MARKET

MAKER
SECRETS
ALGORITHMIC PRICE ACTION
(ICT)

BY ALI KHAN
 DISCLAIMER

The contents of this e-Book are for educational purposes only

and are of my own interpretation of algorithmic price action
concepts, which have been authored and created by my mentor
Michael.J.Huddleston (aka ICT) , whom I have been privately
mentored by since 2018. The concepts explained in this e-Book
are foundational and are not explained in their entirety.

@Ali_Khan_ICT

www.marketmakertrading.com
 INTRODUCTION
My name is Ali Khan. Prior to becoming a full-time trader, I
spent almost a decade working as a Pharmacist in the UK. Like
many of us, I was dabbling in the markets alongside of my day
job. Unfortunately, I was not very good and could not find
much consistency in my approach to trading. I found myself
moving from strategy to strategy, spending thousands of pounds
on courses and various trading systems, with indicators
plastered all over my charts.. Despite this, I never seemed to
find profitability and never understood why the markets moved
the way that they did... until I found Michael in early 2018.

Michael introduced me to a whole new world of price action. He

explained how the markets moved algorithmically, and how the
Market Makers were using computer coded programs to
manipulate the market. Sceptical but intrigued, I would go on to
spend the next several years of my life in the study of
Algorithmic Price Action (APA). After years of deep study, I
concluded that the markets were far too precise and far too
efficient to move on traditional buying and selling pressure
alone. After understanding APA, I was not only able to
predicted where the markets were going, I was often able to
predict the exact highs and lows before they would form, which
would be impossible if the markets weren’t in fact
mathematically derived.

The issue I encountered however, was the sheer volume of

information pertaining to the study of APA. In this e-book I
have summarised the important points to save you years of
study.

I hope you find the information insightful.

www.marketmakertrading.com
 CONTENTS
THE ALGORITHM 1

AMD 2

THE FVG 4

TIME 9

3 BAR SWING 10

SMT 11

POWER OF 3 MODEL 13

PDARRAYS 15

THE ORDER BLOCK 16

THE BREAKER BLOCK 19

THE MITIGATION BLOCK 23

THE DEALING RANGE 27

PREMIUM vs DISCOUNT 29

FINAL THOUGHTS 30

APA ABBREVIATIONS 31

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 THE ALGORITHM
Traditionally we are taught that price is moved by buying and
selling pressure, and that the direction of the market is
determined by which side has the larger inflows of cash. This is
false.

The truth is, the Market Makers were not going to let the entire
financial industry be at the mercy of random buying and selling.
Using computer programming to automate the markets with an
algorithm is much more efficient and reliable.

Michael calls this algorithm IPDA (The Interbank Price Delivery

Algorithm)

IPDAs job is to manipulate price in order to engineer liquidity

into the market place, and to offer fair value. This allows
SMART MONEY, who understand how these algorithms work,
to capitalise on the movement of price.

There are 2 main targets that IPDA will seek:

1) Liquidity above/below old highs and old lows.

2) Areas of inefficient price action (Fair Value Gaps)

Understanding how this will occur, can give unmatched levels of

insight into the markets. In this e-book I am going to reveal the
algorithmic principles used by the market makers in order to
manipulate price to these targets.

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 AMD
Accumulation, Manipulation,
Distribution

'Everything starts with consolidation'

Buystops

Sellstops

IPDA holds price in a range. This allows liquidity to build up

above the consolidation range in the form of buystops, and below
the consolidation range in the form of sellstops. This is known as
the accumulation phase.

Buystops Triggered

Sellstops

IPDA will then reprice above the consolidation range, triggering

the buystops into active market orders. This is known as the
manipulation phase (often referred to as the Judas swing).

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 Buystops Triggered

Sellstops Triggered

Smart money will pair liquidity from the willing buyers (buystops)
with short positions, and offload these positions to willing sellers
below the consolidation range (sellstops). This is known as the
distribution phase.

