Checking ICT Levels With a Synthetic Forex Cross

EUR/GBP appears to sweep a low while EUR/USD and GBP/USD hardly move on the screen. You can investigate the print by building an implied cross. Dividing two displayed midpoints is a start, but the result cannot tell you the price at which the cross could actually have been bought or sold.

A synthetic cross is helpful in ICT analysis when it gives an independent check on the location of a suspected liquidity event. The direct instrument still supplies its own tradable quote history. The comparison works best when both legs have matching timestamps.

How a two-leg currency quote is constructed

A marginal direct wick might reflect a genuine venue-specific quote or a leg that has not updated yet. Looking at an aligned cross helps a trader judge how portable a marked low is across sources. A discrepancy between displayed feeds alone cannot establish that two legs could have been dealt simultaneously at meaningful size.

BIS research on dealer and customer trading in the spot market

Why the distinction matters for order flow

Two-leg execution introduces timing, liquidity, leg sizing and possible partial fills. A paper comparison of synchronized quotes is enough for a diagnostic exercise. To claim a realised cross trade, you would need actual deal records, costs and currency amounts for both legs. The distinction matters most on fast ticks.

How to identify it on a chart

Capture both bid/ask pairs at one decision time. Record each leg’s quote age and the maximum allowed age difference. Preserve full precision for division. For a synthetic candle build the cross at aligned times first and then take its extremes. Combining each leg’s daily extreme can create a cross price that never existed.

Imagine that an apparent synthetic low uses an early low in EUR/USD and a later high in GBP/USD. The quotient can sit below every simultaneously observed EUR/GBP price. Identify which two timestamps were used and whether they overlap. If they do not, label the result an envelope bound rather than an observed sweep.

Build a tradable-side interval before comparing the direct spot quote

Take the aligned EUR/USD quote 1.08642 bid and 1.08652 ask, with GBP/USD at 1.26424 bid and 1.26440 ask. Processing the two sides separately preserves the two spreads. These examples concern price indications available under the assumed snapshot, with no execution guarantees.

Implied selling price. The euro is sold at its dollar bid, then dollars are exchanged into pounds at the sterling ask. Record the unrounded value to distinguish a genuine difference from display rounding.

Implied buying price. Buying euros requires their dollar ask. Selling pounds supplies dollars at the sterling bid. This higher quotient forms the other side of the interval and completes its approximate implied spread.

Direct comparison. Compute the difference against the corresponding side. A direct bid lower than the implied bid does not by itself describe an executable round trip. Buying and selling require opposite sides, costs and adequate size.

Unmatched times. If the study permits only one second of mismatch, reject the pair. A visually larger discount produced by combining stale and fresh legs cannot be used as a timely corroboration of a sweep.

Boundary check. The direct event can be true even if the synthetic interval remains above that price. Compare the synthetic with its own prior reference as a second inquiry, then state which source governs the setup.

What if you have only the two currency pairs’ five-minute OHLC bars?

A quotient from independent extrema can bound a possible cross. It cannot timestamp a simultaneous bid/ask pair. Accept the lower evidential resolution and avoid declaring a cross fill on the basis of that bound.

How to trade the setup in a paper session

Choose the source that governs the liquidity map and the source that governs fills. A direct EUR/GBP trade uses its direct executable side for entry and exit. A USD-pair trade using cross behaviour as context uses that USD pair’s own order prices. Write the instrument and role beside every level.

The charts use constructed five-minute bid candles. The two synthetic cross rates exercises below share a bracket order as a comparison point. Each shows when an ICT displacement clears a local swing, when a fair value gap becomes measurable and which later quote can fill it. All sample spreads, costs, outcomes and sizes belong to the hypothetical exercise.

The difference between an interval and an arbitrage claim

A synthetic bid and ask form an interval that embeds the two source spreads. For a cross comparison, put the direct bid and ask beside that synthetic interval at the same time. If the direct mid lies outside the synthetic mid by a fraction of a pip, there may still be considerable overlap between the tradable intervals. An apparent mid-price discrepancy does not establish an executable profit.

