ICT Market Maker Model Explained 2025

The ICT Market Maker Model (ICT MMX), created by Michael J. Huddleston, simplifies trading by uncovering how smart money—banks, hedge funds, and large institutions—manipulate the market to their advantage.

Want to trade like the pros? Focus on the two pillars of the ICT MMXM model: time and price. Price isn’t random—it’s deliberate. By understanding how market makers think, you can anticipate their next move and position yourself ahead of the game.

What is the ICT Market Maker Model?

The ICT Market Maker Model refers to the systematic approach of identifying how market makers manipulate the market to benefit from liquidity pools. These market makers often move prices to trigger stop-loss orders from retail traders, allowing them to gather liquidity and create volatility in the market.

The core idea of the model is to understand the market maker’s behavior and use that knowledge to the trader’s advantage. For example, market makers often target areas of high liquidity, such as near support or resistance levels, where retail traders place their stop-loss orders. Once these stops are triggered, the price typically reverses, leaving unprepared traders at a loss.

Key Component of ICT Market Maker Model

• Buy-side liquidity (above recent highs) and sell-side liquidity (below recent lows).
• How market makers deliberately hunt for liquidity by creating false breakouts and reversals.
• How institutional order flow moves through the market, creating opportunities for retail traders who know how to follow these movements.

By understanding how these mechanics work, traders can better predict when the market maker is likely to make a move and adjust their strategies accordingly. This makes the ICT Market Maker Model a valuable tool for traders looking to stay ahead of the game and avoid being caught in the traps set by market makers.

Core Concepts of the ICT Market Maker Model

The ICT Market Maker Model is built on key principles that explain how market makers operate to create liquidity, manipulate price, and profit from retail traders. Understanding these core concepts can significantly enhance your ability to predict market movements and avoid falling into traps set by market makers.

Liquidity Pools

Liquidity pools are areas in the market where large numbers of orders are gathered. These pools often exist around support and resistance levels, where retail traders place stop-loss orders. Market makers target these areas to trigger stops, forcing retail traders out of their positions while collecting the liquidity they need to execute their own large trades. There are two types of liquidity pools:

• Buy-side liquidity (h4): This exists above recent highs where retail traders’ buy-stop orders are located.
• Sell-side liquidity (h4): This exists below recent lows where retail traders’ sell-stop orders are placed.

Market makers seek out these pools because they offer ample liquidity to move the market in their favor.

Stop Hunts

A stop hunt is a deliberate move by market makers to push the price beyond a key level to trigger stop-loss orders. Retail traders often place stops near obvious support or resistance levels, making these areas prime targets for market makers. Once stops are triggered, the price may reverse quickly, catching unprepared traders off guard.

Institutional Order Flow

Institutional order flow refers to the large volume trades executed by institutions like banks and hedge funds. These institutions have the power to move the market, and market makers often follow their flow to guide the price in specific directions. Recognizing where institutions are entering or exiting the market can help traders align their strategies with the smart money rather than being caught on the wrong side of a trade.

By understanding these core concepts, traders can better identify areas of manipulation and make more informed decisions.

market maker sell model

The ICT Market Maker Sell Model is designed to help traders understand how institutional players, often referred to as smart money, manipulate price movements to their advantage. This model emphasizes tracking price behavior during different phases, such as accumulation, distribution, and redistribution, to align trading decisions with the strategies of market makers.

Below is a concise breakdown using BTC as an example:

Accumulation Phase: Price consolidates between $53,000 and $58,000, where smart money accumulates positions for a significant move.

Smart Money Reversal: The price rallies to $68,998, sweeping liquidity at $68,853. This marks a reversal point as smart money takes profits and shifts positions.

Fair Value Gaps (FVGs): An FVG forms between $68,000 and $68,000, providing a low-risk sell zone for traders anticipating retracements.

Redistribution Phase:
Price redistributes between $66,000 and $64,000, retesting FVGs and preparing for further decline.

ICT market maker Buy model

Here’s the revised version with corrected grammar and spelling:

The ICT Market Maker Buy Model (MMBM) starts when smart money consolidates their orders or engineers buy-side liquidity in the form of equal highs, which retail traders consider strong resistance areas. Upon reaching a higher timeframe point of interest, smart money sweeps the sell-side liquidity, causing a shift in market structure with an impulsive movement, leaving behind a Fair Value Gap (FVG). This forms the original low-risk buy opportunity for smart money. Redistribution occurs in the form of the FVG, and the market continuously targets buy-side liquidity.

Market Maker Manipulation Tactics

• Market Maker Manipulation Tactics:
  • Designed to control price movement and collect liquidity by trapping retail traders.
• False Breakouts:
  • Price breaks key levels, luring traders to follow the trend.
  • Breakout reverses quickly, trapping traders in losing positions.
  • Tip: Wait for confirmation before entering trades.
• Reversals:
  • Price reverses sharply after false breakouts or stop hunts.
  • Market makers reverse price to capitalize on liquidity.
  • Tip: Identify liquidity zones and false breakouts to anticipate reversals.
• Liquidity Grabs:
  • Market makers target liquidity pools, often near support/resistance levels.
  • Stop-loss orders are triggered, fueling the next price move.
  • Tip: Avoid placing stop-loss orders in obvious locations, position yourself to benefit from liquidity grabs.

