An Introduction to Market Structure and Trading Smart Money

Concepts
Acknowledgements to: MentFx, WadeFx, Phantom Trading, and ICT
 CONTENT
1.The Basics 5. Daily Range Price Action
1. Expansion And Retracement 1. Sessions
2. Fibonacci Retracement 2. Asian Session
3. Break In Market Structure 3. London Session
4. Range High and Range Low 4. New York Session
5. Failure Swing (SMS) 5. Accumulation, Manipulation And Distribution

2. Market Structure 6. Powerful Setups

1. Market Structure In Bullish Conditions 1. Turtle Soup
3. Liquidity 2. SH + BMS + RTO
1. Liquidity Types 3. SMS + BMS + RTO
2. Buy Stops Liquidity (BSL) 4. A.M.D
3. What to Focus on (For BSL) 7. putting everything together
4. Sell Stops Liquidity (SSL) 1. Confluence
5. What to Focus on (For SSL) 2. HTF analysis, LTF Entries
6. Stop Hunt: Manipulation For Liquidity
7. High Impact News Events
4. Order Blocks 8. Marked Up Charts
1. Bullish Order Block
2. Bearish Order Block
 Where Do I
Buy? Or
Where Do IWhere Do I
Begin. They All Sell?
Tell Me That
Trading Is
Complicated
And Confusing

FIRST: YOU THE NEED THE BASICSOFMARKET

STRUCTURE, CYCLES, RYTHYM
 1.THEBASICS
1.1. IMPULSE (Expansion) AND CORRECTION
(Retracement)
Impulse =>occurs when there is an explosive
movement towards a direction.

Correction => is the correction movement

after an impulse movement.
 UPTREND DOWNTREND

I I C
C
I
I C
C
I
I I- Impulse
C- Correction
EXPANSION/IMPULSEANDRETRACEMENT/CORRECTION

LOOKATHOWTHEMARKETMAKESANDBREAKSHIGHSANDLOWS
 1.2. FIBBONACCI RETRACEMENT

USED TO DETERMINE THE END OF THE

IMPULSE / CORRECTIVE MOVES. W E USUALLY
W A I T F O R PRICE TO RETRACE TO 0 . 6 2 % OR
UNTIL OTE S W E E T S P O T ( 0.705, 0.79) BEFORE
ANOTHER IMPULSE MOVEMENT OCCURS.
 ICT FIBBONACCI RETRACEMENT

OTE SWEET SPOT

OTE SWEET SPOT

E- Expansion (Impulse)
R- Retracement (Correction)
 1.3. BMS - BREAK IN MARKET STRUCTURE

BMS occurs when the price closes above / below

a swing high/low, generally, every trader should
trade in the direction of the Higher Time Frame
BMS.

IMPORTANT NOTE:
AFTER BMS I ALWAYS WAIT FOR RETRACEMENT.
 BMS- Break In Market Structure Targetting OTE
Trades

OTE

OTE
OTE OTE

A to B- Downtrend OTE
OTE
B to C- Uptrend
 1.4. Range High and Range Low
After the BMS there will always be the
formation of a new consolidation, that is called
Range High (RH) and Range L.ow (RL)

NOTES:
=> ALWAYS Trade in the direction of the BMS
=> After BMS Wait for retracement to Order
Block (OB) OR OTE of ICT Fibonacci levels.
 BULLISH BEARISH

RH RH
BMS OTE [Low Risk Sell]
OTE [Low Risk Buy] BMS

RL RL
Range High and Range Low

RH- Range High

RL- Range Low
 1.5. FAILURESWING (SHIFT
MARKETSTRUCTURE)
When there is an uptrend market and the
price fails to break the last top (Swing High)
and breaks the previous bottom (Swing Low),
an SMS is considered to have occurred (vice
versa for Bearish).
 FAILURESWING (Shift Market
Structure)

SMS
BULLISH BMS BEARISH
BMS BMS
 FAILURESWING (SMS)

Bullish BMS Bearish

BMS

BMS
Chapter 2: MARKET STRUCTURE
 2. MARKET STRUCTURE
The price can simply be found in one of the 3
phases below:

1.In a CONSOLIDATION
2.In an UPTREND
3.In a DOWNTREND
2.1. Market Structure In Bullish Conditions
[VICEVERSA FOR BEARISH CONDITION]

The bullish market is characterized by making

Higher Highs and Higher Lows, but this
characterization is not enough, it is necessary
to say that bullish markets are always
breaking swing Highs and respecting swing
lows.
The fact that the price has broken a swing high,
indicates that higher prices should be expected,
so it is negotiated in the trend in which the
market structure was broken.
2.1. Market Structure In Bullish Conditions
[VICEVERSA FOR BEARISH CONDITIONS]

BMS

BMS
OTE Low Risk Buy
BMS [LRB]
OTE NOTES:
=> The Price is breaking the highs only
=> After BMS the price Retract to OTE of
Fib Levels.
LRB- Low Risk Buy
2.1. Market Structure In Bullish Conditions
[VICEVERSA FOR BEARISH CONDITIONS]

[LRB]

[LRB]
LRB- Low Risk Buy
 MARKET STRUCTURE

BMS OTE

BMS
BMS BMS
BMS
OTE BMS
OTE
BMS
OTE

Always trade in the direction of BMS

Chapter 3: LIQUIDITY
If you don’t know where the liquidity is
then YOU ARE THE LIQUIDITY
 3. LIQUIDITY
The FOREX market is a zero sum game, which
means that for a trader/institution to buy/sell 1
currency pair it's necessary that there is another
trader/institution with an opposite position.
If Smart Money (Banks) want to buy a currency
pair they will need sellers in the market, the
existing facility to place these positions In the
market is called LIQUIDITY.
Liquidity is mainly defined by Stop losses.
Where the Stop losses exist is where the
liquidity also exists. Institutions need to
activate the stop losses of existing orders in
the market so that they can place their
positions in the market.
The banks manipulate the price because of
liquidity, but why? Banks negotiate large
trading volumes and sometimes find it
difficult to find the other side of their
trades, so they manipulate the price so that
they can have their positions in the market.
 3.1. LIQUIDITY TYPES

In the FOREX market there are two types of

liquidity, which are:
1.Buy Stops Liquidity (BSL)
2.Sell Stops Liquidity (SSL)
 3.2. Buy Stops Liquidity (BSL)

The BSL is originated by Stop Losses of sell

orders, after the BSL is taken, the market
reverses to the downside, because banks use
the BSL to place sell orders in the market.
 3.3. What to focus on (for BSL)

PMH - Previous Month High

PWH - Previous Week High
PDH - Previous Day High
HOD - High Of Day
OLD HIGH - Swing High
EQUAL HIGHS = Retail Resistance
 BSL TAKEN BSL TAKEN
X X EQUAL HIGHS

X- PMH, PWH, PDH,

HOD, OLD HIGH.
PMH - PREVIOUS MONTH HIGH
PWH - PREVIOUS WEEK HIGH
PDH - PREVIOUS DAY HIGH
HOD - HIGH OF DAY
EQUAL HIGHS = Retail Resistance
 3.4. Sell Stops Liquidity (SSL)

The SSL is originated by Stop Losses of Buy

orders, after the SSL is taken, the market
reverses to the Upside, because banks use the
SSL to place Buy orders in the market.
 3.5. What to focus on (for SSL)

PML - Previous Month Low

PWL - Previous Week Low
PDL - Previous Day Low
LOD - Low Of Day
OLD LOW - Swing Low
EQUAL LOWS = Retail Support
EQUAL LOWS
SSL TAKEN SSL TAKEN
X- PML, PWL, PDL,
LOD, OLD LOW.
PML - PREVIOUS MONTH LOW
PDL - PREVIOUS DAY LOW
LOD - LOW OF DAY
OLD LOW - SWING LOW
EQUAL LOWS = Retail Support
When BSL is taken, the market reverses to the
downside.
When SSL is taken, the market reverses to the
upside.
 3.6. Stop Hunt: Manipulation For Liquidity

SH is a movement used to neutralize liquidity

(stop losses). It's a false breakout above /
below the zone where there is LIQUIDITY.