To examine a particular directional discrepancy, identify which market you would have to buy and which you would have to sell. Compare that buy-side ask with that sell-side bid and include fees, available size and time to execute. This exercise ordinarily stops at price comparison. Replicating a cross with two actual legs also requires matching currency amounts and can leave a residual position if only one leg fills.

The stronger educational application is checking whether a near-marginal ICT sweep survives a second description of the exchange rate. Mark an earlier direct low, reconstruct the synthetic’s own earlier low from simultaneous quotes, and monitor both on the same clock. An aligned crossing on both can strengthen confidence in the measurement. A disagreement identifies a source-dependent observation and a reason to inspect the original ticks.

For a training report, separate episodes with stale legs from episodes where both legs were fresh and differences persisted. Otherwise ordinary quote latency can dominate the apparent research finding. Report how the allowed age threshold affects the number of eligible snapshots. A narrower threshold improves temporal alignment at the cost of discarding more observations, especially outside busy dealing hours.

EUR/USD worked example

Check the cross near the direct trade

Use a synchronized context snapshot with EUR/USD at 1.09792 bid and 1.09801 ask, and GBP/USD at 1.26782 bid and 1.26793 ask. These are comparison quotes taken separately from the later order. Dividing the euro bid by the sterling ask gives a synthetic EUR/GBP bid of 0.86592.

The implied ask from the euro ask divided by sterling bid is 0.86606. Keep that two-sided interval beside the direct cross observation. The long on the diagram trades EUR/USD following its own visit to 1.09738 and displacement through 1.09831. Its entry, protective exit and target must stay in dollars per unit of its own base currency.

Read the entry from left to right

Begin with the marked sell-side reference at 1.09738. The five-minute candle beginning 07:20 extends to 1.09717. At its close there is evidence of a visit and a new local low. The price that will become the upper edge of the execution gap is still in the future. A reader practising this live can put an alert on the opposing pivot at 1.09831 and leave the order ticket empty until the remaining conditions arrive.

At the close of the 07:30 candle the bid stands at 1.09855. Compare that with the earlier pivot. A completed shift now supports an upward delivery hypothesis, but the proposed three-candle imbalance still requires its third candle. The first candle’s high is 1.09781. The third candle’s eventual low is 1.09803. Their separation is 2.2 pips and their midpoint is 1.09792. The earliest next-bar activation on this tape is 07:40.

The order buys on the ask and the chart shows bids. With spread fixed at 0.8 pip, an ask of 1.09792 corresponds to bid 1.09784. The returning bid reaches 1.09766 and its matching ask reaches 1.09774. The workbook assumes continuous movement between displayed quote observations, sufficient available size and an execution at the requested limit. The same logic applied to a real broker order would still need the deal record to establish an actual fill.

Translate the chart into a position size

For a worked cash conversion, suppose the USD paper account assigns this candidate a maximum planned loss of $12.20. A standard lot of 100,000 base units on this USD-quoted pair changes by $10 for a one-pip move. One standard lot at the 9.2-pip stop distance plus 0.4 pip of estimated round-trip fees and other friction therefore exposes $96.00 at the modelled stop fill. The bid/ask condition already accounts for the stated spread.

Dividing the cash cap by that one-lot loss gives 0.1271 lots before volume rounding. With a permitted increment of one hundredth, rounding down gives 0.12 lot and $11.52 of planned downside. Check the conversion in reverse by multiplying size by loss per lot. A smaller order can make a wide structural stop affordable. It cannot supply missing room between entry and the intended liquidity destination, and a stop filled through its requested price can still exceed the estimate.

Reclassify one changed condition

Delay the GBP quote while EUR/USD continues to update. The quotient can move without any contemporaneous evidence of a cross-market discrepancy. Apply the time tolerance to both source quotes before allowing cross confirmation. The main instrument’s local setup can still be recorded even when the independent context field is unavailable.

GBP/USD worked example

Check the cross near the direct trade

Use a synchronized context snapshot with EUR/USD at 1.09136 bid and 1.09145 ask, and GBP/USD at 1.27984 bid and 1.27995 ask. These are comparison quotes taken separately from the later order. Dividing the euro bid by the sterling ask gives a synthetic EUR/GBP bid of 0.85266.

