Trading Concepts¶
This section explains the ICT (Inner Circle Trader) methodology that powers the RQF-ML system.
Core Philosophy¶
ICT trading is based on understanding institutional order flow - how smart money (banks, funds) manipulate price to:
- Accumulate positions at favorable prices
- Engineer liquidity by triggering retail stop losses
- Distribute positions to retail traders
- Deliver price to their targets
Key Concepts¶
The RQF Framework¶
RQF (Range Qualification Framework) is our implementation of ICT concepts:
┌─────────────────────────────────────────────────────────────────┐
│ RQF PATTERN SEQUENCE │
└─────────────────────────────────────────────────────────────────┘
TREND BoS SWEEP MSS ENTRY
│ │ │ │ │
▼ ▼ ▼ ▼ ▼
┌───────┐ ┌─────────┐ ┌──────────┐ ┌─────────┐ ┌──────────┐
│Uptrend│ ──▶ │Break Low│ ──▶ │Wick Below│ ──▶│Break TH │ ──▶│ OB/FVG │
│ or │ │(bearish)│ │Close Above│ │(bullish)│ │Confluence│
│Downtr.│ └─────────┘ └──────────┘ └─────────┘ └──────────┘
└───────┘ │ │ │ │
│ │ │ │
State 1 State 2 State 3 SIGNAL
Why It Works¶
1. Liquidity Engineering¶
Institutions need liquidity to fill large orders. They create it by:
- Running stop losses (sweeps)
- Triggering breakout traders
- Creating FOMO with fake moves
2. Order Blocks¶
The last opposing candle before a move contains institutional orders:
┌───┐
│ │ ← Last bearish candle before bullish move
│OB │ (Institutions bought here)
│ │
└───┘
│
└──────────────────▶ Price moves up
3. Fair Value Gaps¶
Imbalances in price delivery that act as magnets:
Bar 1 Bar 2 Bar 3
┌───┐ ┌───┐ ┌───┐
│ │ │ │ │ │
│ │ │ │ │ │
└───┘ │ │ │ │
│ │ │ │ │
│ │ │ └───┘
│ │ │ │
│ └───┘ │
│ │ │
└────────┴───────┘
↑
FVG (gap between Bar 1 low and Bar 3 high)
Confluence Scoring¶
We score setups based on multiple factors:
| Factor | Weight | Description |
|---|---|---|
| OB Present | 25% | Order Block in entry zone |
| FVG Present | 20% | Fair Value Gap overlap |
| HTF Aligned | 20% | Higher timeframe agrees |
| Sweep Quality | 15% | Clean wick, good displacement |
| Session | 10% | NY AM is best |
| EQ Levels | 10% | Unswept liquidity nearby |
Grades: - A (80-100): High probability - B (60-79): Good setup - C (40-59): Acceptable - D (0-39): Low confidence
Learning Path¶
graph TD
A[Start Here] --> B[ICT Basics]
B --> C[Market Structure]
C --> D[RQF Pattern]
D --> E[State Machine]
E --> F[Practice on Charts]
F --> G[Backtest]
G --> H[Paper Trade]
H --> I[Live Trade]- ICT Basics - Terminology and foundational concepts
- Market Structure - BoS, MSS, trend identification
- RQF Pattern - The complete setup sequence
- State Machine - How the indicator logic works