ICT Dealing Range Explained: How Institutions Frame Every Move

If you have ever felt like price moves randomly between highs and lows, the dealing range will change that perception permanently. It is arguably the single most important concept in the ICT methodology because every other tool -- fair value gaps, order blocks, breakers, liquidity sweeps -- only becomes useful once you understand the range price is operating inside.

The dealing range is the canvas. Everything else is paint.

What Is a Dealing Range?

A dealing range is the measured distance between a clearly defined swing high (the Dealing Range High, or DRH) and a clearly defined swing low (the Dealing Range Low, or DRL). It represents a completed cycle of price delivery where the algorithm has raided both buy-side and sell-side liquidity.

Think of it this way: the market needs to collect orders on both sides of a range before it can efficiently deliver price in its intended direction. Once it sweeps above an old high and below an old low, that range becomes the active dealing range. The algorithm references it for everything that follows.

The Three-Bar Swing

Swing highs and lows within a dealing range are confirmed using a three-bar (three-candle) swing pattern:

• Swing high: The middle candle's high is above the candle to the left and the candle to the right
• Swing low: The middle candle's low is below the candle to the left and the candle to the right

This is not arbitrary. The three-bar swing is how the algorithm registers a valid swing point. Until that pattern prints, the swing is not confirmed and the dealing range is not set.

How a Type 1 Dealing Range Forms

The type 1 dealing range is a continuation profile. It forms when the market completes a full liquidity raid on both sides of a swing range, then prepares to continue in its original direction.

Bearish Type 1

1. Price is traveling lower from a higher timeframe perspective (reaching for sell-side liquidity or an inefficiency below)
2. The market runs higher first, sweeping above an old swing high -- this raids buy-side liquidity and triggers buy stops
3. Price then drops below an old swing low, raiding sell-side liquidity and triggering sell stops
4. A new three-bar swing confirms the dealing range low
5. You now have a defined DRH and DRL -- the bearish dealing range is set

The expectation: price retraces into the upper portion of this range (premium) before continuing lower.

Bullish Type 1

The mirror image:

1. Price is traveling higher from a higher timeframe perspective
2. The market drops lower first, sweeping below an old swing low to raid sell-side
3. Price then runs above an old swing high, raiding buy-side
4. A new three-bar swing confirms the dealing range high
5. The bullish dealing range is set

The expectation: price retraces into the lower portion of this range (discount) before continuing higher.

The critical rule in both cases: both sides of liquidity must be raided before the dealing range is valid. If only one side has been swept, the dealing range is not complete.

DRT Levels: Grading the Range

Once the dealing range is identified, the next step is grading it into quadrants using a Fibonacci tool. These are called DRT levels (Dealing Range Theory levels), and they divide the range into precise zones that the algorithm references as it delivers price.

Plot a Fibonacci retracement from the DRH to the DRL:

• DRH (0.0) -- The dealing range high. The ceiling of the range.
• 25 DRT (0.25) -- The first quadrant below the high. Deep premium territory.
• 50 DRT (0.5) -- Equilibrium. The fair value midpoint of the entire range. This is the dividing line between premium and discount.
• 75 DRT (0.75) -- The third quadrant. Deep discount territory.
• DRL (1.0) -- The dealing range low. The floor of the range.

Everything above the 50 DRT is premium. Everything below it is discount.

Why DRT Levels Matter

These levels are not arbitrary support and resistance lines. They are data points that the delivery algorithm references when printing price. High-probability arrays -- fair value gaps, order blocks, breakers -- form in close proximity to DRT levels. When an array overlaps with a DRT level, the probability of a reaction increases substantially.

If you see a sell-side imbalance (fair value gap) sitting right at the 25 DRT level inside a bearish dealing range, that is not a coincidence. The algorithm printed that inefficiency at that DRT level intentionally.

The 50 DRT Filter

For traders still building their edge, the 50 DRT level is the single most powerful filter available.

The rule is simple:

• Bearish dealing range: Do nothing until price retraces above the 50 DRT level. Only look for short setups in premium territory.
• Bullish dealing range: Do nothing until price retraces below the 50 DRT level. Only look for long setups in discount territory.

This one filter eliminates the majority of low-quality trades. If price cannot retrace to the opposite side of equilibrium, you sit on your hands. No exceptions.