Benefits of Understanding the ICT Market Maker Model

Mastering the ICT Market Maker Model can provide traders with numerous advantages, especially when it comes to avoiding manipulation and enhancing profitability. Here are the key benefits of understanding this model:

Avoiding Market Manipulation

The primary advantage of understanding the ICT Market Maker Model is that it helps traders avoid common market manipulation tactics used by market makers. By recognizing false breakouts, stop hunts, and liquidity grabs, traders can prevent themselves from getting trapped in losing positions. Knowing how market makers operate allows you to adjust your strategy and act when opportunities arise, rather than reacting to deceptive price movements.

Improved Trade Entries and Exits

With a deep understanding of the ICT Market Maker Model, traders can improve their trade entries and exits. The model teaches traders to wait for confirmation before entering a trade, rather than jumping in prematurely during a false breakout or liquidity grab. This helps traders enter at optimal points, where the risk is minimized, and the potential for profit is maximized.

Better Risk Management

By learning how market makers target liquidity and trigger stops, traders can improve their risk management. Instead of placing stop-loss orders at obvious support or resistance levels, traders can strategically position their stops to avoid being caught by a market maker’s manipulation. This reduces the risk of premature stop-outs and increases the likelihood of staying in profitable trades.

Aligning with Institutional Order Flow

The ICT Market Maker Model teaches traders to align their strategies with the flow of large institutions, also known as the smart money. By following the institutional order flow, traders can position themselves alongside the entities that have the greatest influence on price direction, rather than trading against them. This alignment gives traders a significant edge over retail traders who are unaware of these movements.

Increased Profitability

Ultimately, understanding and applying the ICT Market Maker Model can lead to increased profitability. By avoiding traps set by market makers, improving your trade entries and exits, and following the smart money, you can increase your chances of making successful trades. The model provides a framework for making more informed and calculated decisions, which can translate to higher profits over time.

Common Mistakes When Using ICT Market Maker Model

Even with a good understanding of the ICT Market Maker Model, traders can still make mistakes that lead to losses. By identifying these common mistakes, you can avoid falling into the same traps and improve your trading performance.

Entering Too Early During a False Breakout

One of the most frequent mistakes traders make is entering a trade too early during a false breakout. While the ICT Market Maker Model teaches traders to recognize false breakouts, many traders act too soon, believing that the breakout is genuine. This leads to premature entries and potential losses when the price reverses. The key is to wait for confirmation, such as a shift in market structure, before committing to a trade.

Ignoring Liquidity Zones

Another common error is ignoring or misjudging liquidity zones. These zones are where market makers target stop-loss orders and gather liquidity. Some traders overlook these areas or fail to account for both buy-side and sell-side liquidity. By not paying attention to liquidity zones, traders increase their risk of falling victim to stop hunts and manipulation tactics. It’s crucial to constantly monitor the market for these zones and position trades accordingly.

Placing Stops at Obvious Levels

Many traders make the mistake of placing their stop-loss orders at obvious support and resistance levels. Market makers are well aware of these levels and frequently target them to trigger stop hunts. By placing stops too close to these key levels, traders expose themselves to premature stop-outs. A better strategy is to place stops away from areas that market makers are likely to target, reducing the risk of getting caught in a stop hunt.

Over-Leveraging Positions

Finally, over-leveraging is a mistake many traders make when using the ICT Market Maker Model. Even when you have correctly identified liquidity zones or a potential market maker move, risking too much capital on a single trade can lead to large losses if the trade goes against you. Proper risk management is crucial to long-term success. Traders should avoid over-leveraging and ensure that their trade size aligns with their overall risk tolerance.

Conclusion

The ICT Market Maker Model provides traders with valuable insights into how market makers manipulate price movements to capture liquidity and trigger retail stop-loss orders. By understanding the core concepts of liquidity pools, stop hunts, and institutional order flow, traders can better position themselves to avoid traps and profit from market movements.

Using the ICT Market Maker Model allows traders to improve their trade entries and exits, align with the smart money, and develop a more strategic approach to risk management. However, it’s equally important to avoid common mistakes such as entering too early during a false breakout or placing stops at obvious support and resistance levels.

In summary, the ICT Market Maker Model equips traders with the knowledge and tools to navigate market manipulation effectively, improve profitability, and make smarter trading decisions. Whether you’re a beginner or an experienced trader, incorporating this model into your strategy can provide a significant edge in the ever-volatile world of trading.

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seojinleelee

Hi, I’m Seojin Lee, an experienced trader focusing on the U.S. stock market, particularly NASDAQ and E-mini S&P futures. As a Chartered Financial Analyst (CFA), I apply my knowledge of financial analysis and market strategies to identify profitable opportunities.

I specialize in both short-term and long-term trading, always balancing risk management with market trends. With years of experience, I continuously refine my strategies to adapt to market shifts. If you’re interested in trading insights or strategies, you’ve come to the right place!