ICT trading strategy: mastering the midnight open retracement

understanding the midnight open retracement concept

the ICT (inner circle trader) opening retracement is one of the most talked-about concepts in modern trading. no matter how you feel about ICT — the report we're going to show you today can have a material impact on your trading once you know how to apply it.

at its core, the ICT midnight open retracement strategy is based on a simple idea: price tends to retrace back to the midnight open (the open of the 12:00AM ET candle) at some point during the New York trading session (9:30AM to 4:00PM ET).

the theory suggests that:

• if price opens above the midnight open, it's likely to retrace down to that level
• if price opens below the midnight open, it's likely to retrace up to that level

but does this concept actually work? and more importantly, does it work consistently enough to give you an edge in the markets?

let's dive into the data to find out.

the statistical edge behind the ICT strategy

to truly understand the effectiveness of the ICT midnight open retracement, we need to look at the actual probabilities across different markets.

S&P 500 futures (ES)

the data for ES over the past 6 months reveals:

• when price opens above the midnight open, it retraces back down 58% of the time
• when price opens below the midnight open, it retraces up 69% of the time

this immediately gives us valuable insight: the ICT strategy is significantly more effective on ES when looking for long setups (price opening below the midnight open) compared to short setups.

when we break this down by weekday, the edge becomes even clearer:

on Thursdays, ES shows an even stronger tendency to retrace to the midnight open when opening below it. this kind of day-specific information can significantly enhance your trading plan, allowing you to focus on the highest probability setups.

Nasdaq futures (NQ)

for NQ, the statistics show:

• when price opens above the midnight open, it retraces back down 57% of the time
• when price opens below the midnight open, it retraces up 63% of the time

while still showing a positive edge, these numbers are slightly less compelling than ES for the baseline strategy. however, when filtered by weekday, Tuesday presents a much stronger opportunity:

on Tuesdays, NQ displays impressive retracement probabilities:

• 67% of the time over the last 6 months, price retraces back down when opening above the midnight open
• 73% of the time over the last 6 months, price retraces up when opening below the midnight open

this illustrates the importance of combining the basic ICT concept with additional subreports we have at edgeful to maximize your edge.

gold futures (GC)

the data for GC paints a different picture:

• when price opens above the midnight open, it retraces back down only 47% of the time
• when price opens below the midnight open, it retraces up just 50% of the time

these near 50-50 probabilities suggest that the basic ICT strategy doesn't provide a meaningful edge for gold traders. however, by using the "by size" report variant, we can identify specific conditions where the strategy becomes viable:

when filtering for gaps between 0.1-0.19% from the midnight open to the opening range, the probabilities improve significantly, especially for setups where price opens below the midnight open.

cryptocurrencies: Bitcoin (BTC) and Ethereum (ETH)

the ICT strategy shows particularly strong results on BTC:

• when price opens above the midnight open, it retraces back down 64% of the time
• when price opens below the midnight open, it retraces up 65% of the time

these consistent probabilities above 60% make BTC an excellent candidate for applying the ICT opening retrace strategy.

ETH shows more mixed results:

• when price opens above the midnight open, it retraces back down 63% of the time
• when price opens below the midnight open, it retraces up only 50% of the time

the data clearly suggests that for ETH, the ICT strategy is only playable for short setups when price opens above the midnight open — remember, we are shooting for probabilities higher than 60%...

how to implement the ICT trading strategy effectively

based on the data we've analyzed, here's a framework for implementing the ICT midnight open retracement strategy:

step 1: identify the midnight open level

use the opening price of the 12:00AM ET candle open as your reference point. this becomes your key target level for the session.

step 2: determine if price is opening above or below that level

at market open (9:30AM ET for stocks/futures), compare the opening price to the midnight open level.

step 3: check the probability for your specific market

refer to the historical probabilities for your instrument. focus on setups that have at least 60% probability, and ideally look for those with 70% or higher.

step 4: apply additional filters to increase edge

use the weekday data to further refine your bias and target selection. for example, prioritize ES longs on Thursdays or NQ trades on Tuesdays when the probabilities are highest.

step 5: execute with clear risk management

define your entry, stop loss, and take profit levels before entering the trade. the midnight open serves as your primary profit target.

real-world examples of the ICT strategy in action

let's examine three real examples of the ICT midnight open retracement strategy across different markets:

ES example from January 13, 2025

key observations:

• ES opened below the midnight open (blue horizontal line)
• based on our data, ES retraces up to the midnight open 69% of the time in this scenario
• price indeed moved up to the midnight open level and continued higher
• a clear long entry on the initial move up with targets at the midnight open would have been profitable

Bitcoin example from January 12, 2024

key observations:

• BTC opened above the midnight open level
• our data shows that BTC retraces down to the midnight open 64% of the time in this scenario
• a short entry on the trendline break provided a clear entry
• the midnight open level served as a perfect target, with price precisely reaching this level

Ethereum example from November 29, 2024

key observations:

• ETH opened above the midnight open level
• while the general probability for ETH to retrace down is 62%, on Fridays this jumps to 80%
• this day-specific edge made this an exceptionally high-probability setup
• a simple technical entry with the midnight open as target worked perfectly

in each of these examples, understanding both the general concept and the specific statistical edge for each market and day of the week was key to identifying high-probability opportunities.

why the ICT midnight open retracement works

there are several theories about why this strategy tends to work:

1. institutional activity: major financial institutions often use the midnight open as a reference point for their daily operations
2. algorithmic trading: many trading algorithms incorporate specific reference points, with the midnight level being one of them
3. mean reversion principles: markets tend to revert to key levels after moving away from them, and the midnight open serves as one such level
4. self-fulfilling prophecy: as more traders observe and trade this pattern, their collective action helps reinforce it

regardless of the underlying reason, the statistical evidence suggests that the ICT midnight open retracement does provide an edge when applied to the right markets under the right conditions.

optimizing your ICT trading strategy

to maximize your success with the ICT strategy, keep these advanced tips in mind:

priority #1: market selection matters

as we've seen, some markets show much stronger tendencies than others. prioritize instruments like ES, NQ (on Tuesdays), and BTC where the probabilities significantly favor the strategy.

priority #2: filter by day of week

the weekday effect is substantial. focus on days where the probabilities exceed 70% for your chosen instrument.

priority #3: combine with traditional technical analysis

use support/resistance, trendlines, or other technical patterns to fine-tune your entries while using the midnight open as your target.

priority #4: size appropriately based on probabilities

adjust your position size based on the historical probability. higher probability setups (70%+) might warrant larger positions than borderline setups (60-65%).

conclusion: incorporating the ICT strategy into your trading plan

the ICT midnight open retracement strategy offers a data-backed approach to finding high-probability trade setups across various markets. by understanding the specific statistics for each instrument and applying additional filters like day of the week, you can focus on the highest probability scenarios.

remember these key points:

• aim for setups with probabilities above 60%
• prioritize markets and days where probabilities exceed 70%
• always define your risk parameters before entering trades
• use the midnight open as your primary profit target
• combine with other technical analysis for optimal entry timing

by incorporating these principles into your trading plan, you can leverage the power of the ICT midnight open retracement strategy while avoiding lower probability scenarios that might drain your account.

want to access the ICT midnight open retracement report and analyze probabilities across dozens of markets? try our data-driven trading platform and transform your approach to the markets.