Reading Body Behavior at the 50 DRT

Pay attention to how candle bodies interact with the 50 DRT level:

• Bodies failing to close above the 50 DRT in a bearish dealing range means the market is heavy. Sellers are in control and the market is in a hurry to continue lower. This is strong confirmation of bearish intent.
• Bodies failing to close below the 50 DRT in a bullish dealing range means the market is supported. Buyers are in control.
• Bodies closing decisively through the 50 DRT into premium or discount means the retracement is healthy and the algorithm is likely reaching for a specific array deeper in the range.

This body-level analysis at the 50 DRT tells you more about who is in control than any indicator can.

Extending the Dealing Range

The dealing range is not static. It extends as new swing points form:

• In a bullish dealing range, if price makes a new swing high, you keep the DRL in place and extend the DRH to the new high. The range grows, but the anchor stays.
• In a bearish dealing range, if price makes a new swing low, you keep the DRH in place and extend the DRL to the new low.

You keep extending the range in the direction of the move until the opposite side is raided, which forms a new dealing range entirely. This means the DRT levels shift as the range extends. Recalculate them every time the range updates.

Parent and Child Dealing Ranges

Dealing ranges are fractal. A higher timeframe dealing range (the parent) contains smaller dealing ranges (the children) operating inside it.

This creates a hierarchy:

• The daily or 4-hour dealing range sets the macro context
• The 1-hour or 15-minute dealing range sets the intraday trading range
• The 5-minute or 1-minute dealing range provides execution-level precision

The most powerful setups occur when DRT levels from the parent range overlap with DRT levels from the child range. If the 25 DRT on the daily coincides with the 50 DRT on the 1-hour, that confluence creates an extremely high-probability zone for entries.

This is the same multi-timeframe analysis principle applied specifically to dealing range theory.

Connection to Other ICT Concepts

The dealing range is not an isolated concept. It is the framework that makes every other concept tradeable.

Premium and Discount

The dealing range defines what is actually premium and discount. Without a defined range, "premium" and "discount" are meaningless labels. The 50 DRT level of the active dealing range is the real equilibrium -- not some arbitrary Fibonacci level drawn on a random swing.

For a deeper breakdown, see the full guide on ICT premium and discount zones.

Power of 3 (AMD)

The Power of 3 plays out inside the dealing range:

• Accumulation occurs as price consolidates within the range, typically near the 50 DRT or at the range extremes
• Manipulation is the sweep of liquidity at the DRH or DRL -- the false move that triggers stops
• Distribution is the continuation move through the range toward the draw on liquidity

Once you see how AMD maps onto the dealing range, you can anticipate which phase you are in based on where price sits relative to the DRT levels.

Fair Value Gaps and the Measuring Gap

Fair value gaps that form near DRT levels are algorithmically significant. But there is a specific formation that confirms you have the right dealing range:

A measuring gap is a fair value gap that prints at or very near the 50 DRT level. If you see a fair value gap form right at the halfway point of your range, you know the dealing range is valid and the algorithm is referencing it. This is a powerful confirmation tool.

When building your fair value gap strategy, always cross-reference the gap's position against the DRT levels of the active dealing range.

Liquidity Sweeps

The dealing range literally requires liquidity sweeps to form. Both the buy-side and sell-side must be raided. Once the range is set, the next liquidity targets become clear: they will be at or beyond the dealing range extremes, or at specific DRT levels where arrays have formed.

Understanding this removes the guesswork from identifying where sweeps will occur. The algorithm is reaching for stops clustered at predictable levels within the dealing range structure.

Market Structure

A break of structure within a dealing range is significant because it tells you which direction the algorithm is delivering price. A BOS above a short-term high inside a bearish dealing range suggests the retracement is reaching into premium -- not that the trend has reversed. Context from the dealing range prevents you from misreading structure shifts.

Trading the Dealing Range: Step by Step

Here is a practical workflow for using dealing ranges in live trading.

Step 1: Establish Higher Timeframe Bias

Before looking at any dealing range, determine the higher timeframe draw on liquidity. Is price heading toward a liquidity pool above (buy-side draw) or below (sell-side draw)? Is there an unmitigated inefficiency the market needs to rebalance?

Without directional bias, the dealing range is just a box on the chart. Bias gives it purpose. Your top-down analysis starts here.

Step 2: Identify the Active Dealing Range

Find the most recent swing high and swing low where both buy-side and sell-side have been raided. Confirm the swings with three-bar swing patterns. This is your active dealing range.

