The ICT (Inner Circle Trader) “One Trade Setup for Life” is a core concept introduced by Michael J. Huddleston, also known as ICT.
This setup represents a simplified yet powerful approach to trading, emphasizing the identification of high-probability trades using a combination of ICT principles.
The essence of this concept is to develop a reliable, repeatable trade setup that can be used consistently in various market conditions to achieve long-term profitability.
In this guide, we will break down the concept in detail, explaining how to identify the setup, what to look for in the market, and how to apply this trade consistently with examples.
1. What Is ICT’s “One Trade Setup for Life”?
At its core, the “One Trade Setup for Life” refers to a high-probability trade that can be identified using key elements of market structure, liquidity, and price action.
It focuses on understanding how institutional traders move the market, allowing retail traders to capitalize on these moves.
This setup can be applied across different timeframes and markets (forex, stocks, indices), making it versatile and highly effective.
The idea behind the “One Trade Setup for Life” is to master a specific setup that works consistently and refine it over time, instead of constantly switching between different strategies.
2. Key Components of the “One Trade Setup”
The “One Trade Setup” incorporates several essential concepts from the ICT methodology, including:
- Market Structure
- Liquidity
- Fair Value Gaps (FVGs)
- Order Blocks (OB)
- Break of Structure (BOS)
- Liquidity Sweep
Let’s break each one down.
1. Market Structure
Understanding market structure is the foundation of this setup.
It involves identifying higher highs, higher lows in an uptrend, and lower highs, lower lows in a downtrend.
Traders must be aware of the current trend to position themselves in the direction of the larger market move.
- In a bullish market, you are looking for long entries.
- In a bearish market, you are looking for short entries.
Example:
If the EUR/USD is in an uptrend and consistently making higher highs and higher lows, you would focus on looking for buying opportunities after a pullback to a key level.
2. Liquidity
Liquidity is where large institutional players place their orders.
Smart money moves the market by targeting areas of liquidity where retail traders place their stop-loss orders or pending orders.
Liquidity is typically found around swing highs, swing lows, or psychological levels.
- Buy-side liquidity refers to stop orders placed above previous highs.
- Sell-side liquidity refers to stop orders placed below previous lows.
Example:
In a bullish market, institutions may drive the price lower temporarily to sweep the sell-side liquidity below a recent low before reversing the price to move higher.
3. Fair Value Gaps (FVGs)
Fair Value Gaps (FVGs) are price imbalances left by strong impulsive moves in the market.
These gaps represent inefficiencies in price where the market has not fully traded, and price tends to return to these areas to “rebalance” the order flow.
Example:
In an uptrend, after a strong bullish move, a fair value gap may form between two consecutive candles.
The price might retrace to fill this gap before continuing upward, offering a buying opportunity.
4. Order Blocks (OB)
Order Blocks are specific zones where institutions accumulate large buy or sell orders.
These zones often become support or resistance levels and are key areas for entering trades.
- Bullish Order Block: A zone where institutions are likely to have placed buy orders, often found at the base of an impulsive move higher.
- Bearish Order Block: A zone where institutions are likely to have placed sell orders, found at the top of an impulsive move lower.
Example:
In a downtrend, you might see a bearish order block form at a recent high.
When price retraces to this order block, it can be a high-probability area to enter a short trade.
5. Break of Structure (BOS)
A Break of Structure (BOS) occurs when the market violates a previous high or low, indicating a potential shift in trend or momentum.
ICT traders use BOS to confirm entry points.
Example:
If the market has been making lower lows and lower highs (a bearish structure), and it suddenly breaks above a recent swing high, this BOS may signal a potential reversal or retracement, offering a buying opportunity.
6. Liquidity Sweep
A Liquidity Sweep occurs when price takes out the liquidity resting above a previous high or below a previous low, often inducing retail traders to take the wrong side of the market.
After sweeping liquidity, the market reverses and moves in the opposite direction.
Example:
In a bullish setup, the market might take out a recent low, triggering sell stops (sell-side liquidity), only to reverse higher, providing a buying opportunity.
3. How to Apply the “One Trade Setup for Life”
Here is a step-by-step breakdown of how to execute the “One Trade Setup for Life”:
Step 1: Identify Market Structure
Determine whether the market is in an uptrend or downtrend by analyzing market structure (higher highs, higher lows in an uptrend; lower highs, lower lows in a downtrend).
This helps you align your trade with the larger trend.
Step 2: Locate Liquidity Pools
Identify where liquidity is resting. Look for previous swing highs and lows, as these are areas where retail traders may have placed stop-loss orders, providing liquidity for institutions.
Step 3: Identify Fair Value Gaps and Order Blocks
Look for imbalances (FVGs) or key institutional zones (Order Blocks) that the price may retrace to.
These areas offer potential entry points.
Step 4: Wait for the Liquidity Sweep
Be patient and wait for the market to sweep liquidity, either by taking out a recent high or low.
This sweep is often followed by a reversal in the opposite direction.
Step 5: Confirm with Break of Structure (BOS)
Wait for a Break of Structure (BOS) to confirm the reversal. Once the market breaks a key level in the direction of the trade, this is your confirmation to enter.
Step 6: Enter the Trade
Enter the trade based on the setup, ideally when the price returns to the order block or fair value gap. Use the liquidity sweep and BOS as your entry triggers.
Step 7: Set Stop-Loss and Target
Place your stop-loss just beyond the liquidity sweep level or the order block, and set your target at a key level (previous high, low, or liquidity pool).
4. Example of “One Trade Setup for Life”
Let’s consider the GBP/USD pair, which is in a downtrend:
- Market Structure: The market is making lower lows and lower highs.
- Liquidity Pool: There is a swing high at 1.3200, where buy-side liquidity rests.
- Fair Value Gap: A bearish FVG is identified after a strong move down from 1.3100 to 1.3000.
- Order Block: A bearish order block is located around 1.3150.
- Liquidity Sweep: The price moves up, sweeping the buy-side liquidity above 1.3200.
- Break of Structure: After sweeping the liquidity, the price breaks below the recent low at 1.3150, confirming a bearish structure.
- Entry: Enter a short position when the price retraces to the bearish FVG or order block around 1.3150.
- Stop-Loss and Target: Place a stop-loss above the liquidity sweep (1.3200) and target the next swing low at 1.3000.
5. Why “One Trade Setup for Life” Works
The “One Trade Setup for Life” works because it is built around the idea of aligning your trades with institutional order flow.
By identifying areas where institutions are likely to act (such as order blocks and liquidity pools), you position yourself on the right side of the market.
The setup is reliable and repeatable because it leverages the fundamental mechanisms that drive price movement, including market structure and liquidity sweeps.
6. Conclusion
The ICT “One Trade Setup for Life” is a powerful, repeatable strategy that focuses on high-probability areas in the market, such as liquidity sweeps, fair value gaps, and order blocks.
By mastering this setup, traders can consistently identify profitable trade opportunities in line with institutional order flow.
The key to success is patience, precision, and understanding the dynamics of price action within the ICT framework.
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