optimal-trade-entry

name	optimal-trade-entry
description	Define and test the ICT Optimal Trade Entry retracement convention. Use when measuring whether a 62–79% pullback region adds value after an objectively defined impulse.
license	Apache-2.0
metadata	{"author":"ske-labs","version":"4.0"}

Optimal Trade Entry (OTE)

The ICT convention labels a 62–79% retracement region as OTE. Treat it as a candidate coordinate band; candles do not reveal where "smart money" entered, and empirical evidence does not support special standalone Fibonacci power.

OTE Zone Levels

Fib Level	Convention
61.8%	Start of OTE zone
70.5%	Arithmetic midpoint of 61.8% and 79%
79%	End of OTE zone

Use after: BOS/CHoCH pullbacks, liquidity sweeps, trending move continuations.

Workflow

1. Identify the impulse -- a strong displacement move with clear swing low to swing high (or vice versa):

   get_candles_around_date(symbol=<symbol>, exchange=<exchange>, interval=<interval>, date=<date>)
   

2. Draw Fibonacci using draw_chart_analysis with fib_retracement:
   • Bullish: Point 1 = swing low, Point 2 = swing high
   • Bearish: Point 1 = swing high, Point 2 = swing low
3. Calculate OTE zone from the swing range:
   • OTE Start: Swing High - Range * 0.618
   • OTE Mid: Swing High - Range * 0.705
   • OTE End: Swing High - Range * 0.79
4. Mark OTE zone using draw_chart_analysis with demand (bullish) or supply (bearish)
5. Test entry choices at the boundary, midpoint, full traversal, or an objective confirmation; do not privilege 70.5% without evidence
6. Stop loss beyond the 100% level (swing point)
7. Set target from objective structure/time logic; extensions are candidate coordinates only

Example Calculation

High=52000, Low=45000, Range=7000:

• OTE Start (61.8%): 47,674
• OTE Mid (70.5%): 47,065
• OTE End (79%): 46,470

Evidence and Validation

• Treat the setup as a testable hypothesis, not a prediction. Define thresholds, entry, invalidation, and exit before evaluating outcomes.
• Calibrate on the same instrument, venue, session, and timeframe. Use closed candles and a held-out or walk-forward sample; record every variant tried.
• Include spread, fees, slippage, borrow or funding, partial fills, and latency. Reject the setup when net expectancy is not positive or depends on one narrow parameter.
• Return observed inputs, missing data, cost assumptions, entry, invalidation, exit, and a valid, watch, or no-trade status.
• Research basis: Empirical Fibonacci research found Fibonacci zones did not outperform non-Fibonacci zones as standalone rules; treat 62–79% as a candidate region only.

Key Rules

• Define the impulse endpoints without hindsight and normalize displacement by ATR/bars.
• Test higher-timeframe state, order-block, and FVG overlap as correlated candidate features.
• Compare the 62–79% region with equal-width non-Fibonacci and continuous-retracement baselines.
• Compute R:R from the actual entry, stop, target, side, and costs; no coordinate guarantees a minimum R:R.

Related Skills

• order-blocks — test whether a separately defined candle zone adds information to the OTE band
• premium-discount — OTE in discount for longs, premium for shorts maximizes probability