In ICT (Inner Circle Trader) concepts, a premium wick is the part of a candlestick that forms in the premium zone of the market, which is above the 50% equilibrium level. This is where liquidity is collected before price reverses. These wicks often signal stop hunts and possible trade setups if confirmed.
Key Takeaways
- Premium wicks appear above the 50% equilibrium line in ICT models.
- They show liquidity grabs where stops are run before the price reverses.
- ICT traders use the premium/discount framework to decide where to look for trades.
- Not every premium wick is a signal; context and confirmation matter.
- Marking the 50% line with Fibonacci helps spot premium wicks accurately.
What is a Premium Wick in ICT?
In ICT trading, a premium wick is the wick of a candlestick that forms above the equilibrium level of a price range. ICT teaches that the market operates between premium zones (above 50%) and discount zones (below 50%).
When a wick forms in the premium zone, it can signal that the market is grabbing liquidity before reversing back into the range. ICT traders see this as a sign of smart money manipulation: institutions sweep liquidity, then move price in the opposite direction.
Premium wicks are especially useful when you combine them with other ICT tools like order blocks, fair value gaps, and market structure shifts.
Premium vs. Discount Concept in ICT
The premium/discount model is at the heart of ICT trading. It divides a price range into two halves:
| Zone | Location | Meaning |
| Premium | Above 50% equilibrium level | Price is expensive; look for sales. |
| Discount | Below 50% equilibrium level | Price is cheap; look for buys |
ICT traders draw a Fibonacci retracement from high to low of a range. The 50% line becomes the equilibrium. Anything above is premium; anything below is discount.
- Premium Zone: Price is considered expensive. Ideal area to look for shorts.
- Discount Zone: Price is considered cheap. Ideal area to look for longs.
When a wick forms above premium, it may mean the price has run stops and is now ready to move lower. This is the essence of the premium wick ICT concept.
How Premium Wicks Form
A typical premium wick scenario looks like this:
- Price trades within a range.
- It pushes above the 50% equilibrium (premium zone) into previous highs.
- Stop-loss orders of retail traders sitting above these highs are triggered.
- A large upper wick forms as price quickly reverses down.
- Market structure shifts, giving a possible short entry.
This pattern is ICT’s way of showing stop hunts or liquidity sweeps. Think of it as the market reaching above a ceiling to grab liquidity, leaving a wick, and then moving back down. Traders who understand this can avoid getting trapped and instead trade in the direction of the real move.
Trading Implications of Premium Wicks
Premium wicks are not a buy signal like long lower wicks. They’re usually a warning of false breakouts and a chance to trade in the opposite direction (short) after the sweep.
Here’s a simple ICT‑style approach:
- Mark the 50% equilibrium line of a range using Fibonacci.
- Watch for the price to spike above the line (premium zone) and form a long upper wick.
- Wait for a market structure shift back below the equilibrium.
- Enter a short trade with a stop above the wick.
- Target the opposite side of the range or a fair value gap.
Comparison Table: Premium vs Discount Wicks
| Feature | Premium Wick (Above 50%) | Discount Wick (Below 50%) |
| Location | Above equilibrium line | Below equilibrium line |
| Typical Direction | Liquidity grab before price moves down | Liquidity grab before price moves up |
| Trade Bias | Look for sales after confirmation | Look for buys after confirmation |
| Common Setup | Stop hunting for highs, and then reverse. | Stop hunting for lows, then reverse. |
| Best With | Order blocks and market structure shift | Order blocks and market structure shift |
This table helps visualize why premium wicks are often connected to short setups, while discount wicks often connect to long setups.
Mini Strategy: How to Trade a Premium Wick ICT‑Style
- Identify the Range:Mark the high and low of a key swing or session. Draw the 50% equilibrium line.
- Watch the Premium Zone: Wait for the price to push above the 50% level.
- Spot the Wick: Look for a candle with a long upper wick forming above previous highs.
- Wait for Confirmation: Check for a market structure shift back below the premium zone.
- Enter Short: Place stop just above the wick’s high. Target the low of the range or a fair value gap.
Real‑Life Examples of Premium Wicks
Forex Example
On GBP/USD, price trades between 1.2700 and 1.2600. After London opens, it spikes to 1.2725 (above premium), forms a long upper wick, then drops to 1.2580. Traders who waited for confirmation captured the move.
Stock Example
A stock rallies into previous highs above the 50% line of a swing range, forms a large upper wick on news, and reverses sharply. ICT traders interpret this as a liquidity grab and short opportunity.
Crypto Example
Bitcoin trades between $30,000 and $29,000. It spikes to $30,400 (premium), leaving a big upper wick, then collapses to $28,800. A classic premium wick liquidity sweep.
How Premium Wicks Tie into Liquidity Concepts
ICT teaches that the market moves to take liquidity before heading in its true direction. Premium wicks are a visible footprint of this liquidity hunt. They often form at:
- Swing highs (premium) for shorts.
- Swing lows (discount) for longs.
- Session highs/lows during London or New York opens.
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Start Trading ICT Strategies with Defcofx TodayTimeframes and Premium Wick Reliability
Premium wick signals vary across timeframes:
- 1‑Minute / 5‑Minute: Many false signals, high noise.
- 15‑Minute / 1‑Hour: Better reliability, used by intraday ICT traders.
- 4‑Hour / Daily: Most reliable premium wick patterns, used by swing and position traders.
Final Thoughts: What is a Premium ICT Wick?
In ICT concepts, a premium wick is a candlestick wick forming above the 50% equilibrium line, often signaling a liquidity grab before reversal. These wicks mark areas where stops are triggered and price may shift direction. They’re powerful clues but only with context, confluence, and confirmation.
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FAQs
In ICT trading, a premium wick is the part of a candlestick forming above the 50% equilibrium level (premium zone) of a price range. It often shows where liquidity was grabbed before price reversed lower. Traders use it as a clue for potential short setups.
ICT traders draw a Fibonacci retracement from the high to the low of a significant swing. The 50% level becomes the equilibrium. Anything above is premium; anything below is discount. By marking this line, you can quickly see when a wick forms in the premium zone.
Premium wicks matter because they reveal where smart money hunts liquidity. When price spikes above highs and leaves a wick, it shows that stops have been triggered. This often leads to a reversal. By spotting these areas, traders can avoid false breakouts and trade with the real move.
No. Not every wick in premium is a valid setup. Some form without enough liquidity or confluence. A strong premium wick trade usually aligns with other ICT concepts like order blocks, fair value gaps, market structure shifts, and time-of-day rules. Always wait for confirmation before entering.
Yes. The concept applies to forex, stocks, crypto, and commodities because it’s based on liquidity, not a specific asset. However, the reliability changes by timeframe. Higher timeframes like the 1‑hour, 4‑hour, and daily produce clearer and stronger premium wick signals than smaller charts.
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