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How to trade Smart Money Concepts:Smart Money Concepts is a more sophisticated way of trading price action, while taking advantage of where institutions are likely to place their orders. This makes Smart Money Concepts a usable tool whenever you are dealing with hedge funds. What you are about to read is an elaborate tutorial explaining a lot about this trading strategy, including some trading strategies (NOTE: there are many SMC indicators and the one I’ll be using is the one by LuxAlgo since I believe is the most “complete” out of all). Let's start. 1) Order Blocks: Order Blocks are, in my opinion, the most important feature in SMC trading, as it shows where these institutions are likely to place their orders. In order for an order block to form, look at where the market is consolidating, creating an area of volume price is likely to be attracted to (some order blocks are formed due to imbalances in the market). In this image, you can see how order blocks are formed right after a ranging market has been broken. Because of this unique feature, order blocks are not the same as support/resistance zones. In order for us to trade using order blocks, look for where an order block has been formed recently, as the longer an order block survives, the weaker it becomes. Buy when the candle that hit the order block closes and set your stop loss under that order block. In this example it worked since the volume wasn’t too high and the order block had formed a few candles before the retest. You can do this for shorts as well (NOTE: the more retests the order block gets, the weaker it becomes) 2) BOS & CHoCH: Supports and resistances usually apply on Price Action, but they can be applied in Smart Money Concepts as well. The difference is that in Smart Money Concepts, you these supports and resistances when the price breaks through them. However, in many occasions these signals can be false and it’s only a retest of the support/resistance. In order to understand what BOS/CHoCH means, we need to look at the graph: This is an example I made. From the graph, a BOS or a Break of Structure is whenever the price breaks the most recent support/resistance in the direction of the trend direction(bullish/bearish). A CHoCH or a Change of Character is whenever the price breaks the most recent support/resistance in the direction opposite of the trend direction. What I mean by this is that in the example I have shown, the trend was bullish until it was not. Normally a bullish trend breaks the resistances instead of the supports, and vice-versa. This is why the name Break of Structure since the price continues going the direction it wants while solving any “issue” in its path. If this “issue” is big enough to break the support/resistance maintaining the trend intact, then it’s known as a Change of Character , since it changes the character of the trend. When this happens, there is a chance for a trend reversal to happen, which is the case for the example I’ve shown. Now I’ll show how to trade BOS/CHoCH in a real graph. As you can see from the chart, there are a lot of Breakthroughs of Structure and Changes of Character, but this indicator actually shows which of these BOS/CHoCH are major. The trick is that if the indicator shows a BOS/CHoCH marked by a straight line instead of a bunch of lines, this means that it is more accurate. In this example, we ignore the smaller BOS/CHoCH and just look at the 2 important ones. We know they are important because they are marked by a straight line. You buy after the CHoCH/BOS label appears and when the candle that retested the broken resistance/new support closes and the volume doesn’t increase before that (unless the market is ranging after it broke). Same thing with shorts. You short after the BOS/CHoCH label appears when the candle that retested the broken support/new resistance and the volume doesn’t increase from the candle before that. 3) EQH/EQL: In Price Action , there are chart patterns. One of the most known ones are the double top and the double bottom . Smart Money Concepts refers to these double tops/bottoms as Equal Highs and Equal Lows (EQH/EQL for short). Here’s an example: As you can see, there is a double top (EQH) which came after an uptrend, meaning that there is a chance that the price will break the necklace (the support line made in the middle of the double tops), causing a change of character, which it did. Due to the nature of double tops and bottoms, this rarely happens. You should use this tool in confluence with other SMC tools like Order Blocks and BOS/CHoCH. Personally, I don’t use them much. I just use them to identify strong supports and resistances, as well as double tops and bottoms. They could also be used to identify trend reversals on major areas of support and resistance. 