IPDA (Interbank Price Delivery Algorithm) is the ICT model by which institutional financial markets systematically target liquidity levels across lookback periods of 20, 40 and 60 days. Developed by Michael J. Huddleston (Inner Circle Trader), this theoretical framework explains how banks and financial institutions drive prices toward precise liquidity zones, creating predictable targets that retail traders can exploit. According to the Bank for International Settlements, the forex market averaged $7.5 trillion in daily volume in April 2022: at that scale, price delivery necessarily follows a structured logic.
What is IPDA in ICT?
Definition: Interbank Price Delivery Algorithm
IPDA is the name given by ICT to the algorithmic logic that, according to Huddleston, governs price delivery in institutional financial markets. The core principle is this: financial institutions have precise liquidity mandates, and their large-scale order executions create recurring patterns in price structure that ICT analysis seeks to identify and exploit.
It is not a technical indicator in the classical sense. IPDA is a temporal reading grid: it defines which time windows are relevant to identifying the liquidity levels the market will probably target. Based on these windows, the trader can locate the extreme highs and lows that constitute the next institutional targets.
The distinction from classical retail approaches is fundamental. A traditional retail trader looks for support and resistance based on Fibonacci retracements or congestion zones. An ICT trader using IPDA looks for the exact levels where liquidity (trader stops) has accumulated and must be collected before price moves in its real direction.
The ICT theoretical framework of liquidity
Liquidity is at the heart of the IPDA model. In ICT terminology, liquidity does not simply denote transaction volume: it refers to stop orders accumulated above recent highs and below recent lows.
According to the French Financial Markets Authority (AMF), approximately 89% of retail investors lose money on leveraged products. This statistic, viewed through the ICT lens, is partly explained by retail traders placing their stops at obvious technical levels (below supports, above resistances), creating exactly the liquidity institutions need to execute their positions.
IPDA models how this liquidity collection occurs across cycles of 20, 40 and 60 days. For a deeper introduction to Smart Money Concepts, see our guide on Smart Money Concepts for beginners.
IPDA and market prediction
IPDA does not claim to predict markets with certainty. It offers a framework to identify high-probability zones where accumulated liquidity creates a natural attraction for price. Any trading decision must be based on a confluence of signals and rigorous risk management.
IPDA lookback periods
20, 40 and 60 days: how to use them
The three IPDA lookback periods are the temporal reference windows for identifying institutional highs and lows. Each window covers a number of trading sessions (daily candles), and the extremes of each window constitute potential price targets.
| Lookback period | Sessions covered | Time horizon | Main use |
|---|---|---|---|
| 20 days | ~4 calendar weeks | Short-term (short swing) | Day trading, H4 swing |
| 40 days | ~8 calendar weeks | Medium-term (mid-quarter) | Swing trading, H4-Daily |
| 60 days | ~1 quarter | Long-term (quarterly shift) | Position trading, Weekly |
The practical application: on a Daily (D1) chart, go back 20 candles, identify the high and low of that period, then repeat for 40 and 60 candles. These six levels (3 highs and 3 lows) are the active IPDA targets.
Window priority depends on market context. At the start of a quarter, the 60-day window is dominant: price seeks to reach the previous quarter's extremes before repositioning. Mid-quarter, the 40-day window takes over. The 20-day window is used to refine intraday entries.
IPDA and range structure
IPDA structures each time window into a dealing range: the band delimited by the period's high and low. This range is not static: it recalculates daily as new candles are added and older ones leave the window.
The midpoint of the dealing range (the 50% level, called equilibrium in ICT terminology) separates the premium zone (above midpoint, favoring institutional short positions) from the discount zone (below midpoint, favoring institutional long positions). This premium/discount concept is fundamental to evaluating whether an entry signal is aligned with IPDA logic.
For a deep dive into the dealing range and its key levels, see our guide on ICT Dealing Range and IPDA Data Range.
Daily recalculation of IPDA levels
IPDA levels are not fixed: they shift daily. A level that was the 20-day high on Monday may no longer be on Thursday if new candles create a higher high. This dynamic means recalculating levels regularly, ideally at the start of each session or each week depending on the timeframe used.
IPDA in market cycles
Accumulation, Manipulation, Distribution (AMD) phases
IPDA integrates directly with the AMD model (Accumulation, Manipulation, Distribution), one of the foundational concepts of ICT methodology. AMD cycles describe how price moves in three successive phases, and IPDA defines the targets of each phase.
The accumulation phase corresponds to price consolidating within the IPDA dealing range. Price oscillates between the 20, 40 or 60-day levels without clear direction: institutions are quietly positioning their orders.
The manipulation phase corresponds to the move that briefly breaks out of the dealing range, breaks an obvious technical level (high or low of the last 20 days), triggers trader stops, and collects the liquidity needed for the next phase.
The distribution phase is the directional move toward the opposite IPDA target: if price manipulated the lows (liquidity sweep below the 20-day low), distribution targets the 40 or 60-day highs.
This cycle repeats on all timeframes. For a deeper look at the AMD model, see our guide on ICT Power of Three (AMD): accumulation, manipulation, distribution.
Identifying IPDA targets on a chart
IPDA targets are identified at the extremes of the last 20, 40 and 60 daily candles. Price alternates between these levels by sweeping liquidity. Here is the practical method for locating them.
On a D1 chart, select a window of 20, then 40, then 60 candles going back from the current candle. Mark the swing high and swing low of each window. These six levels are the active targets.
Target priority follows this logic: if price is currently in the upper portion of the 60-day dealing range (premium zone), targets toward the 20 and 40-day lows become attractive. If price is in the lower portion (discount zone), targets toward the 20 and 40-day highs are priority.
