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
1---2name: optimal-trade-entry3description: 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.4license: Apache-2.05---67# Optimal Trade Entry (OTE)89The 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.1011## OTE Zone Levels1213| Fib Level | Convention |14| --------- | ------------------------ |15| 61.8% | Start of OTE zone |16| 70.5% | Arithmetic midpoint of 61.8% and 79% |17| 79% | End of OTE zone |1819Use after: BOS/CHoCH pullbacks, liquidity sweeps, trending move continuations.2021## Workflow22231. **Identify the impulse** -- a strong displacement move with clear swing low to swing high (or vice versa):24 ```25 get_candles_around_date(symbol=<symbol>, exchange=<exchange>, interval=<interval>, date=<date>)26 ```272. **Draw Fibonacci** using `draw_chart_analysis` with `fib_retracement`:28 - Bullish: Point 1 = swing low, Point 2 = swing high29 - Bearish: Point 1 = swing high, Point 2 = swing low303. **Calculate OTE zone** from the swing range:31 - OTE Start: Swing High - Range * 0.61832 - OTE Mid: Swing High - Range * 0.70533 - OTE End: Swing High - Range * 0.79344. **Mark OTE zone** using `draw_chart_analysis` with `demand` (bullish) or `supply` (bearish)355. **Test entry choices** at the boundary, midpoint, full traversal, or an objective confirmation; do not privilege 70.5% without evidence366. **Stop loss** beyond the 100% level (swing point)377. **Set target** from objective structure/time logic; extensions are candidate coordinates only3839### Example Calculation4041High=52000, Low=45000, Range=7000:42- OTE Start (61.8%): 47,67443- OTE Mid (70.5%): 47,06544- OTE End (79%): 46,4704546## Evidence and Validation4748- Treat the setup as a testable hypothesis, not a prediction. Define thresholds, entry, invalidation, and exit before evaluating outcomes.49- Calibrate on the same instrument, venue, session, and timeframe. Use closed candles and a held-out or walk-forward sample; record every variant tried.50- 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.51- Return observed inputs, missing data, cost assumptions, entry, invalidation, exit, and a valid, watch, or no-trade status.52- Research basis: Empirical [Fibonacci research](https://www.sciencedirect.com/science/article/abs/pii/S0957417421012495) found Fibonacci zones did not outperform non-Fibonacci zones as standalone rules; treat 62–79% as a candidate region only.5354## Key Rules5556- Define the impulse endpoints without hindsight and normalize displacement by ATR/bars.57- Test higher-timeframe state, order-block, and FVG overlap as correlated candidate features.58- Compare the 62–79% region with equal-width non-Fibonacci and continuous-retracement baselines.59- Compute R:R from the actual entry, stop, target, side, and costs; no coordinate guarantees a minimum R:R.6061## Related Skills6263- **order-blocks** — test whether a separately defined candle zone adds information to the OTE band64- **premium-discount** — OTE in discount for longs, premium for shorts maximizes probability
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