The Tradeskill
Fair Value Gaps & Order BlocksIntermediate

Optimal Trade Entry (OTE)

What ICT's optimal trade entry (OTE) is, how to draw the 62%–79% retracement zone and the 70.5% level, and how it combines with structure.

Library categories

What it means

Optimal trade entry is a retracement zone between roughly 62% and 79% of a swing, with 70.5% often used as the midpoint. It is an ICT term for a deep pullback inside discount (or premium).

It is drawn with a Fibonacci tool from the swing low to the swing high (bullish).

Why traders use it

Entering deep in the pullback keeps the stop close to the swing extreme and the reward to the high large. Combined with a liquidity sweep or order block, it gives a precise entry area.

Chart examples

OTE zone on a bullish leg

EntrySwing high70.5%OTE 62%–79%Swing low
From the swing low to the swing high, the 62%–79% retracement is the OTE zone; the pullback reaches it and price resumes up.Schematic diagrams drawn to explain the idea; they are not market data.

How to identify it objectively

  • 1Confirm the leg with a break of structure.
  • 2Draw Fibonacci from the swing low to the swing high (bullish).
  • 3Mark 0.62, 0.705 and 0.79.
  • 4Wait for price to reach the zone and react.

Bullish use

  • 1Bullish BOS defines the leg.
  • 2Price retraces into 62%–79%.
  • 3A bullish close there; stop below the swing low.

Bearish use

  • 1Bearish BOS defines the leg.
  • 2Price rallies into 62%–79% of the down leg.
  • 3A bearish close there; stop above the swing high.

What confirms it

  • Another element in the zone (order block, FVG, sweep).
  • A reaction close.

What invalidates it

  • Price closes beyond the 100% (the swing origin).
  • Anchors changed after the fact.

How a hypothetical setup is built

Entry

Limit order near 70.5%, or a confirmation close in the zone.

Stop

Below the swing low.

Target

The swing high, then extensions.

A hypothetical illustration of how the concept is turned into a plan, not a recommendation. Practise it on a paper account first.

Related concepts

Historical testing

Not tested on The Tradeskill yet. Record whether price reached the zone at all; many legs never retrace that deep.

Limitations: when it fails

  • Many pullbacks stop above 62%, so the entry is missed.
  • Fibonacci levels have no proven predictive power on their own.
  • Anchors must follow a written rule.

Knowledge check

Pick an answer to see the explanation. Nothing is saved.

The OTE zone is roughly…

1. The OTE zone is roughly…

What level is often used as the OTE midpoint?

2. What level is often used as the OTE midpoint?

What invalidates a bullish OTE setup?

3. What invalidates a bullish OTE setup?

Practise it risk-free

Open the free chart, use replay to go back in time and look for this concept candle by candle with $20,000 in virtual money.