4) Premium and Discount zones: Premium and Discount zones are ranges that form in the market when a recent major support and resistance has been established. In this example, you can see when did the premium and discount zones form. The price made a major support and resistance. The equilibrium zone is the 50% line in the Fibonacci Retracement tool if you pay close attention. This means that price can react off of the Equilibrium zone, and if you pay close attention, you can see it was ranging for a while. For a trading strategy, wait for the price to reach the Premium or Discount zones, and, if the market's volume decreases, enter a trade and set your take profit at the equilibrium zone. The reason why you should set your take profit at the equilibrium zone is because there is a chance the price rejects off of the equilibrium zone. 5) Fair Value Gaps: Fair Value Gaps are imbalances that form in the market and can be good support/resistance areas. They usually form when the market is volatile and when a breakout or retest just happened. In order to identify what a fair value gap is, look for a huge candle body like the one shown in the picture, then, draw a rectangle with its base being at the highest point of the previous candle's upper wick and with its top being the lowest point of the following candle's lower wick. Now, extend the rectangle to the right and now you have a fair value gap. For a trading strategy, look for the line in the middle which is shown in the fair value gap. This line acts as a support, and the price can bounce off of it. For an entry point, wait for the price to react to the fair value gap, and, if the volume decreases while the reaction is happening, enter. 6) Liquidity Grabs: Even if you think your trading strategy is amazing, you will always have to deal with scams. No matter how good your trading strategy is, all trading strategies fail to deal with hedge funds and whales. They sometimes act when the price is very close to a support or resistance, and when the people expect a bounce, they place their stop losses under the area of confluence. These hedge funds then act, and end up manipulating the market, forcing the people to panic buy or panic sell, depending on the area of confluence. One major example of market manipulation is in the Crypto Exchange. Trading Crypto is almost like gambling. Liquidity grabs perfectly reference the scam. You can spot them if, on a ranging market, there is a sudden increase or decrease in price. Always pay attention to traps like the ones in these examples shown below: For a trading strategy, wait for the scam pump or dump to stagnate and then enter your trade in the opposite direction that the candle was going to. In conclusion, Smart Money Concepts is a fascinating trading strategy for me, and it could be for you too. There are many aspects of it, and it is another way of trading Price Action, which itself is already fantastic. This tutorial took me 3 hours to make, so please make sure to heart and comment your opinion on this. Thank you for reading through all of this.
BITSTAMP:BTCUSDEducation
by lorinstocksinvesting
15
BTCUSD: Death to the B*TC*After 7 years of studying charts, you start to see obvious patterns that beginners miss. I know that the majority of the market is buying BTC now after the trend line breakout. The charts suggest it and so does the sentiment. So what will I be doing if the majority are buying, SELLING. I don't want to be greedy, I simply want to find an area to sell from in this region to clear some of the buyer liquidity from the market. Anyway, it's been a while! I have committed to start posting here again. I have nothing to sell you, I trade for fun and don't need your money - I hope you enjoy my content.
Short
by AlkalineFX
8
EUR/USD Might consolidateEUR/USD has reached a Premium zone which has rejected with an swing Order Block. We've established 3 new FVG's in the past day, so we might see the price consolidate for this week. - Closest Fair Value gap starts at 1.06262 - Second Fair Value gap starts at 1.06043 - Third Fair Value gap starts at 1.05820 Watch the out for these zones, its possible that the price might reject from these zones of FVG. - First Order Block (Bullish) starts at 1.05775 - Lower Order Block (Bullish) starts at 1.05480 Keep in mind, that these analyses might be with a Neutral effect (Which might consolidate). A closer look at the Swing Bearish order block;
by RumbaCash
GBPZAR SHORTThe XA leg of the Harmonic is a Double top in itself. The huge wicks on that leg suggests large institutional volumes trapped in that region. The CD leg just broke through the last order block and we see a confluence on the 1.272 Fib and 2.000 Fib where the CD leg completes. The H1 also gives a beautiful crab pattern competing around the same region. I would say this move may wait for the release oof Non-farm data for a violent take off in the Bearish side and if not enough volume is taken then we may see a retest and a gradual Bearish movement.
Short
by harveygoldfx
1
Result of Previous Idea | 140pips GBPUSD | What's Next?Welcome back traders. Here's the result of our previous idea. It was published on February 21 and target reached on February 24.. some 140pips.. Explaining the trade generally: •Open your chart on GBPUSD Daily frame and mark the exact FVG I marked above and in previous idea.. •Look at the bodies of candles after reaching the FVG.. Ignore the tails of candles that tried to trick traders in longs. •Open H1 chart and mark the first FVG you see after reaching Daily FVG..(22Feb, 03:00) •What time is London Open Killzone? •Do you see how many FVGs we got on H1 and lower time frames(15m,5m,3m,1m)? •See the opportunities that price offered in active market times (Killzones).. Want more? Show your Likes👍 Something not clear? Tell me in comments ✍️
by MST_Trader
Short Scalp After Daily Bias Order Flow Shift BearishBias: Bearish Daily Plot: Price weakens and shown signs of reversal to seek sell-side liquidity after hitting an old Order Block as Resistance. Price Daily TF forms lower high. Price has never confirmed with Asia's 50% if may continue bullish. Price strongly seeks sell-side liquidity until Daily TF Shifts Bullish again, but not likely as price had been going high for over a week without any good retracement. Entry was an ICT Mitigation Block. Confirmation once price hits the Propulsion block and confirms moving downside.
Short
by bl4ckoffee