What Is a Premium Wick ICT? | ICT Trading Explained

Learn what a premium wick means in ICT trading. Understand its role in smart money concepts, price delivery, and entry strategies.

ICT is an acronym that refers to Inner Circle Trader, a trading style that is concerned with the movement of the market by smart money (such as banks and large investors). It assists traders in comprehending price movements in a better way. One of the concepts is the premium and discount zones – prices above 50 per cent of a range are premium (expensive), and below are discount (cheap). ICT also describes such concepts as order blocks, price delivery, and liquidity. These tools are used by many traders, including those who learn with platforms such as Beirman Capital, to prevent retail traps and trade more accurately.

What Is a Premium Wick ICT?

A premium wick is the upper shadow of a candle that develops in the premium zone, which is the zone above the 50 per cent level of a price range. This wick is frequently an indication of where the smart money is seeking liquidity in ICT trading. It can appear that the price is rising, but it is usually a trap to get stop-losses before the actual move starts.

These wicks are seen around resistance areas or at the peak of a swing and tend to indicate that the market may turn around. Premium wicks are closely monitored by traders as they are usually indicators of smart money manipulation and price reversals.

Premium Wick vs Discount Wick: Know the Difference to Trade Better

What Is a Premium Wick?

At the upper end of the price range, there is a premium wick, which is the premium zone. It indicates that the price is expensive, and smart money (big traders) may be selling. This wick, at times, deceives buyers by increasing the price momentarily and then dropping.

What Is a Discount Wick?

A discount wick is found at the bottom of the price range, which is referred to as the discount zone. It implies that the price is cheap and there is a possibility of smart money buying. This wick can fool sellers by making the price drop a little, but then it usually goes back up.

Why Are Both Wicks Important?

Both the premium and the discount wicks demonstrate where the smart money seeks liquidity. They make fake movements that may mislead ordinary traders. Knowing these wicks will enable you to understand when the market may turn around and when to buy or sell.

Why Do Wicks Matter in ICT Trading?

Wicks are highly significant in ICT (Inner Circle Trader) trading. They are not mere random price fluctuations; they tend to indicate where large players (smart money) are operating. A wick is created when the price reaches a level, touches it and then quickly moves away. This normally happens when a large number of traders have set their stop-loss orders or pending orders.

These levels are used by smart money to gather liquidity. As an example, a high-quality wick can extend beyond a recent high, triggering stop losses of sellers or buy orders of retail traders. However, the price falls instead of rising. This action deceives traders into believing that the price will increase. The same occurs with discount wicks, only in reverse.

Wicks display fake breakouts or fake moves. ICT traders consider these wicks as market manipulation or smart money traps. Rather than responding to the wick, they wait for confirmation from market structure or order blocks.

With the right knowledge of wicks, traders will not make emotional decisions and will be able to think like smart money. Wicks are hints; they indicate where the actual fight between buyers and sellers is taking place.

How to Trade Using Premium Wicks

Trading with premium wicks needs patience and the right setup. Here’s a simple step-by-step guide to help you understand how it works:

Step 1: Identify the Price Range

First, get a good high and low on your chart. Note the 50 per cent mark; the space above this is referred to as the premium zone.

Step 2: Spot the Premium Wick

Find a candle whose wick rises above the 50 per cent line (premium zone) but closes below it. This wick indicates that the price has reached a costly zone, and it can reverse soon.

Step 3: Wait for Confirmation

Don’t get into the trade just because you see a wick. Wait for signs such as market structure change, breaker block or FVG (fair value gap) to confirm the move.

Step 4: Set Entry, Stop Loss, and Target

Once confirmed, you can go into a sell trade. Put your stop loss above the wick and set your take profit near the discount zone or the next support level.

Step 5: Practice and Review

To practice using the tools of replay or trade on a demo account. The more you see premium wick behaviour, the more your entries will improve.

Common Mistakes to Avoid

While trading with premium wicks can be powerful, many traders make simple mistakes that lead to losses. Here are some common ones to avoid:

1. Entering Without Confirmation

Among the greatest errors is to get into a trade simply because one sees a wick. A high-quality wick can appear robust, but unless it is confirmed (such as a structural break or other ICT tools), it can fail.

2. Ignoring the Bigger Picture

Traders tend to concentrate on short periods. Never forget to look at the trend of the higher timeframe. A counter-trend wick may not be effective.

3. Placing Stop Loss Too Close

Liquidity hunts include wicks. When your stop loss is too tight, it may be hit before the actual move starts. Never crowd the trade.

4. Trading Every Wick You See

Not all wicks are high-quality wicks. Seek wicks that are observed in the appropriate zones (more than 50 per cent) and active sessions such as London or New York.

5. Rushing the Trade

ICT trading is a matter of patience. Without planning, you may end up in smart money traps when you rush into trades.

Avoiding these mistakes can help you trade smarter and with more confidence.

Final Thoughts

Knowing premium wicks in ICT trading will enable you to understand where the smart money may come in or out. It is not only about seeing wicks, but reading them in the proper context. These arrangements can enhance your accuracy in trading with time and practice. Whether you want to know more or require professional advice, the Beirman Capital team is at your service. Do not hesitate to reach out to us and advance your smart money trading.

FAQs

What is a premium discount in ICT?

In ICT, premium is the upper half of a price range (expensive zone), and discount is the lower half (cheap zone). Merchants purchase cheap and sell expensive.

What is the wick theory in ICT trading?

Wick theory in ICT demonstrates how traders are trapped by smart money using candle wicks. Wicks tend to capture stop-losses even before the actual market direction begins.

What is the premium in ICT?

Premium in ICT trading is the top half of the price range. It is perceived as a costly region where intelligent money tends to sell or take profits.

Is ICT trading profitable?

Yes, ICT trading is profitable when applied with discipline and practice. It is centred on the idea of smart money, yet outcomes are determined by the skill and patience of the trader.

What is a wick in trading?

A wick is the thin line on top or bottom of a candle body. It indicates how much the price went up or down before closing during that time frame.