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SMC Basic

Smart Money Concept (SMC) trading focuses on institutional order flow, liquidity, and market structure, highlighting how 'smart money' influences price movements. Key principles include understanding market structure breaks, liquidity pools, order blocks, and fair value gaps, as well as recognizing traps set for retail traders. Effective entry and exit strategies involve waiting for confirmations and targeting liquidity zones or fair value gaps for profit-taking.

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rakibhosen642002
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106 views2 pages

SMC Basic

Smart Money Concept (SMC) trading focuses on institutional order flow, liquidity, and market structure, highlighting how 'smart money' influences price movements. Key principles include understanding market structure breaks, liquidity pools, order blocks, and fair value gaps, as well as recognizing traps set for retail traders. Effective entry and exit strategies involve waiting for confirmations and targeting liquidity zones or fair value gaps for profit-taking.

Uploaded by

rakibhosen642002
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Smart Money Concept (SMC) trading is a strategy based on institutional order flow, liquidity, and

market structure. It focuses on how "smart money" (banks, hedge funds, and institutional
traders) manipulates price movements. Here are the key rules and principles of SMC trading:

1. Market Structure

Break of Structure (BOS): Confirms trend continuation.

Change of Character (CHOCH): Signals a potential trend reversal.

2. Liquidity & Stop Hunts

Liquidity Pools: Price moves toward areas with high liquidity (e.g., above highs/lows).

Stop Hunts: Institutions trigger stop-loss orders to grab liquidity before reversing.

3. Order Blocks (OBs)

Bullish Order Block: Last bearish candle before a strong bullish move.

Bearish Order Block: Last bullish candle before a strong bearish move.

Mitigation: Price often revisits OBs before continuing in the intended direction.

4. Fair Value Gaps (FVGs)

Imbalance in Price Action: Created when price moves rapidly, leaving a gap.

Price often retraces into these areas before continuing in trend direction.

5. Inducement & Traps

Retail traders get trapped in false breakouts before the real move happens.

Institutions manipulate price to collect liquidity before the actual direction.

6. Premium & Discount Pricing

Buy in discount zones (lower 50% of a range).


Sell in premium zones (upper 50% of a range).

7. Entry & Exit Strategies

Entry: Wait for a confirmation like CHOCH + OB reaction.

Exit: Target liquidity zones or FVGs for take-profit.

Would you like help with chart examples or backtesting strategies?

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