The implied ask from the euro ask divided by sterling bid is 0.85280. Keep that two-sided interval beside the direct cross observation. The short on the diagram trades GBP/USD following its own visit to 1.28045 and displacement through 1.27941. Its entry, protective exit and target must stay in dollars per unit of its own base currency.

Audit the sell order from the dealing side

The first local buy-side reference at 1.28045 has a different job from the swing whose closing break confirms the bearish move. Compare the observed high of 1.28068 with that first price, then inspect the later close at 1.27914 relative to the pivot at 1.27941. One comparison describes location and the other supplies direction. Combining them into a single retrospective arrow would hide the point at which the trader actually gained the new information.

A bearish fair value gap forms when the later high remains below the earlier low in the three-candle sequence. Here the low of the candle starting 07:30 is 1.27996. The high of the candle starting 07:40 is 1.27972. The middle of their 2.4-pip interval is 1.27984. The sell limit becomes available once the second boundary is known. On the returning candle the maximum bid is 1.28013, high enough for the paper limit under the stated fill convention.

A sell opens on the bid, but the position ends by buying on the ask. For an ask stop at 1.28087 the bid needs to reach only 1.28077 with the assumed 1.0-pip spread. An ask target at 1.27751 requires a bid at or below 1.27741. Marking the two bid equivalents before scoring the last candle prevents a visually attractive wick from becoming a profit that the executable side never offered.

Reconcile the terminal candle

The first deciding bar opens at 08:05 GMT. Its bid ranges from 1.27712 to 1.27866. Adding the model spread gives an ask range from 1.27722 to 1.27876. Follow the tape from the fill and stop at the first executable exit. Here the original bracket reaches its target before the other terminal price. The closing body can finish away from that exit without changing the realised trade.

As a sensitivity check, leave the chosen fill sequence intact and increase extra round-trip costs by 0.5 pip. Possible net reward becomes 22.3 pips and possible downside becomes 11.3 pips, giving risk:reward of 1:1.97. This calculation isolates a change in charges. A different spread can alter whether the original sell or its buy-to-close orders were ever executable, which calls for a new quote-by-quote replay.

Reclassify one changed condition

Delay the GBP quote while EUR/USD continues to update. The quotient can move without any contemporaneous evidence of a cross-market discrepancy. Apply the time tolerance to both source quotes before allowing cross confirmation. The main instrument’s local setup can still be recorded even when the independent context field is unavailable.

Evaluate a direct crossing and an independent implied crossing

Take five independent practice records and apply two predeclared policies. A requires the direct bid below its own earlier low. B requires the synchronized synthetic bid below its own earlier low. In this exercise “yes” means the named condition occurs within the stated opportunity. A row can satisfy both conditions, satisfy one, fail both, or leave a condition unresolved. Score the evidence supplied before imagining how the rest of the chart might behave.

Work through the disagreements

Both direct and implied series cross their own low. This compares like references within each source despite possible differences in their absolute levels.

Only direct EUR/GBP crosses. A direct venue can show a small penetration that the aligned component prices do not reproduce.

Only the synchronized synthetic bid crosses. An implied movement supplies context. It cannot fill an order on a direct broker that never offered the required quote.

Both series remain above their references. A later directional move cannot retroactively create either of the earlier crossing observations.

Direct bid crosses while the sterling leg is stale. The known direct event stands. The implied classification needs fresh component quotes at a comparable time.

In these constructed observations, A gives 3 confirmed yes, 2 confirmed no and 0 unresolved. B gives 2 confirmed yes, 2 confirmed no and 1 unresolved. Among the 4 rows settled for both rules, they agree on 2 classifications. Agreement here concerns qualification under the stated definitions. No return series has been supplied for these five records, so the counts cannot estimate the profitability of either policy.

