| 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
- 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>)
- 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
- 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
- Mark OTE zone using
draw_chart_analysis with demand (bullish) or supply (bearish)
- Test entry choices at the boundary, midpoint, full traversal, or an objective confirmation; do not privilege 70.5% without evidence
- Stop loss beyond the 100% level (swing point)
- 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