THE MARKET MARKERS (BANKS) USUALLY USE

HIGH IMPACT NEWS TO TAKE LIQUIDITY.
Stop Hunt: Manipulation For Liquidity

SH- Stop Hunt

Stop Hunt: Manipulation For Liquidity

SH- Stop Hunt

 High Impact News Events

The High Impact News Events are used to

hunt liquidity in the market, always pay
attention to the news calendar, to know the
pairs that will move, generally, pairs with
many news forecasts("High Impact"), those
pairs are going to move (trend) during the
day or week.
Chapter 4: ORDER BLOCKS
 4. ORDER BLOCKS [OB]

Order Blocks are candles where Institutions

(Banks) have placed their positions,
generally, the market returns to those
candles and they are never violated ("if they
are really OB's")

There're 2 types of Order Blocks:

1.Bullish Order Blocks
2.Bearish Order Blocks
 4.1. BULLISH ORDER BLOCK

The Bullish Order Block is the last bearish

candle before the bullish movement, that
Break The Market Structure Higher.
Represents a high possibility of holding the
price, when the price returns to it.
 BULLISH ORDER BLOCK

BMS

Buy Entry
The Bearish Candle
Before The Bullish
Optimal Entry is at the 50% level
Movement, that
BMS Higher

SL below the OB
BULLISH ORDER BLOCK
 4.2. BEARISH ORDER BLOCK

The Bearish Order Block is the last bullish

candle before the bearish movement, that
Break The Market Structure Lower.
Represents a high possibility of holding the
price, when the price returns to it.
 BEARISH ORDER BLOCK
SL above the OB

The Bullish Candle Optimal entry is the 50% level

Before The Bearish
Movement, that
BMS Lower Sell Entry

BMS
BEARISH ORDER BLOCK
 H

=
O
L

Chapter 5: DAILY RANGE PRICE ACTION

 5. DAILY RANGE PRICE ACTION
The Daily Range is defined by: Open Price, Low
Of Day, High Of Day and Close Price.

C
O- Open Price
L- Low Of Day
= H- High Of Day
C- Close Price
O
L
Bullish Day Bearish Day
H H

C O

O C

L L
 5.1. SESSIONS

The Daily Range is defined by 3 important

sessions, which are:
1. Asian Session
2. London Session
3. New York Session
 5.2. Asian Session

The Asian session is characterized by being

an accumulation (of 20 - 50 pips), due to the
lack of liquidity in the market.
ASIAN SESSION
ASIAN SESSION
 5.2. London Session
The London Session is characterized by
making the Low Of Day or High Of Day, it can
be used to take traders to the opposite side of
the true direction of the day (Because Of
Liquidity).

Not the whole London session need attention,

focus on the first 2-3 Hours at the beginning of
the session
London Open
London Open
 5.3. New York Session

The NY session is often characterised by a

reversal after the London Session has made
the Low/High of the day, sometimes the NY
session can make the Low/High of the day.

Not the whole NY session need attention,

focus on the first 2-3 Hours at the beginning
of the session.
New York Open
New York Open
New York Open
5.4.Accumulation, Manipulation And Distribution
[AMD]

Accumulation:
The accumulation of positions generally
occurs during the Asian session, the
accumulation is characterised by price ranging
(Asian session), but it may not be the Asian
session.
Manipulation
usually occurs at the opening of the London
session (sometimes it can be NY open), this
Manipulation consists of taking the price to
the opposite side of the true direction of
the rest of the day.

Distribution:
occurs when Institutions (Banks)
liquidate (Exit) their positions.
 AMD on the daily Bar

D{ A{
}M

A{ D{
}M
 Bullish AMD DAILY BAR
VICE-VERSA FOR BEARISH

D D
1
A

1 M
M

LO/ NYO
1.Accumulation [Asia Session]
2.London Open / New York Open
Bullish AMD
Bearish AMD
The Institutions (Banks) Buy/ Sell
below/ Above the Asian Session/open price
(Because Of Liquidity).