The trigger is always a prior liquidity collection: price must first sweep an obvious liquidity level (liquidity sweep) before delivering toward the opposite IPDA target. Without this sweep, the entry is premature.
IPDA and PD Arrays
Order Blocks, FVG and IPDA
PD Arrays (Premium/Discount Arrays) are the specific price structures that IPDA targets for institutional execution. The two most important PD Arrays in confluence with IPDA are Order Blocks and Fair Value Gaps.
An Order Block (OB) is the last bearish candle before a strong bullish move (bullish OB), or the last bullish candle before a strong bearish move (bearish OB). These zones represent prior institutional execution points. When an Order Block sits within an IPDA discount or premium zone, its reaction probability increases significantly.
A Fair Value Gap (FVG) is the price gap left by a rapid move: it corresponds to a candle whose low is higher than the high of the candle two positions back (bullish FVG) or inversely. FVGs within IPDA levels constitute preferred entry points.
The confluence of Order Block or FVG + IPDA level + premium/discount zone is one of the most robust setups in ICT methodology. To explore these confluences further, see our guide on SMC Order Blocks and Fair Value Gaps.
IPDA + Kill Zone confluence
The Kill Zone is the third dimension of IPDA confluence. ICT Kill Zones are specific hourly windows (Asian Kill Zone, London Kill Zone, New York Kill Zone) during which institutional volatility is naturally higher and stop liquidations more frequent.
The optimal configuration combines three simultaneous elements:
- Price is in an IPDA discount or premium zone
- A PD Array (Order Block or FVG) is present at that level
- The signal occurs during an ICT Kill Zone
This triple confluence offers the highest probability of a directional move aligned with IPDA. To understand ICT Kill Zones, see our guide on ICT Kill Zone times and trading sessions.
Backtesting IPDA-based strategies
Testable rules
One of IPDA's key advantages over many trading concepts is that it rests on objective, verifiable rules. The 20, 40 and 60-day levels are calculable from historical data, and each signal can be retrospectively validated. Here is the recommended backtesting sequence.
Calculate IPDA levels
Identify the premium/discount zone
Find PD Array confluence
Wait for liquidity collection
Set up the backtest on Backtrex
Historical results framework
Applying IPDA rules to historical data allows you to measure how often price actually reaches the 20, 40 and 60-day targets after a liquidity sweep. This target hit rate varies by market, timeframe and IPDA window used.
The recommended methodological approach: analyze at least 100 conforming IPDA setups on historical EUR/USD, GBP/USD or index data (NQ, ES) on intraday timeframes. For each occurrence, note whether the nearest IPDA target (20-day) was reached before the next one (40-day), and calculate the win rate using a minimum 1:2 risk/reward.
Backtrex lets you reproduce these conditions exactly, applying ICT logic blocks to multi-year historical data with no code. The result is a solid empirical base to validate or invalidate an IPDA setup before trading it live. See all lifetime license options to get started.
IPDA backtesting: avoiding biases
When backtesting IPDA, apply rules only to past data without adjusting parameters after observing results (data snooping bias). Test first on a reference market, then validate on a second market before trading live. For a deeper look at preventing overfitting in backtesting, see our guide on fair value gap backtesting strategy.
Important Risk Warning
FAQ
IPDA (Interbank Price Delivery Algorithm) is the ICT concept by which an institutional algorithm drives prices by targeting liquidity zones defined across lookback periods of 20, 40 and 60 days. The market sweeps the extremes of these reference periods to collect retail trader stop orders before delivering price in the institutional direction. IPDA serves as a reading grid to anticipate the probable targets of the next directional move and to structure effective backtesting of SMC and ICT strategies.
IPDA targets are identified at the extremes of the last 20, 40 and 60 daily candles. On a D1 chart, count back 20 candles from the current candle and identify the high and low: these are the short-term targets. Repeat for 40 and 60 candles. These six levels are the natural price attractors over the coming weeks or months depending on market context.
IPDA is the general algorithmic concept describing the logic of institutional price delivery. The dealing range is IPDA's measurement tool: it denotes the price band between the high and low of an IPDA window (20, 40 or 60 days). In other words, IPDA is the why (how institutions deliver prices), and the dealing range is the how (the band within which that delivery occurs).
The confluence of IPDA and PD Arrays (Order Blocks, Fair Value Gaps) is one of the most powerful configurations in ICT methodology. When an Order Block or FVG sits within an IPDA discount or premium zone (at or very close to a 20, 40 or 60-day extreme), the probability of a price reaction increases. This confluence is further strengthened when it occurs during an ICT Kill Zone window.
IPDA was developed primarily for the forex market, particularly major pairs such as EUR/USD, GBP/USD, USD/JPY and US indices (NQ, ES). The concept is applicable on any liquid market where institutions represent a significant share of volume, including equity indices and commodities. It is less relevant on low-liquidity markets or small-cap crypto assets.
Backtrex lets you backtest IPDA-based strategies without writing a single line of code. The drag-and-drop interface lets you create condition blocks corresponding to IPDA levels (premium/discount zone, Order Block/FVG confluence, liquidity sweep) and test them on 5-10 years of historical data in under 30 seconds. Find out how to get started on the features page or browse lifetime license options.
For day trading, the 20-day lookback (short-term) is most relevant as it covers one month of trading and generates targets reachable within days to weeks. The 40-day window serves as confirmation reference to assess whether price is in a broader premium or discount zone. The 60-day window is used for quarterly context, particularly to identify mid-quarter quarterly shifts.