After a strong move, price rarely continues in a straight line. It pulls back first. The Optimal Trade Entry (OTE) is ICT's name for the part of that pullback where a continuation entry offers the best price for the risk: the 62% to 79% retracement of the move, with 70.5% as the sweet spot.
Drawing it on the right swing
- Find a move that broke structure with displacement (a strong candle that closed past a swing high or low).
- For a bullish OTE, draw the Fibonacci tool from the swing low where the move started to the swing high it made.
- The zone between the 0.62 and 0.79 levels is the OTE. The 0.705 level is its centre.
The most common mistake is drawing it on a random swing. The move should have taken liquidity first and then shifted structure; a slow drift is not a good anchor.
Why that zone
A pullback that stops before 50% often means the move is too strong to wait for, and one that goes past 79% puts the start of the move at risk. The 62-79% band sits in the discount part of the move for a buy (or premium for a sell), so you are buying cheap within the swing.
Make it stronger with confluence
- a fair value gap or order block inside the OTE zone;
- the pullback happening inside a killzone;
- the higher time frame trend in the same direction.
Stop and targets
The stop goes beyond the start of the swing (below the swing low for a buy). Many traders take first profit at the old swing high and use Fibonacci extensions (for example -0.27 and -0.62 beyond the swing) as further targets.
In ICC Charts
The OTE tool in the drawing tools marks 0.62, 0.705 and 0.79 plus extension levels, and the Premium / Discount + OTE layer draws the zone for you. The scanner's Optimal Trade Entry model (M4) looks for OTE entries in the London and New York killzones on the 5-minute chart. Open the terminal or see the models.
Education only. Fibonacci levels are a guide, not a promise. Practise on a demo account first.
Open ICC Charts in your browser, free, with the ICT and VSA layers and the model scanner.
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