This whole process is a part of IPDAs market efficiency paradigm

logic, whereby smart money will sell to the buyers and buy back
from the sellers (and vice versa). This is obviously oversimplified
and there are ways to determine when and where this process is
likely to happen, but that is beyond the scope of this e-Book. The
speed of the manipulation leg also causes FOMO for buyers, who
are chasing the market, thus entering longs in the expansion leg
higher. This is also another example of how IPDA will engineer
liquidity by the manipulation of price. The same concept can be
seen with other retail patterns such as trendlines, support and
resistance, head and shoulder patterns, bull and bear flags etc.
Each of these patterns are designed to draw retail money into the
marketplace. When trading, one should consider 'Where are the
retail stops?' when undertaking their trade analysis.

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 THE FVG
(FAIR VALUE GAP)

IPDA not only engineers liquidity in the markets by moving price,

by design it has to offer fair value for buying and for selling. This
too is based on its market efficiency paradigm logic. In some
cases, IPDA may reprice too quickly in one direction over
another, thus leaving an inefficiency in price delivery (A FVG). In
order for IPDA to maintain its fair value parameters, it will
reprice to rebalance the inefficient price action to offer fair value
on both sides of the market.

BISI
(Buyside Imbalance, Sellside Inefficiency)

ONLY BUYSIDE
OFFERED

The example above is known as a BISI. This is where IPDA has

repriced higher (buyside delivery) too quickly. This leaves a
buyside imbalance (the space between the red lines). The wicks
offer both buying and selling in the up and down movement. The
body where no wicks overlap is all buyside delivery and inefficient
of any sellside delivery.

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 SIBI
(Sellside Imbalance, Buyside Inefficiency)

ONLY SELLSIDE
OFFERED

The example above is known as a SIBI. This is where IPDA has

repriced lower (sellside delivery) too quickly. This leaves a sellside
imbalance (the space between the red lines). The wicks offer both
buying and selling in the up and down movement. The body
where no wicks overlap is all sellside delivery and inefficient of
any buyside delivery.

Redelivered

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 In the example above, buyside movement has been redelivered back
through the sellside imbalance. The inefficient sellside imbalance
has now been matched with buyside price delivery, offering us a
balanced price range of both buyside and sellside delivery.

Rebalanced

When price passes back through this range for a 3rd time and leaves
it, this whole range has now been rebalanced. Any upward
movement back through this range should be met with strong
resistance (in a bearish market)
True Support & Resistance
(The 3 Levels)

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 The PREMIUM level (high) of the FVG should offer
support in a bullish market if price has closed above this
level. This level becomes even stronger as support if the
FVG has been balanced/rebalanced.

The DISCOUNT level (low) of the FVG should offer

resistance in a bearish market if price has closed below
this level. This level becomes even stronger as resistance if
the FVG has been balanced/rebalanced.

The CONSEQUENT ENCROACHMENT (C.E) is the

midpoint or 50% equilibrium level of a FVG. There are
many caveats to this level that are again beyond the scope
of this e-Book, but will mainly act as a support/resistance
level inside of a FVG.

DISPLACEMENT

A FVG can indicate that IPDA is in a hurry to move price in one

direction over another. This is an algorithmic footprint that we
can see in price action. Michael often uses the analogy of an
elephant stepping into a children's pool. Since the size and mass
of the elephant's foot is so large, we will of course see a
displacement of water. He uses this analogy to draw a comparison
to larger institutions with 'deep pockets' entering the marketplace.
Like everything with APA, there are of course caveats to when and
where we can expect displacement to occur and when to trust it,
but keeping this analogy in mind at key support/resistance levels
will serve you well.

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 V.I
(Volume Imbalance)

A Volume Imbalance (V.I.) occurs when there is an area of price

that has been left without a candle body. There is up-and-down
movement in the overlapping of the wicks, however since the bulk
of the volume is in the body of the candle, we dub this a Volume
Imbalance.