Resolve the missing evidence

Obtain the EUR/USD bid and GBP/USD ask at aligned times throughout both reference and visit intervals. Until that information is available, the possible number of positive A classifications is 3 out of five. For B the corresponding count is 2 to 3. Preserving bounds stops an unresolved record from entering the journal as a known failure merely because obtaining the source data was inconvenient.

Applying the worksheet on a new session

Preserve precision from the source quote to the decision

Store the original quotation in its native increment. Five-decimal EUR/USD and GBP/USD examples express one tenth of a pip in their last digit. A rounding step made for a convenient label can turn a one-point miss into a touch or collapse two distinct highs onto a single price. Carry the raw numbers through the comparison and round only the final display value or the actual order as required by the venue.

Record the equality convention at every boundary. A rule admitting separation of at most one pip includes the exact one-pip case. A rule requiring a price beyond an old high excludes a print exactly on it. The same worksheet can quite correctly use both conventions, because constructing a candidate and confirming the next event are different operations. Audit equality cases first when two reviewers disagree despite using apparently identical charts.

Where a calculated midpoint falls between executable increments, distinguish the analytical midpoint from the order price. Document which direction the order rounds for a buy and for a sell. Then recompute potential risk, reward and fill eligibility from the actual order. This is often immaterial on a large move but can dominate a study built around marginal returns to tightly spaced levels.

Choose the source for the observation and for the order

Record the symbol, venue or broker, source timezone, quote convention and sampling interval for each input. A tick stream can contain last trades, bids and asks, or a subset of these. A candle’s high represents the maximum of whatever field constructed it. It follows that two apparently identical charts may answer different questions before any discretionary interpretation enters the picture.

For a multi-source test, define the permitted age and alignment of observations. A last quote can remain visible while another feed updates several times. Pairing both visible values as if they were simultaneous can manufacture a divergence. Store each quote’s original timestamp and reject or flag combinations outside the predeclared tolerance. The same discipline applies when comparing prior reference windows as well as the immediate signal.

Use the execution venue for actual fills. A separate analytical series can still be appropriate for choosing location or direction if the rule declares it. The order then has its own submission record, active lifetime, bid or ask trigger and terminal deal. Keeping those records separate lets you find a useful analytical signal even when the price printed on its source was never directly available to the broker account.

Reconcile gross chart movement with the actual deal

A pip of favourable movement on the chart has a money value only after direction, contract size, account currency and volume are known. For the two USD-quoted paper pairs here, a standard one-hundred-thousand-unit lot changes by ten dollars per pip. A smaller position scales proportionately. Check the actual symbol specifications whenever you move the calculation to another contract or a different account denomination.

Execution side is part of the price path. Longs open by buying and close by selling. Shorts do the reverse. If the simulation already waits for the correct bid or ask and measures between actual deal prices, the spread is already represented. Additional commission, financing or assumed adverse slippage should be labelled by what it covers. Charging a full spread again after using both correct sides can understate the result.

A trade can also have a planned and a realised risk amount. The protective trigger states an instruction, while a faster market may produce a worse deal. Retain the original planned exposure as the denominator for risk-unit reporting, and record the actual cash loss separately. That preserves the evidence of excess loss instead of hiding it by increasing the denominator after the event.

Check the units before trusting the spreadsheet

Write the units of each leg directly under its bid and ask. Dividing dollars per euro by dollars per pound gives pounds per euro. If the resulting number represents euros per pound instead, the operands or the quote orientation have been reversed. This simple unit check can catch an error that still produces a smooth and convincing chart.

Next widen only the sterling ask in a saved snapshot, holding every other field fixed. The implied cross bid should fall because the dollars obtained by selling euros buy fewer pounds. The implied ask in this particular experiment should stay fixed. Reverse the experiment by widening only the euro ask and inspect the other side. Controlled changes like these reveal whether the synthetic formula correctly assigns each source quote before you use its output to assess a marginal ICT sweep.

Frequently asked questions

Continue the chart exercise with the school’s guides to the London Kill Zone and the Judas Swing for session context. Use market structure shifts to locate the confirmation, fair value gaps to mark the return interval, and order blocks to relate the smaller trade to its larger price area.