It explains how price action shifts from a bearish key zone to a bullish key zone within Price Discovery (PD) Arrays. This framework is fundamental in forex education, helping traders recognize precise entry opportunities and place conservative stop losses, thereby enhancing the potential for capturing favorable price movements.
What is the ICT Market Maker Buy Model?
This model illustrates the transition of price from a bearish phase dominated by selling pressure to a bullish phase controlled by buyers. By applying this model, traders gain deeper insight into trend reversals and directional shifts, allowing for more accurate market analysis and trade execution.
Key Considerations Before Applying the ICT Market Maker Buy Model
- The broader market trend should be upward on higher timeframes (e.g., daily or weekly charts), with prices moving towards higher price levels.
- Liquidity should be concentrated near higher price points, with previous highs serving as significant targets.
- On lower timeframes (e.g., 15 or 30 minutes), a brief bearish retracement often precedes entry into key higher timeframe zones, setting the stage for an upward continuation.
Components of the ICT Market Maker Buy Model
Consolidation Phase
Price moves sideways within a defined range, called the consolidation zone or initial range, bounded by upper and lower levels.
Lower High Formation
During the downward price movement, lower highs are formed. These serve as liquidity points when the price begins its upward shift.
Trend Reversal
At a critical higher timeframe level (such as within a PD Array), the market reverses from a selling trend to a buying trend.
Liquidity Capture
The price absorbs liquidity from previous highs established during consolidation before retracing back into the initial range.
Key Zones
- Fair Value Gaps (FVGs): Imbalance zones where optimal trade entries are often found.
- Liquidity Zones: Important levels like Previous Day Highs (PDH) and Previous Day Lows (PDL) that act as strategic trading points.
How to Trade Using the Market Maker Buy Model
- Confirm a Bullish Market Structure
Examine higher timeframe charts to verify an uptrend, indicated by Higher Highs and Higher Lows. - Identify Liquidity Above Price
Look for previous highs above the current price where liquidity is likely to accumulate. - Wait for a Bearish Pullback on Lower Timeframes
Monitor lower timeframes for a temporary bearish move that draws price back into the bullish zone on the higher timeframe PD Array. - Confirm Bullish Reversal on Higher Timeframes
After price reaches the bullish zone, wait for confirmation signals such as a Break of Structure (BOS) and Smart Money Technique (SMT) Divergence to validate the trend reversal. - Enter a Buy Position
Enter after the price retraces from an FVG and confirms a Bullish Break of Structure. - Set Stop Loss
Place the stop loss 10 to 20 pips below the last swing low preceding the Break of Structure. - Define Profit Targets
Use Fibonacci retracement levels measured from the lowest Smart Money Reversal point to the highest Break of Structure point, commonly between 1.0 to 2.5 extension. Alternatively, target previous highs or significant liquidity levels on higher timeframes.
Example: Bitcoin Chart Analysis
A 15-minute Bitcoin chart typically demonstrates bullish market structure and the application of the Market Maker Buy Model with clear entry zones and risk management.
Conclusion
The ICT Market Maker Buy Model provides a structured approach to trading by analyzing bullish market conditions, key liquidity areas, and optimal entry points such as Fair Value Gaps. By incorporating Market Structure Shifts and effective risk management, traders can enhance their ability to identify low-risk, high-probability trades and improve overall performance.