Asian Session/Open Price:

Below: Sell Stops Liquidity [SSL].
Above: Buy Stops Liquidity [BSL].
Chapter 6: POWERFUL SETUPS
 Stop Hunt, Break In Market Structure and
Return To Order Block [SH, BMS, RTO]

This is one of my most used setups that I trade with

Where Institutions (Banks) have taken liquidity

(SH), they have placed positions in these areas
and generally the price must not exceed these
levels.
 How To Trade SH + BMS + RTO

1.First, occurs the SH, that movement is used

by Market Makers to neutralise Liquidity.
2.Second, there's a Break In Market
Structure (BMS), Confirming the SH.
3.Third, the price Return To Order Block
(RTO).
 Bullish SH + BMS + RTO

1st Target

BMS

BUY
X SH RTO
SL
Bullish SH + BMS + RTO

x BSL [1st TARGET]

x BSL
Bearish SH + BMS + RTO

SL
X SH RTO
Sell

BMS
1st Target
Bearish SH + BMS + RTO

1st Target
Failure Swing (SMS), Break In Market Structure
and Return To Order Block [SMS + BMS + RTO]

When the price fails to break a top or bottom, it

shows that the trend is ending and a reversal
may occur
 How To Trade SMS + BMS + RTO

1.First, the price fails to break a top or

bottons.
2.Second, there's a Break In Market
Structure (BMS), Confirming the SMS.
3.Third, the price Return To Order Block
(RTO).
Bullish SMS + BMS + RTO

BMS

BUY
RTO
SL
SMS
Bullish SMS + BMS + RTO
Bearish SMS + BMS + RTO
SMS
SL
RTO
SELL
BMS
Bearish SMS + BMS + RTO
Accumulation, Manipulation And Distribution
[AMD]
How To Trade AMD:
-Accumulation: the price will be ranging.
-Manipulation: the price will break the range
direction to trap traders (Because of Liquidity)
-Distribution: the price will go against the
Manipulation movement, and here, look to go
long/short on: Simple RTOs, SH + BMS + RTO,
SMS + BMS + RTO.
 Bullish AMD
VICE-VERSA FOR BEARISH

Distribution

Accumulation
Go long on:
Simple RTO
SH+BMS+RTO
Accumulation SMS+BMS+RTO

Manipulation
Bullish AMD
VICE-VERSA FOR BEARISH
Chapter 7: PUTTING EVERYTHING TOGETHER
 CONFLUENCE
Confluence is very important to increase the
chances of winning trades, a trader needs to
have at least two factors of confluence to open
a trade. When the confluence exists, the
trader becomes more confident on
their decisions.
The Factors Of Confluence Are:

Higher Time Frame Analysis.

Trade during London Open.
Trade during New York Open.
Refine Higher Time Frame key levels in Lower
Time Frame entries.
Combine setups.
 7.2. HTF analysis, LTF Entries
Refine HTF key levels in LTF entries or setups
for confirmation that the HTF analysis will
hold the price.
HTF Key Levels Are:
HTF Order Blocks;
HTF Liquidity Pools;
HTF Market Structure.

Note: It's not mandatory to refine all HTF key levels.

Time Frame Setups
For Swing Trading
HTF: Weekly, Daily, H4.
Entries: H1, M30, M5 (Sometimes on H4).

For Short Term Trading

HTF: Daily, H4, H1
Entries: M30, M5 (Sometimes on H1).

For Day Trades and Scalps

HTF: H4, H1, M30
Entries: M5, M1 (Sometimes on M15).
 Swing Trading Example

Weekly Time Frame

HTF Setup: Turtle Soup Long.

 Swing Trading Example

H1

LTF Setup: SH + BMS + RTO.

 Swing Trading Example

Daily Time Frame

HTF Setup: SH + BMS + RTO

 Swing Trading Example

LTF Setup: Turtle Soup And SH + BMS + RTO.

 Short Term Trading Example

LTF Sell Opportunity

Adicionar um título

BMS

HTF Setup: Simple RTO after BMS.

 Short Term Trading Example

LTF Setup: SH + BMS + RTO.

Another Confluence: RTO During New York Open.
 Short Term Trading Example

HTF Setup: Simple RTO, After SH.

 Short Term Trading Example

LTF Setup: SH + BMS + RTO inside of 4H RTO.

 Day Trades and Scalps
Highlight:
Asian Range (To buy High or Sell Low) "If it's
possible".

Enter a trade during:

London Open
New York Open
Price retesting HTF Key Levels
High Impact News Events.
 Day Trades and Scalps

NYO

Setup: SH + BMS + RTO.

