Institutional candles (also called displacement candles or impulse candles) are large-bodied candles with little to no wicks that represent strong institutional activity. They break through structure and create FVGs. The characteristics of these candles — body size, wick ratio, volume — reveal where institutions are committing capital.
Large real body relative to recent candles (usually 2-3× average), Minimal wicks (< 25% of total range), High volume on the candle, Creates displacement away from a level, Often creates FVGs on either side
After an institutional candle confirms direction, trade the pullback into the FVG or OB it left behind, Institutional candle breaking structure = BOS/ChoCH confirmation, Multiple institutional candles in sequence = strong momentum phase
Enter on pullback to the institutional candle's body midpoint or FVG, Stop beyond the origin of the institutional candle, Target the next liquidity resting above/below
Visible on all timeframes; most significant on 1H, 4H, Daily
True institutional candles engulf multiple previous candles and create a clear before/after visual. If the candle is large but has long wicks, it's contested, not institutional.
An order block is the last opposing candle before a strong institutional move — the final bearish candle before a bullish impulse (bullish OB) or the final bullish candle before a bearish impulse (bearish OB). Order blocks represent zones where institutions placed large orders, and price tends to return to these zones for continuation.
Kill zones are specific time windows during the trading day when institutional activity peaks and the most significant moves occur. ICT identifies four main kill zones: Asian session (20:00–00:00 ET), London Open (02:00–05:00 ET), New York Open (07:00–10:00 ET), and London Close (10:00–12:00 ET). Trading only during kill zones improves probability.
Mitigation blocks are price levels where institutional traders return to 'mitigate' or close out prior losing positions before continuing in the new trend direction. When smart money takes a position that initially moves against them, they mark the level for re-entry — when price returns, they close the losing trade at break-even and add to their new directional position. This creates a powerful support or resistance zone.
Premium and Discount zones divide the current price range (from the swing low to swing high) into halves using the equilibrium (50%) level. Discount = below 50% (cheap, look to buy). Premium = above 50% (expensive, look to sell). This concept ensures traders are buying low and selling high relative to the current range.