G.I
(Gap Imbalance)

A Gap Imbalance (G.I) occurs when an area of price is void of any

price delivery including wick movement. This is a real price gap.

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 TIME
Time is the first component IPDA will refer to. Once the time
window is in operation, IPDA will then look to seek key levels
(PD.ARRAYS) in price. It is always TIME then PRICE.

The manipulation of price will occur within these windows of

time and will provide the best times of the day to hunt for trade
setups. Michael refers to these time windows as KILLZONES.

News drivers within these Killzones are often the catalyst for
IPDA to reprice to key levels, by initiating buy/sell programs.

During high-impact news events such as CPI, FOMC or NFP,

manual intervention can take place. This is where the normal
pricing parameters in IPDA's repricing engine can be manually
overridden. This is usually done at the central bank level.

KILLZONES
FX (NY-EST)

ASIA - 8pm - 12am

LONDON - 2am - 5am
NEY YORK - 7am - 10am
LONDON CLOSE - 10am - 12pm

FUTURES/CRYPTO (NY-EST)
PRE-MARKET SESSION - 7am- 9.30am
AM SESSION - 9.30am- 12pm
PM SESSION - 1.30pm - 4pm

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 THE 3 BAR SWING
SWING HIGH

A swing high is the highest high (middle candle) with a lower high
to the left and a lower high to the right

SWING LOW

A swing low is the lowest low (middle candle) with a higher low to
the left and a higher low to the right

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 Market Maker
SPONSORSHIP
We can see the footprints of the Market Maker within price
action. The algorithms that dictate the price of asset classes all
work synergistically with one another. It makes sense if you think
about it.. If one asset class is correlated with another asset class,
price fluctuations are going to have an impact on it's correlated
asset. Michael calls this S.M.T Divergence

S.M.T
Correlated Pair 1

LOWER LOW

Sell Stops Purged

Correlated Pair 2

HIGHER LOW

Sell Stops NOT Purged

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 In the example above, we can see that correlated pair 1 made a
lower low, running its sellside liquidity below a previous low.
Since pair 2 is correlated to pair 1, we should also expect to see it
run its sellside liquidity below its previous swing low. It failed to
do so. This indicates strength in pair 2 as it is unwilling to take its
sellside liquidity. This divergence is a footprint of the Market
Maker and shows institutional accumulation. This crack in
correlation indicates that pair is only going lower to raid sellside
liquidity before repricing higher, with institutional sponsorship
behind the move. (Reverse for sellside delivery)

Inversely Correlated Pair 1

HIGHER LOW

Sell Stops NOT Purged

Buy Stops Purged

HIGHER HIGH

Inversely Correlated Pair 2

In the example above, we can see that inversely correlated pair1

failed to run its sellside liquidity below a previous low. Since pair
2 is inversely correlated to pair 1, we should also expect to see it
fail to run its buyside liquidity above its previous swing high. It
did run the buyside liquidity, whilst pair 1 failed to run its sellside
liquidity. This indicates strength in pair 1 as it is unwilling to go
lower. This crack in correlation indicates that pair 2 is only going
higher to take buyside liquidity before repricing lower.
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 POWER OF 3
The Po3 model enables us to buy below the opening price on a
buy day and sell above the opening price on a sell day. There are
many caveats to this model but for the purposes of this e-book, I
will keep it simple. We use midnight NY (EST) time as our filter
for the Po3 concept. The opening price at this time is the true day
opening price.

CLASSIC BUY DAY

High High

Close Close

12am Open 12am Open

Low Low

In the example above, we can see how the OHLC bar can be
viewed as a daily candle stick. The 12am opening price is our
filter. Our aim is to buy at or below this open as the low is being
formed, when we anticipate a bullish day. We are not concerned
about the close. Our objective is to trade the bulk of the
expansion move higher.

