Optimal trade entry (OTE) is ICT's name for a specific Fibonacci retracement zone: between the 62% and 79% retracement of a swing, with 70.5% as the midpoint. It sits deep in discount (for longs) or premium (for shorts), where ICT expects the best risk-to-reward on a pullback.
Drawing it
- Identify a swing that broke structure with displacement. For a long, the swing low that started the move and the high it made.
- Draw the Fibonacci tool from the swing low to the swing high (high to low for a short).
- Add the 62%, 70.5% and 79% levels if your tool doesn't have them.
- Wait for price to pull back into the zone.
Making it a trade
- Confluence: the best OTEs line up with a PD array, such as an order block or FVG inside the 62–79% band.
- Entry: a limit order at 62% or 70.5%, or a lower-timeframe shift inside the zone.
- Stop: beyond the swing low (100%). If price gets there, the swing has failed.
- Targets: the swing high first; ICT also projects extensions beyond it (often quoted as −27% and −62%).
Worked example
Gold rallies from $2,300 to $2,340, breaking structure. Swing range: $40.
62% = 2,340 − 0.62 × 40 = $2,315.20. 70.5% = $2,311.80. 79% = $2,308.40.
A buy at $2,311.80 with a stop at $2,298 risks $13.80. A target at the old high of $2,340 offers $28.20, about 2R; the −27% extension at $2,350.80 offers about 2.8R.
Key takeaways
- OTE is the 62–79% retracement of a swing that broke structure, with 70.5% as the midpoint.
- Draw from swing low to high for longs, and high to low for shorts.
- The best OTEs contain a PD array such as an order block or FVG.
- Stops go beyond the swing's 100% level; targets are the swing extreme and extensions beyond it.