ICT Killzones - The Forex Geek (2024)

Author: The Forex Geek | Published: January 23, 2024

In the world of forex trading, finding optimal entry points is key to maximizing profits and minimizing losses. One popular strategy that traders use to identify such points is the ICT Killzones. Introduced by forex trader Inner Circle Trader, the Killzones represent different time intervals where there is high volatility and coincide with market pre-openings. The Killzones are designed to help traders identify high-probability zones for price action trades in a certain direction, and they have gained popularity among traders. In this article, we will explore the ICT Killzones in detail and examine how traders can use them to make better trading decisions.

What are the ICT Killzones?

The ICT Killzones refer to specific time intervals in the forex market that are characterized by high volatility and offer optimal trade entries. There are four kill zones identified by forex trader Inner Circle Trader: Asian Range Kill Zone, the London Open Kill Zone, the New York Open Kill Zone, and the London Close Kill Zone. Each kill zone has its own characteristics and is best suited for specific currency pairs and time intervals.

The first Killzone is the Asian Range Kill Zone, which runs from 20:00 to 00:00 ET. During this time, the AUD, NZD, and JPY pairs are best suited for trading, and an OTE pattern can offer a 15 to 20-pip scalp. However, most of the time, it is usually a consolidation. The consolidation is important as it holds many clues to how the daily range will develop over the remainder of the trading day.

The second Killzone is the London Open Kill Zone, which runs from 02:00 to 05:00 ET. The EUR and GBP pairs are best suited for trading during this time, and the London Open frequently sets an OTE pattern that can offer a 25 to 50-pip scalp. Additionally, it has the highest probability of creating either the high or low of the day.

The third Killzone is the New York Open Kill Zone, which runs from 07:00 to 10:00 ET. The FX major pairs are best suited for trading during this time, and the New York Open frequently sets up an OTE pattern that can offer a 20 to 30-pip scalp. The price action during the New York session is largely influenced by the 08:30 data embargo, and the session typically has two potential scenarios – continuation of the London move or a complete reversal.

Lastly, the London Close Kill Zone runs from 10:00 to 12:00 ET, and the FX major pairs are best suited for trading during this time. The London Close frequently sets up an OTE pattern that can offer a 10 to the 20-pip scalp. The price action seen in the London Close typically sees a retracement off the highs or lows of the day, and there is typically a 5-minute OTE setup in these conditions. The London Close ends with the London Fix at 11:00 ET, and the direction of the day or week can change during the London Close. By utilizing specific time intervals and currency pairs, this strategy offers a clear and concise plan for trading during the Asian, London, New York, and London Close kill zones.

ICT Killzones Strategy

The ICT Killzones strategy involves using the New York Kill Zone to frame buy and sell setups. To set up a buy trade, the trader should look for sell-side liquidity (SSL) in the form of previous lows or equal lows before 07:00 am New York time, followed by a clearing of the SSL after 07:00 am with the price trading lower to take out the SSL.

The price should then create a new swing low, followed by a shift in market structure higher or break in market structure higher, indicating that the price is trading higher to take out the short-term high. The trader should anticipate a buy entry using the bullish Fair Value Gap (FVG) that was created in the process of the shift in market structure higher. The trader should also look for price showing willingness to trade higher.

To set up a sell trade, the trader should follow similar steps, including looking for buy-side liquidity (BSL) in the form of previous highs or equal highs before 07:00 am, followed by a clearing of the BSL after 07:00 am with the price trading higher to take out the BSL.

The price should then create a new swing high, followed by a shift in market structure lower or break in market structure lower, indicating that the price is trading lower to take out the short-term low. The trader should anticipate a sell entry using the bearish FVG that was created in the process of the shift in market structure lower. The trader should also look for price showing willingness to trade lower.

Buy Signal

• Look for liquidity inform of previous (Low or equal Lows) before 07:00 am [New York Time]
• After 07:00 am [New York Time], price trades lower to take-out Sell Side Liquidity (SSL)
• Price creates a new swing low
• Shift in market structure higher or break in market structure higher
• Anticipate buy entry using Fair Value Gap that was created in the process of shift in market structure higher

Sell Signal

• Look for liquidity inform of (High or equal Highs) before 07:00 am [New York Time]
• After 07:00 am [New York Time], price trades higher to take-out Buy Side Liquidity (BSL)
• Price creates a new swing high
• Shift in market structure lower or break in market structure lower
• Anticipate sell entry using Fair Value Gap that was created in the process of shift in market structure lower

ICT Killzones Pros & Cons

Pros

• High probability trade entries: The ICT Killzones provide traders with a high probability zone to hunt for trades in a certain direction,
• increasing the chances of successful trades.
• Easy to understand: The concept of the killzones is straightforward and easy to understand, even for novice traders.
• Time-saving: The killzones are specifically designed for pre-openings and volatile market times, saving traders valuable time in finding optimal trade entries.
• Objective approach: The killzones are based on objective criteria, making it easier for traders to follow a disciplined approach to trading.

Cons

• Limited to certain times: The ICT Killzones are only applicable during specific time intervals, limiting their use to certain market conditions.
• False signals: As with any trading strategy, there is always the risk of false signals, which could lead to losses.
• Limited to certain markets: The ICT Killzones were initially designed for forex trading and may not be applicable to other markets.
• Relies on subjective analysis: While the killzones themselves are objective, the analysis of price flip areas and market structure require some level of subjective analysis, which may be a challenge for some traders.

Conclusion

In conclusion, the ICT Killzones strategy is designed to help traders identify optimal trade entries based on high volatility and market pre-openings. The strategy involves looking for liquidity, swing highs/lows and shifts in market structure to frame buy or sell setups. While the strategy offers the potential for high-probability trades, it requires patience, discipline, and strict adherence to risk management rules. Traders should also be aware of the potential drawbacks, such as false signals and missed opportunities due to strict entry requirements.