# Optimal trade entry (OTE): a strategy to learn and test | DT Academy > In a fresh leg, buy the 62 to 79% pullback in discount, or sell it in premium. [Strategy Library](https://www.thedtterminal.com/academy/strategies) ICT # Optimal trade entry (OTE) An ICT entry zone. Draw the leg from a meaningful swing low to swing high. Below its halfway point is discount, above it premium. In an up leg you look to buy the pullback into the 62% to 79% retracement, with 70.5% as its middle, and the mirror in a down leg. Advanced Forex, indices, gold London and New York M15, H1, H4 [Use this strategy](https://www.thedtterminal.com/login?signup=true&from=academy&entry=strategy_use&redirect=%2Fjournal%2Facademy%2Fstrategies%2Fict_ote_pullback) [Practice it](https://www.thedtterminal.com/login?signup=true&from=academy&entry=strategy_practice&redirect=%2Fjournal%2Facademy%2Fstrategies%2Fict_ote_pullback) Example 01 ### Optimal trade entry (OTE) on a chart EURUSD · M15 OTE band leg, pullback, continue Leg: 1.0810 to 1.0870OTE band: 1.0823 to 1.0833Entry at 70.5%: 1.0828Stop: 1.0807Sample candles, not market data The pullback reached the 62% to 79% band below the halfway point and turned there. The stop sits beyond the start of the leg. ### The rules Setup Pick the leg from a swing that swept liquidity or broke structure, not a minor wiggle Draw the retracement over it and mark 50% (equilibrium), 62%, 70.5% and 79% Entry In an up leg, enter on a pullback into the 62% to 79% band, in discount (mirror it in a down leg) Stop Beyond the start of the leg (the swing low for a long) Target The end of the leg, or the liquidity beyond it Manage Redraw the leg when price makes a new swing ### Common mistakes - Drawing it on a minor swing. A random leg gives a random zone. Choose the swing by a written rule. - Treating 70.5% as exact. Nothing makes 70.5% special beyond being the middle of the band. - Never redrawing. Once price makes a new leg, the old zone is out of date. ### When it's off - Call it off if price closes beyond the start of the leg - Skip a pullback that stops in premium for a long, or discount for a short ### Words to know Optimal trade entry The 0.62 to 0.79 retracement band of a leg, deep in discount for longs or premium for shorts, with 0.705 as its middle. Premium and discount Split a leg or dealing range at 50% (equilibrium): the upper half is premium, the lower half discount. In a bullish range you look to buy in discount, in a bearish range to sell in premium; price in the wrong half is a reason to wait, not a signal the other way. Fibonacci retracement A tool that measures how deep a pullback is as a fraction of the leg (0.382, 0.5, 0.618, 0.786). Draw it low to high on a leg up and high to low on a leg down, on the leg that broke structure, usually wick to wick. Golden zone The part of a pullback many traders watch most, commonly the 0.5 to 0.618 retracement; the tighter golden pocket (0.618 to 0.65) and a deeper 0.618 to 0.786 version exist too. It is a place to look, not a reason to enter: it needs structure and a trigger. Swing high and swing low A swing high is a peak with lower highs on both sides; a swing low is a dip with higher lows on both sides. It only counts once the candles to its right have closed. Equilibrium The 50% point of a leg or range, between premium and discount. When you make it yours, I'll ask what the rules above leave open. Start with one of these: - Which swings make your leg, and on which timeframe? - Do you draw from wicks or from bodies? - Do you enter anywhere in 62% to 79%, at 70.5%, or after a lower timeframe confirmation? [Ask Edge in DT Terminal](https://www.thedtterminal.com/login?signup=true&from=academy&entry=strategy_question&redirect=%2Fjournal%2Facademy%2Fstrategies%2Fict_ote_pullback) ## From DT Academy - [Dealing ranges, premium, discount and OTE](https://www.thedtterminal.com/academy/ict-dealing-ranges-and-ote) - [The golden zone](https://www.thedtterminal.com/academy/the-golden-zone) - [Market structure](https://www.thedtterminal.com/academy/market-structure) ## What testing exists No evidence was found that these retracement levels are special. Treat the band as a hypothesis to test against a simple control. ## Before you trust a backtest - Many professional traders risk under 1% of their account on one trade idea, and the common guideline is 1 to 2%. - The more versions of a rule you try on the same data, the more likely a good backtest is luck. Decide your rules before you test. - Include spread and commission, and practice on dates you have not looked at, before you trust a result. ## Sources - [Optimal trade entry (opens in a new tab)](https://www.luxalgo.com/library/concept/optimal-trade-entry/), LuxAlgo Library - [Premium and discount (opens in a new tab)](https://www.luxalgo.com/library/concept/premium-and-discount/), LuxAlgo Library - [ICT trading concepts (opens in a new tab)](https://fxopen.com/blog/en/what-are-the-inner-circle-trading-concepts/), FXOpen - [Controlling risk (opens in a new tab)](https://www.ig.com/en/ig-academy/money-management/controlling-risk), IG Academy - [Forex risk management (opens in a new tab)](https://www.cmcmarkets.com/en-gb/forex/forex-risk-management), CMC Markets - [Pseudo-mathematics and financial charlatanism (Notices of the AMS, 2014) (opens in a new tab)](https://scholarworks.wmich.edu/math_pubs/40/), Bailey, Borwein, López de Prado and Zhu - [What is backtesting? (opens in a new tab)](https://www.ig.com/uk/trading-strategies/what-is-backtesting-and-how-do-you-backtest-a-trading-strategy--220426), IG DT Academy is education, not financial advice. Nothing here is a recommendation to buy or sell any instrument. Trading carries a high risk of losing money, and past results, examples and backtests do not guarantee future results. [Risk disclosure](https://www.thedtterminal.com/risk-disclosure) --- Risk disclosure: Futures, forex and options trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing one's financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results. [Read the full risk disclosure](https://www.thedtterminal.com/legal/risk-disclosure). This is the Markdown version of https://www.thedtterminal.com/academy/strategies/ict_ote_pullback. [Home](https://www.thedtterminal.com/) · [Verification](https://www.thedtterminal.com/verification) · [Pricing](https://www.thedtterminal.com/pricing) · [Supported brokers](https://www.thedtterminal.com/supported-brokers) · [Rankings](https://www.thedtterminal.com/rankings) · [About](https://www.thedtterminal.com/about) · [llms.txt](https://www.thedtterminal.com/llms.txt)