The ICT Turtle Soup Trading Strategy is a smart money concept developed by the Inner Circle Trader (ICT) to capitalize on liquidity grabs and false breakouts.
It is based on identifying setups where price intentionally breaches previous swing highs or lows to trigger stop losses, only to reverse direction shortly afterward.
This creates opportunities for traders to enter trades aligned with the institutional move.
1. What is Turtle Soup in ICT?
The term “Turtle Soup” comes from the idea of hunting retail traders who follow conventional trading strategies, such as breakout trading.
Institutions intentionally “hunt” these retail traders by pushing price beyond key levels (like swing highs or lows), triggering stop losses or entries, and then reversing the market in the opposite direction.
2. Core Principles of ICT Turtle Soup
1. Liquidity Grab:
The strategy seeks to exploit liquidity pools above swing highs or below swing lows.
2. False Breakout:
Institutions engineer price to break these levels, trapping breakout traders or triggering stop-loss orders.
3. Reversal Setup:
After the liquidity grab, price reverses, often confirming the presence of institutional order flow.
3. Steps to Implement ICT Turtle Soup
1. Identify Key Swing Highs and Lows
Look for significant swing highs (resistance) or swing lows (support) that retail traders are likely to use as breakout or stop-loss levels.These levels act as liquidity pools.
Example:
On the EUR/USD 1-hour chart, a clear swing low forms at 1.1000.
This level is likely a liquidity target.
2. Wait for the Liquidity Sweep
Monitor price action for a false breakout.
Price must breach the swing high/low momentarily before reversing.
Example:
Price drops below 1.1000 to 1.0985, triggering stop losses of retail traders who had long positions.
3. Confirm Reversal Signals
Look for signs of rejection, such as wicks, bullish/bearish engulfing candles, or other reversal patterns near the liquidity level.
Use smaller timeframes (5M or 15M) to confirm the reversal with tighter stop losses.
Example:
After breaching 1.1000, EUR/USD forms a long wick, signaling rejection.
A bullish engulfing candle follows on the 5-minute chart.
4. Enter the Trade
Enter a long trade if the price sweeps a swing low and shows signs of reversal.
Enter a short trade if the price sweeps a swing high and reverses.
Example:
After the sweep of 1.1000, enter a long position at 1.1010 with a stop loss at 1.0980.
5. Set Target Levels
Target the next liquidity pool or resistance/support level.
Use a favorable risk-to-reward ratio (e.g., 1:2 or 1:3).
Example:
Target 1.1050, the nearest resistance level, for a profit of 40 pips.
4. Real-Life Example of Turtle Soup in Action
Scenario: GBP/USD False Breakout
- Swing High Identified:
- A clear swing high forms at 1.2300 on the 4-hour chart.
- Liquidity Sweep:
- Price moves above 1.2300 to 1.2320 during the London session.
- Reversal Confirmation:
- A bearish pin bar forms on the 15-minute chart, signaling rejection.
- Trade Entry:
- Enter a short trade at 1.2290 after confirmation.
- Stop Loss and Target:
- Stop loss at 1.2330 (above the liquidity sweep).
- Target 1.2200 (next liquidity pool).
5. When to Avoid Turtle Soup Trades in ICT
1. Strong Momentum Breakouts
If the price continues trending strongly after the liquidity sweep, avoid entering a reversal trade.
2. Unclear Swing Points
Avoid trades where swing highs/lows are not well-defined or lack visible liquidity pools.
3. No Reversal Confirmation
Enter only when clear reversal signals (candlestick patterns or market structure shifts) occur.
6. Tips for Using Turtle Soup in ICT
1. Combine with Other ICT Concepts
Use Turtle Soup with Order Blocks, Fair Value Gaps (FVGs), or Killzones to increase accuracy.
2. Focus on High-Impact Sessions
London and New York sessions are ideal for spotting institutional liquidity sweeps.
3. Use Tight Stops
Enter trades close to the liquidity sweep to minimize risk.
7. Advantages of Turtle Soup Strategy
- High Probability Setups: Trades align with institutional moves.
- Great Risk-to-Reward Ratio: Stops are tight, and targets are based on market structure.
- Works Across Markets: Effective in forex, indices, and commodities.
8. Final Thoughts
The Turtle Soup strategy is a powerful ICT technique for exploiting liquidity sweeps and false breakouts.
By combining it with other ICT tools like order blocks and fair value gaps, traders can achieve greater precision and profitability.
As always, practice the strategy on a demo account before applying it to live trading.
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