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 CLASSIC SELL DAY

High High

12am Open
12am Open

Close
Close

Low Low

In the example above, we can see how the OHLC bar can be
viewed as a daily candle stick. The midnight opening price is our
filter. We aim to sell at or above this open as the high is being
formed when we anticipate a bearish day. We are not concerned
about the close. Our objective is to trade the bulk of the
expansion move lower.

Michael refers to the manipulation above/below the opening price

as the JUDAS swing.

Together with time and key levels in price, we can predict how
high or low this Judas swing may reach.

I have already explained the time element in this e-book. Next, I

will delve into key price levels known as PDArrays.

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 PD.ARRAYS
(Premium/Discount Arrays)

Arrays are data points that are stored within a program. These
arrays are key price levels stored in IPDAs repricing logic, relative
to a premium/discount market, and will be referred back to at
later dates. These arrays will become active when time aligns with
price. We do not have zones in APA logic. Each array has specific
levels, which can be graded and calibrated. There will be different
arrays present in each swing that can offer support/resistance.
Monitoring how price reacts at these key levels can help us to
gauge order flow in a bullish or bearish market environment.

THE PD.ARRAY MATRIX

OLD HIGH/LOW
REJECTION BLOCK
ORDER BLOCK
BREAKER BLOCK
MITIGATION BLOCK
PREMIUM
FVG
MARKET
MARKET PRICE DISCOUNT
MARKET
FVG
MITIGATION BLOCK
BREAKER BLOCK
ORDER BLOCK
REJECTION BLOCK
OLD HIGH/LOW

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 THE ORDER BLOCK
(BULLISH)

sellside liquidity
(old low)

1. A down close candle (or consecutive down close candles) that

run sellside liquidity

2. The down close candle(s) come into a HTF support level

3. The down close candle(s) becomes a valid order block once we

close above it's high.

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 4

4. A higher quality order block will have a FVG directly above

it (displacement)

5. When price returns back down, the most sensitive area of the
order block will be the high to the mean threshold (50%). We
do not want to see price violate the mean threshold of the
order block.

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 6

6. If the order block is valid, and we are in a bullish

environment, we should see a reaction from the order block
and IPDA will reprice higher.

Higher probability order blocks will generally be found

around the equilibrium level (50%) of a consolidation range.

OB KEY LEVELS

Reverse this for Bearish Order Block (Last up close candle(s))

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 THE BREAKER
(BEARISH)

1. A swing high is formed

2. A swing low is formed

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 3

Buystops
Triggered

3. A HIGHER HIGH is formed

4
Sellstops
Triggered

4. Price reverses and runs below the

previous swing low

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 5

5. Last down close (or consecutive down close

candles in the swing low) = BREAKER

Trapped Longs

6. Price returns back to breaker.

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 7

7. This return to the breaker allows interbank

traders to mitigate long positions & add to their
short positions as the market reprices lower.

Reverse this for a Bullish Breaker

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 THE MITIGATION
BLOCK
(BEARISH)

1. A swing high is formed

2
2. A swing low is formed

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 3

3. A LOWER HIGH is formed

4. Price reverses and runs below

previous swing low

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 5

5. Last down close (or consecutive down close

candles in the swing low) = M.B

6. Price returns back to Mitigation Block.

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 7

7. This return to the Mitigation Block allowing

interbank traders to mitigate long positions &
add to their short positions as the market
reprices lower.

Reverse this for a Bullish Mitigation Block

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 THE DEALING
RANGE

The markets move in ranges. Understanding how a range is

created is one of the most essential components to
understanding price delivery.

A dealing range is established when we run buyside and

sellside liquidity to create a new swing. This new swing will
have it's own high and low. The range between this new high
and low will become the current dealing range. IPDA will
seek PDArrays/FVGs and/or INTERNAL RANGE
LIQUIDITY (Lows/Highs inside of the range) within this
dealing range.

