In the world of financial trading, particularly in the Forex and Crypto markets, SMC (Smart Money Concept) has emerged as a popular technical analysis method among traders. This approach focuses on tracking the price actions of large institutions, also known as “Smart Money,” to identify market trends and seek high-profit trading opportunities.

1. Market Structure

• BOS (Break of Structure): A break in the market structure, indicating a strong trend reversal.
• CHoCH (Change of Character): A shift in market behavior, transitioning from bullish to bearish or vice versa.

2. Liquidity

• Stop Hunt: Price action deliberately pushes through support/resistance levels to collect liquidity.
• Liquidity Pool: Areas with a high concentration of pending orders or stop-loss orders.

3. Order Block

This refers to the price zones where large institutions execute significant volume trades, often creating strong support and resistance levels.

4. Fair Value Gap (FVG)

A rapid price movement that creates a gap on the chart, which is often filled in the future.

5. Supply & Demand Zones

• Supply Zone: A price area with strong selling pressure.
• Demand Zone: A price area with strong buying pressure.

6. Entry Trigger

Combining factors such as liquidity sweeps, BOS confirmation, or CHoCH to enter trades with a high Risk/Reward ratio.

Advantages of SMC

✅ Identify market trends by following the footprints of Big Players.
✅ Optimize entry points with high RR.
✅ Effectively combine with tools like Volume Profile and EMA for signal confirmation.

Illustrative Example

Below is an illustration of the SMC structure on a real market chart:

Conclusion

SMC is an effective trading strategy suitable for traders seeking a deeper understanding of how large institutional money moves in the market. By correctly applying elements like Market Structure, Liquidity, and Order Blocks, you can significantly improve your trading results.

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