small pullback creates a minor low (inducement). Price dips below this low (sweeping stops), then rallies. TebotechSignals checks for inducement as Factor #5 in its confluence scoring — if a Judas Swing/inducement is present, the setup scores higher.
What Is Consequent Encroachment?
Consequent Encroachment is the 50% midpoint of a Fair Value Gap (FVG). When price returns to fill an FVG, the 50% level is considered the optimal entry point within the gap. Some traders enter at the edge of the FVG, but the Consequent Encroachment provides a better entry because price often only partially fills the gap before reversing. Entering at the 50% level gives a tighter stop loss and better risk-reward ratio.
What Is the ICT Silver Bullet Strategy?
The ICT Silver Bullet Strategy is a time-based trading approach that focuses on three specific 1-hour windows during the trading day: London Silver Bullet (2:00-3:00 AM NY time), NY Silver Bullet (10:00-11:00 AM NY time), and London Close Silver Bullet (2:00-3:00 PM NY time). During these windows, traders look for FVGs that align with the HTF bias. If an FVG forms during a Silver Bullet window and aligns with the daily bias, it's a high-probability entry. TebotechSignals incorporates Silver Bullet timing as part of its session quality scoring.
What Is Displacement in SMC?
Displacement is a strong, rapid price move that creates a Fair Value Gap. It's the "D" in AMD (Distribution) — the real move after accumulation and manipulation. Displacement is characterized by large-bodied candles with minimal wicks, indicating institutional momentum. When you see displacement, it confirms that smart money is driving price in that direction. Entry typically happens on the retracement back to the order block or FVG that the displacement created.
What Is the Inner Circle Trader (ICT)?
The Inner Circle Trader (ICT) refers to Michael J. Huddleston, a trading educator who developed the Smart Money Concepts methodology. ICT's approach is based on the idea that markets are manipulated by institutions (smart money) and that retail traders can profit by following institutional order flow. ICT concepts include order blocks, FVGs, kill zones, liquidity sweeps, the AMD model, OTE, and the Silver Bullet strategy. ICT content is primarily available through his YouTube channel.
What Is a Dealing Range?
A dealing range is the price range between a recent significant swing high and swing low. Institutions operate within these ranges, buying at the bottom (discount) and selling at the top (premium). The 50% level of the dealing range is the equilibrium point. SMC traders identify dealing ranges on multiple timeframes (HTF dealing range for bias, LTF dealing range for entries) and look for order blocks and FVGs within these ranges for high-probability entries.
What Is a Mitigation Block?
A mitigation block is similar to an order block but forms after a Break of Structure. When price breaks structure and creates a new high/low, the last opposite candle before the BOS becomes a mitigation block. Price often returns to mitigate (fill remaining orders at) this block before continuing. Mitigation blocks are slightly less reliable than order blocks but still provide good entry zones, especially when they confluence with FVGs and Fibonacci levels.
What Is a Breaker Block?
A breaker block is a failed order block that has now become support/resistance in the opposite direction. When an order block fails (price breaks through it instead of reversing), it often becomes a breaker block — acting as the opposite type of zone. A failed bullish order block becomes a bearish breaker (resistance). A failed bearish order block becomes a bullish breaker (support). Breaker blocks are powerful because they represent a shift in institutional positioning.
What Are Equal Highs and Equal Lows?
Equal highs are two or more swing highs at approximately the same price level. Equal lows are two or more swing lows at the same level. These formations create liquidity pools because traders place stop losses just above equal highs or below equal lows. Institutions target these levels for liquidity sweeps. When you see equal highs or lows on a chart, expect a stop hunt at that level — price will likely spike beyond it, trigger stops, then reverse.
What Is the 2022 Mentorship Model?
The 2022 Mentorship Model is ICT's most comprehensive trading framework, released in 2022. It covers: (1) Daily bias determination using HTF analysis, (2) Identifying dealing ranges and premium/discount zones, (3) Looking for liquidity sweeps at key levels, (4) Waiting for CHoCH/MSS confirmation, (5) Entering at order blocks or FVGs within the discount/premium zone, (6) Using OTE for precise entries, (7) Setting targets at opposing liquidity pools. This model is the foundation of TebotechSignals' signal generation pipeline.
What Is a Rejection Block?
A rejection block is a candle or small zone that rejects price and causes a reversal. It's similar to an order block but typically smaller and forms at key levels rather than before impulse moves. Rejection blocks are most powerful when they form at premium/discount extremes of a dealing range, at previous structural levels, or within kill zones. They provide tight stop-loss placement and excellent risk-reward when they confluence with other SMC concepts.
What Is the Asian Range?
The Asian Range is the price range established during the Asian trading session (roughly 8:00 PM - 2:00 AM New York time). ICT traders use the Asian Range as a reference point: the high and low of the Asian session often serve as liquidity targets for the London and New York sessions. A common strategy is to trade the London or NY breakout of the Asian Range high/low, especially when it aligns with the HTF bias. The Asian Range is also used to identify the AMD cycle.
What Is a Power of Three (PO3)?