Confluence: RTO during New York Open.
 Day Trades and Scalps

Setup: Turtle Soup Long and SH + BMS + RTO.

Confluence: Turtle Soup and RTO during New York Open.
Chapter 8: MARKED UP CHARTS
 EUR/ USD

BUY
SL

PWL Taken Out = SH

LTF Setup: SH + BMS + RTO
 NASDAQ

BMS

HTF Setup: Simple RTO ON H4 OB = SHORT SETUP

 NASDAQ (CON..)

H1 Turtle Soup Short + H4 RTO

 NASDAQ (CON..)

LTF Setup: SH + BMS + RTO inside of H4 OB

 GBP/CHF

RTO

BMS

HTF Setup: SH + BMS + RTO

 GBP/CHF (Con..)
RTO

LTF Setup: SMS + BMS + RTO

 NASDAQ

SH + BMS + RTO
NOTE: Trade during London Open, New York Open, High Impact News Events
 USD/CAD

SH + BMS + RTO
The H4 RTO Could be refined in LTF entry.
 EUR/USD

PDH Liquidity run = SH = Turtle Soup Short.

NOTE: Trade during London Open, New York Open, High Impact News Events.
 EUR/USD

SH + BMS + RTO.
NOTE: Trade during London Open, New York Open, High Impact News Events.
 EUR/USD

x x

RTO

SH + RTO.
NOTE: Trade during London Open, New York Open, High Impact News Events.
 AUD/USD

SH + BMS + RTO.
The H4 RTO Could be refined in LTF entry.
 NASDAQ

Equal Highs Liquidity run = SH = Turtle Soup Short.

NOTE: Trade during London Open, New York Open, High Impact News Events.
 NASDAQ

SH + BMS + RTO.
NOTE: Trade during London Open, New York Open, High Impact News Events.
 EUR/USD

BUY
SL

SH + BMS + RTO.
NOTE: Trade during London Open, New York Open, High Impact News Events.
 GBP/USD

Equal Lows Liquidity run = SH = Turtle Soup Long.

NOTE: Trade during London Open, New York Open, High Impact News Events.
 AUD/USD

SH + BMS + RTO.
The H4 RTO Could be refined in LTF entry
 GBP/USD

Bullish Market Structure

Confluence: SH + BMS + RTO AND SMS + BMS + RTO.
 GBP/USD

Bullish AMD with a RTO during the Distribution Phase.

NOTE: Trade during London Open, New York Open, High Impact News Events.
 GBP/USD

PDL Liquidity run = SH = Turtle Soup Long.

NOTE: Trade during London Open, New York Open, High Impact News Events.
 GBP/ USD

X PDL

Accumulation, Manipulation and Distribution| PDH Liquidity Run

Confluence: London Open.
 GBP/ USD

Accumulation, Manipulation and Distribution.

Confluence: London Open.
 GBP/ USD

Turtle Soup Long and Bullish Market Structure

LTF Buy opportunities on HTF OTE
 EUR/ USD
SL

SELL

SH + BMS + RTO
Confluence: RTO during London Open.
 EUR/ USD

SH + BMS + RTO
NOTE: The H4 RTO Could be refined in LTF entry.
 EUR/ USD

RTO

SH + BMS + RTO
NOTE: The H4 RTO Could be refined in LTF entry.
 EUR/ USD

BUY

SL

SH + BMS + RTO.
NOTE: Trade during London Open, New York Open, High Impact News Events.
 GBP/ USD

Equal Highs

SH

After SH, Buy opportunities available on every RTO.

NOTE: Trade during London Open, New York Open, High Impact News Events.
 GBP/ USD

SH + BMS + RTO combined with AMD.

NOTE: Trade during London Open, New York Open, High Impact News Events.
 GBP/ USD

PDL Liquidity run = SH = Turtle Soup Long.

NOTE: Trade during London Open, New York Open, High Impact News Events.
 GBP/ USD

PDL Liquidity run = SH, After SH, Buy every OB in LTF.

NOTE: Trade during London Open, New York Open, High Impact News Events.
 EUR/ USD

The Market Hardly reverses without taking Liquidity!

After HTF SH look for LTF entry setups.