Plain-English SMC/ICT Glossary: Liquidity, Order Blocks, FVG, BOS & Inducement

Why this exists

The single most common complaint about SMC/ICT content is jargon used without definitions — 'liquidity,' 'bias,' 'order block,' thrown around as if you already know them. Here's each term in plain English. Where a concept is just an old idea renamed, we say so.

The core terms

• Liquidity — resting orders (mostly stop-losses) clustered where they're predictable: just beyond obvious swing highs/lows. 'Taking liquidity' = price spiking through that level.
• Order block — the last candle before a strong move; treated as a zone price may return to. In practice, a support/resistance / supply-demand zone with new vocabulary.
• Fair Value Gap (FVG) / imbalance — a gap left by a fast move where little trading happened; some expect price to 'fill' it. It's a gap; sometimes it fills, sometimes it doesn't.
• BOS (Break of Structure) — price breaks a recent swing high/low, said to confirm trend continuation. A trend-line/structure break by another name.
• CHoCH (Change of Character) — the first break against the prevailing trend, said to signal a reversal. A potential trend reversal, relabeled.
• Bias — which direction you expect price to go, usually set from a higher timeframe.
• Inducement — a tempting-looking setup said to be 'bait' to trap traders before the 'real' move. Largely unfalsifiable after the fact.
• Mitigation / premium & discount — price returning to a zone (mitigation); the upper/lower half of a range (premium/discount) — i.e., fancy names for 'pullback' and 'expensive vs cheap within a range.'

The honest footnote

Most of these are classic price-action ideas — levels, gaps, trend breaks — with new names. That's not automatically bad: levels and trend matter. But renaming them doesn't make them a verified edge. When we backtested the mechanical SMC rules across 741 assets, they didn't beat buy-and-hold on a meaningful share. Use the vocabulary if it helps you think; don't pay for the mythology.