Step 3: Grade with DRT Levels

Plot Fibonacci from DRH to DRL. Mark the 25, 50, and 75 DRT levels. Note which zone price currently occupies.

Step 4: Wait for the Correct Zone

If your bias is bearish, wait for price to retrace into premium (above 50 DRT). If bullish, wait for discount (below 50 DRT). If price never reaches your zone, you do not trade. This patience is what separates profitable dealing range traders from everyone else.

Step 5: Look for Confluence at DRT Levels

The best entries occur where a DRT level overlaps with one or more of these:

• A fair value gap sitting at a DRT level
• An order block forming at a DRT level
• A breaker block at a DRT level
• A liquidity pool just beyond a DRT level that acts as a magnet

The Institutional Price Blocks indicator can help identify order blocks and breaker formations that align with these levels. For mapping where fair value gaps cluster relative to range structure, the Impulse & Balance indicator highlights the imbalances that matter.

Step 6: Execute with Defined Risk

• Entry: At the confluent DRT level where your array sits
• Stop: Beyond the dealing range extreme (above DRH for shorts, below DRL for longs)
• Target: The draw on liquidity identified in Step 1

Your risk is defined by the range itself. This is why the dealing range is the canvas -- it gives you the boundaries for every trade decision.

The Implied Dealing Range

There is a more advanced application worth mentioning: the implied dealing range. This is not a range you draw from historical price swings. It is the range smart money is operating within for a specific trade.

When institutions go short at the DRH after sweeping buy-side liquidity, they are targeting sell-side liquidity at or below the DRL for offset distribution. The implied dealing range is from their entry to their profit target. Within that implied range, they distribute their position in stages:

• First stage offset distribution: The first significant liquidity pool below (for shorts). Institutions take partial profit here.
• Second stage offset distribution: The next liquidity pool deeper in discount. The remainder of the position is closed here.

Understanding this helps you anticipate where price will pause, consolidate, or bounce temporarily during a trending move. These pause points are the stages where smart money is banking profit.

The CRT with Key Levels indicator can help identify these candle range theory patterns that often signal the beginning or end of an offset distribution stage.

Common Mistakes

Drawing Dealing Ranges Without Liquidity Raids

If price has not swept both buy-side and sell-side, you do not have a dealing range. You have a swing range. There is a difference. The dealing range requires both sides to be cleared.

Ignoring the Higher Timeframe

A dealing range on the 5-minute chart means nothing if the daily or 4-hour dealing range is pointing in the opposite direction. Always start with the higher timeframe context. The MTF Confluence Key Levels indicator can help you keep higher timeframe levels visible on your execution chart.

Forcing Entries Outside Premium/Discount

If you are bearish and price is sitting in discount, there is no trade. If you are bullish and price is in premium, there is no trade. The 50 DRT filter exists for a reason. Respect it.

Not Extending the Range

When price makes a new swing high or low, the dealing range changes. If you fail to extend it, your DRT levels are wrong and your entries will be off. The range is dynamic. Update it as price evolves.

The Dealing Range in Session Context

The dealing range integrates directly with session-based trading. During the Asian session, price often forms the accumulation portion of the dealing range -- a tight consolidation that builds liquidity on both sides.

London then manipulates one side of that range, sweeping liquidity to form the dealing range extreme. New York either continues the move (distributing through the range) or provides a retracement into a DRT level before the next leg.

During kill zones, the dealing range tells you exactly what to expect. If the London session swept the DRH and you are bearish, the New York session should deliver price into discount. The DRT levels give you the specific zones where the NY retracement is likely to stall and reverse.

Summary

The dealing range is the foundational framework for institutional price delivery. Every concept in the ICT toolkit -- premium/discount, AMD, fair value gaps, liquidity sweeps, market structure -- becomes more precise when anchored to a properly identified dealing range.

The workflow is straightforward:

1. Define the range (both sides of liquidity raided, confirmed with three-bar swings)
2. Grade it with DRT levels (25, 50, 75)
3. Determine higher timeframe bias
4. Wait for price to enter the correct zone (premium for shorts, discount for longs)
5. Find confluence at a DRT level (FVG, OB, breaker, liquidity pool)
6. Execute with risk defined by the range extremes

If you do nothing else but learn to define the dealing range you are trading inside, grade it with DRT levels, and use the 50 DRT as a filter, you will eliminate the majority of losing trades that come from trading in the wrong zone at the wrong time.

The dealing range is where the edge lives. Everything else is detail.