Optimal Trade Entry: the deep retracement where the move resumes
Optimal trade entry, or OTE, is ICT's precise answer to where you join a move after displacement. Rather than guessing a pullback, you measure the impulse leg with a Fibonacci retracement and look to enter in the 0.62 to 0.79 band, with 0.705 as the centre of gravity. The power of OTE is not the fib by itself; it is the overlap of that band with a discount array such as an order block or fair value gap, after a liquidity sweep. This module shows how to draw it and how to keep it honest.
What OTE is
Optimal trade entry is a deep retracement into an impulse move, the zone where the move tends to resume with the best risk to reward. After price displaces, breaks structure, and leaves a fair value gap, it usually pulls back before continuing. OTE defines how deep that pullback should go for a high-quality entry: not a shallow dip, but a retracement into the 0.62 to 0.79 region of the impulse leg. Enter too shallow and you are paying a premium; the deep retracement is where the aligned entry lives.
The fib levels 0.62 to 0.79
Draw a Fibonacci retracement from the start of the impulse leg to its end: low to high for a bullish leg, high to low for a bearish one. The OTE zone is the band between the 0.62 and 0.79 retracement levels. Many ICT traders add the 0.705 as the heart of the zone and the 0.5 and 0.886 as outer references. The exact numbers matter less than the idea: you want a deep, not shallow, retracement, measured objectively rather than eyeballed.
Drawing the fib on a bullish leg
For a long, anchor the retracement at the low that began the displacement and drag to the high it reached. The 0.62 to 0.79 band now projects onto price as your entry zone. You are looking for price to trade down into that band and show a reaction. Because the zone is deep, the stop can sit just below the 0.79 or the swing low, keeping risk tight while the target, the opposing liquidity, sits far above. That geometry is why ICT calls it optimal.
Confluence with a fair value gap or order block
OTE on its own is a probability, not a signal. It becomes a trade when the 0.62 to 0.79 band overlaps a price delivery array: an order block, a fair value gap, or a breaker sitting in discount. When the fib zone and the array line up at the same price, after a liquidity sweep, you have a stacked entry. Treat the fib as the ruler and the array as the reason; you want both pointing at the same level before you act.
The 0.705 sweet spot
If you want a single level to lean on, use the 0.705, the midpoint of the OTE band. It often lines up with the mean threshold of an order block or the consequent encroachment of a fair value gap, which is why it earns its reputation. A clean reaction at the 0.705 with a lower-timeframe shift is the archetypal OTE entry. Do not fetishise the exact decimal, though; treat the whole 0.62 to 0.79 band as the zone and the 0.705 as its centre.
Stop, target and gold
Place the stop just beyond the 0.79, or beyond the swing that anchored the leg, so a deeper retracement that invalidates the idea takes you out cleanly. Target the opposing liquidity: the buy-side above for a long, the sell-side below for a short. On gold, OTE works best on H1 and M15 impulse legs inside the London and New York windows; in dead Asian hours the retracements are muddy. Always draw the fib on a leg that itself began with a sweep and displacement, never on a random swing.
FAQ
What is the OTE zone exactly?
It is the 0.62 to 0.79 retracement of an impulse leg, with 0.705 as the sweet spot in the middle. You draw a Fibonacci retracement from the start of the displacement to its end and look to enter in that band on the pullback.
Why such a deep retracement?
Because a deep retracement gives a tighter stop and a larger distance to the target, which improves risk to reward. A shallow pullback means you are buying closer to a premium; the 0.62 to 0.79 band is where the aligned, well-priced entry sits.
Do I need a fair value gap or order block as well as the fib?
Yes, for a quality entry. OTE on its own is just a retracement level. It becomes a trade when the 0.62 to 0.79 band overlaps a price delivery array in discount, after a liquidity sweep. Use the fib as the ruler and the array as the reason.
Where do I put the stop on an OTE trade?
Just beyond the 0.79 level, or beyond the swing point that anchored the impulse leg. If price retraces deeper than that, the setup is invalid and you want to be out cleanly.
Does the 0.705 have to be exact?
No. Treat the whole 0.62 to 0.79 band as the zone and the 0.705 as its centre of gravity. It often lines up with the mean threshold of an order block or the midpoint of a fair value gap, but the band matters more than the exact decimal.