IPDA will seek internal range liquidity, where interbank

traders will look to pair buy or sell orders with willing
participants and offload their positions to willing participants
above/below the dealing range highs and lows (EXTERNAL
RANGE LIQUIDITY).

The market constantly moves from internal range liquidity to

external range liquidity, and external range liquidity to
internal range liquidity (unless manual intervention is in
play)

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 The expansion lower here
has ran sellstops, making a new low

Sellstops purged

The expansion higher here

has ran buystops, making a new high

Buystops purged
New Dealing Range

A new dealing range has been

established

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 PREMIUM
vs
DISCOUNT

PREMIUM

50%

DISCOUNT

Once we have an established dealing range, we can split this range

in half. Above the 50% level would become the PREMIUM range
and below the 50% level would become the DISCOUNT range.
We seek to buy at discount and sell at a premium.

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 FINAL
THOUGHTS
This e-Book is designed to build a foundation into the
understanding of Algorithmic Price Action (APA). We only
scratch the surface here into how deep these concepts go, and
how they are applied to real-life trading. I have done my best to
keep things as concise as possible without making this e-Book
hundreds of pages long. I intend to explore these concepts in
greater detail through my YouTube Channel (@Ali_Khan_ICT).

Trading is NOT a get-rich-quick scheme. I cannot stress how

important it is to learn self-disciple and thoroughly backtest,
collect data, and create your own personal working model.
Knowing how the algorithm's book price does not automatically
entitle you to profitability.

Finally, I invite everyone who has read this e-book to dig into
their own charts and see for themselves how these concepts work.
There is ABSOLUTELY an algorithm controlling these markets
and this information can be life changing for those who delve into
understanding it.

Thank you for reading.

Good Luck & Good Trading

AK

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 ABBREVIATIONS
AMD - Accumulation, Manipulation, Distribution
AB - Accumulation Block
ATH - All Time High
ATL - All Time Low
BISI - Buyside Imbalance Sell side Inefficiency
BMS - Break of Market Structure
BRK - Breaker (+BRK = Bullish Breaker / -BRK = Bearish Breaker )
BSL - Buyside Liquidity
BE - Break Even
BOS - Break of Structure
BMS - Break in Market Structure
CE - Consequent Encroachment
CISD - Change in State of Delivery
DH - Daily High
DL - Daily Low
DB - Distribution Block
EH - Events Horizon
FVG - Fair Value Gap
GI - Gap Imbalance
HL - Higher Low
HH - Higher High
HTF - High Time Frame
IOF - Institutional Order Flow
IOFED - Institutional Order Flow Entry Drill
IPDA - Interbank Price Delivery Algorithm
LO - London Open
LOKZ - London Kill Zone
LP - Liquidity Pool
LV - Liquidity Void
LL - Lower Low
LH - Lower High

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 LTF - Low Time Frame
MB - Mitigation Block
MH - Monthly High
ML - Monthly Low
MS - Market Structure
MSB - Market Structure Break
MTH - Mean Threshold
NDOG - New Daily Opening Gap
NMOG - New Monthly Opening Gap
NWOG - New Weekly Opening Gap
NYKZ - New York Kill Zone
NYO - New York Open
OB - Order Block (+OB = Bullish Order block / -OB = Bearish
Order block )
OTE - Optimal Trade Entry
PA - Price Action
PB - Propulsion Block
PDH - Previous Daily High
PDL - Previous Daily Low
PWH - Previous Weekly High
PWL - Previous Weekly Low
RR - Risk to reward
RTO - Return to Order Block
SH - Stop Hunt
S/R - Support & Resistance
SIBI - Sellside Imbalance Buyside Inefficiency
SL - Stop Loss
SMS - Shift in Market Structure
SSL - Sellside Liquidity
STDV - Standard Deviation
TA - Technical Analysis
TP - Take Profit
TL - Trendline
VB - Vacuum Block
VI - Volume Imbalance
WH - Weekly High
WDYS - What Do You See?

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