Open High Low Close (OHLC / OLHC) - ICT Concepts

Introduction

This tutorial will guide you through the Open High Low Close (OHLC) and Open Low High Close (OLHC) concepts, important tools in trading analysis. Understanding these concepts will help you make informed decisions based on market movements. We will cover definitions, practical examples, and how to apply these concepts effectively.

Step 1: Understand OHLC and OLHC

• OHLC Definition:

  • The OHLC chart represents the opening, highest, lowest, and closing prices of a trading period.
  • Each bar on an OHLC chart provides a comprehensive view of price movement, allowing traders to analyze trends.

• OLHC Definition:

  • The OLHC chart is similar but emphasizes the opening, lowest, highest, and closing prices.
  • This format can be useful for specific trading strategies where the opening price is more significant.

Step 2: Expect Patterns in OHLC/OLHC

• Recognizing Trends:

  • Look for patterns in the OHLC/OLHC data to identify potential market reversals or continuations.
  • Pay attention to how the closing price relates to the opening price, as this can indicate bullish or bearish sentiments.

• Using Indicators:

  • Leverage indicators to enhance your analysis of OHLC/OLHC data.
  • For example, consider using the "HTF Power of Three" indicator available on TradingView.

Step 3: Analyze Practical Examples

• Example 1:

  • Observe the OHLC data for a specific timeframe.
  • Identify the high and low points, and assess how they relate to the opening and closing prices.

• Example 2:

  • Examine another trading period with different market conditions.
  • Compare how the OHLC format reflects the market behavior.

• Example 3:

  • Analyze a volatile trading session.
  • Focus on how the opening price influenced subsequent price movements.

Step 4: Implementing OHLC/OLHC in Trading Strategies

• Create Trading Plans:

  • Use OHLC/OLHC data to formulate entry and exit strategies.
  • Set stop-loss orders based on the high and low prices to manage risk effectively.

• Backtesting Strategies:

  • Test your trading strategies using historical OHLC/OLHC data to assess their effectiveness.
  • Adjust your strategies based on the backtesting results.

Conclusion

Understanding and applying OHLC and OLHC concepts can significantly enhance your trading strategy. By recognizing patterns and utilizing these tools effectively, you can make more informed trading decisions. To further your learning, consider exploring additional resources, joining trading communities, and participating in mentorship programs. Always remember to practice risk management in your trading activities.