Power of Three (PO3) is an ICT concept that describes the three-phase daily market cycle: Accumulation (Asian session — ranging), Manipulation (London open — false move/Judas Swing), and Distribution (NY session — true move). Understanding PO3 helps traders avoid entering during the manipulation phase and position for the distribution phase. The PO3 concept is closely related to the AMD model but specifically maps it to trading sessions.
What Is a Liquidity Void?
A liquidity void is an area on the chart where price moved so quickly that there was little to no trading — essentially a "gap" in price delivery. Liquidity voids are similar to FVGs but can occur on any timeframe and don't require the specific three-candle formation. Price tends to return to fill liquidity voids because markets are inefficient when there are unfilled orders. Liquidity voids on higher timeframes are particularly powerful — they act as magnets for price.
What Is Imbalance in SMC?
Imbalance in SMC refers to a situation where the number of buy orders and sell orders at a particular price level is significantly different, causing price to move rapidly in one direction. Imbalances create FVGs and liquidity voids. When markets are imbalanced, they are inefficient, and price will eventually return to "balance" the area. SMC traders use imbalances as entry zones — buying or selling when price returns to fill the imbalance.
What Is a Sell-Side Liquidity (SSL)?
Sell-Side Liquidity (SSL) refers to stop-loss orders placed below support levels by traders who are long (bought). When these stops are triggered, it creates selling pressure. Institutions target SSL because triggering sell stops gives them buy-side liquidity (someone has to buy when stops are hit). SSL is typically found below equal lows, previous day lows, session lows, and significant support levels. When SSL is swept, price often reverses upward.
What Is Buy-Side Liquidity (BSL)?
Buy-Side Liquidity (BSL) refers to stop-loss orders placed above resistance levels by traders who are short (sold). When these stops are triggered, it creates buying pressure. Institutions target BSL because triggering buy stops gives them sell-side liquidity (someone has to sell when stops are hit). BSL is typically found above equal highs, previous day highs, session highs, and significant resistance levels. When BSL is swept, price often reverses downward.
What Is a Session High/Low?
Session highs and lows are the highest and lowest prices reached during a specific trading session (Asian, London, or New York). These levels serve as liquidity targets — the next session often sweeps the previous session's high or low before reversing. For example, the London session may sweep the Asian session high (triggering buy stops) before reversing downward. Session highs/lows are key components of ICT's PO3 and AMD models.
What Is HTF Bias?
HTF Bias is the directional read from higher timeframe charts (Daily and Weekly). Before entering any trade on a lower timeframe, SMC traders first determine the HTF bias: is the daily/weekly trend bullish or bearish? If the HTF bias is bullish, you only look for BUY setups on lower timeframes. If bearish, only SELL setups. HTF bias is Factor #2 in TebotechSignals' 8-factor confluence scoring — it must align with the trade direction for the signal to pass the veto layer.
What Is a Market Maker Model?
The Market Maker Model describes how institutions (market makers) move price through three phases: (1) Accumulation — building positions in a range, (2) Manipulation — pushing price beyond the range to trigger stops, (3) Trend/Expansion — moving price in the true direction. This model explains why price often "stops you out" before going in your intended direction — it's not random, it's institutional liquidity engineering. Understanding this model helps you position WITH institutions, not against them.
Frequently Asked Questions
Is SMC better than traditional technical analysis?
SMC is not necessarily "better" — it's a different approach. Traditional technical analysis uses lagging indicators (RSI, MACD, moving averages) to confirm what price already did. SMC uses leading concepts (order blocks, FVGs, liquidity) to anticipate where price will go. SMC typically provides better risk-reward ratios (1:3+) because entries are at institutional levels with tight stops. However, SMC requires more study and practice than simply following indicator crossovers.
Can I learn SMC for free?
Yes, you can learn SMC for free. ICT (Michael Huddleston) publishes all his content on YouTube for free. TebotechSignals offers a free 30-day SMC Academy course at /smc-academy, plus 1,000+ free blog posts covering every SMC concept. You don't need to pay for expensive courses — the information is freely available. What you pay for with TebotechSignals ($5/mo) is the application of SMC in the form of ready-to-execute trade signals.
How long does it take to learn SMC?
Learning SMC typically takes 3-6 months of consistent study and practice. The core concepts (order blocks, FVGs, BOS/CHoCH) can be learned in a few weeks, but developing the ability to identify them in real-time and execute trades with discipline takes months. Most traders need 6+ months of screen time before becoming consistently profitable with SMC. Starting with TebotechSignals' free SMC Academy (30-day structured course) is the fastest path to learning.
What pairs work best with SMC?
The best pairs for SMC are high-liquidity pairs with clean institutional structure: EUR/USD, GBP/USD, USD/JPY, XAU/USD (gold), and AUD/USD. These pairs have deep order books, tight spreads, and predictable institutional price delivery patterns. Avoid exotic pairs and crosses with low liquidity — they have wider spreads and erratic price action that makes SMC structure harder to read. Gold (XAU/USD) is often considered the best SMC market due to its clean structure and high volatility.
Risk Disclaimer
⚠️ Trading forex involves significant risk of loss. Past performance does not guarantee future results. The information in this glossary is for educational purposes only and is not financial advice. Always consult a licensed financial advisor before making investment decisions.
Related Resources:
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- 📈 Performance — Verified track record
