THE

TRADING
FLOOR

SMART
MONEY
CONCEPTS
TABLE PAGE 1
OF INTRODUCTION TO SMART MONEY
CONCEPTS

CONTENTS Introduction to Smart Money Concepts

PAGES 2-19
THE BASICS

Bullish Structure & Bearish Structure

Strong and Weak Market Structure
Structure Mapping
Swing Structure
Internal Structure
Fractal Structure
Multi-Timeframe Structure
Break of Structure (BOS)
Internal Break of Structure (iBOS)
Trend Changes
Change of Character (CHoCH)
Premium vs. Discount
TABLE PAGES 20 - 27
OF SUPPLY AND DEMAND

CONTENTS
Order flow (Range, initiation, Mitigation, Continuation)
Supply & demand
High probability Supply & Demand zones
Supply & demand zones requirements
Flip zones

PAGES 28-33
LIQUIDITY

Concept of Liquidity
Where Liquidity Forms
Inducement
Liquidity Sweeps

PAGES 34-37
PUTTING IT ALL TOGETHER

Multi Timeframe Analysis

Building the Story
 INTRODUCTION TO
SMART MONEY CONCEPTS
The term "Smart money" refers to institutional investors and/or institutions ie. banks and hedge funds, who are knowledgeable and
thoroughly research financial markets. They frequently have an edge over retail investors (day traders) due to their access to
advanced market analysis tools, research, and substantial capital.

The concept behind "smart money" suggests that these institutional investors have the ability to impact market movements and may
strategically position themselves in anticipation of future price movements. Their actions and positions are closely monitored by
other market participants, as they are believed to have the expertise to make informed investment decisions.

It's worth noting that the term "smart money" can be subjective and speculative, and it's important for individual traders to conduct
their own research and analysis rather than solely relying on the actions of institutional investors. Successful day trading often
involves a combination of technical analysis, fundamental analysis, risk management, and the development of a personal trading
strategy.

WHAT IS SMC IN A NUTSHELL?

It is a philosophy about how the markets work and move and uses the
basics of Price Action Trading such as :

Supply and Demand

Chart Patterns
Support and Resistance

In addition to other concepts such as:

Liquidity Grabs
Mitigation Blocks and Breaker Blocks
Order Blocks
Fair Value Gaps and much more!
PAGE ONE
 BULLISH & BEARISH
STRUCTURE
Bullish Market Structure: HH BoS

A bullish market structure refers to a market trend

HH BoS
characterized by rising prices. In a bullish market, buyers
outnumber sellers, leading to upward price movements. HL
HH BoS

Prices tend to consistently rise with a series of higher HL

highs and higher lows with buyers dominating the market. re nd
ht
HL llis
Bu

B ea
r is h Bearish Market Structure:
tr e
LH nd
A bearish market structure refers to a market trend
LH characterized by declining prices; sellers dominate the
LH market. In a bearish market, sellers outnumber buyers,
BoS
LL leading to downward price movements.
LL BoS
Prices exhibit a consistent downward trend with a series of
LL BoS lower highs and lower lows.

It's important to note that market structures can vary in duration and intensity. Trends within a market can range
from short-term fluctuations to long-term sustained movements. Successful day traders often monitor market
structures and use technical analysis tools to identify potential entry and exit points based on their assessment of the
market's current state and future direction.

PAGE TWO
 STRONG & WEAK
MARKET STRUCTURE
In terms of technical analysis, the role or function of a low
is to create a high. Conversely, the job of a high is to create
a low. During an uptrend, when a low forms a higher high,
the low is considered "strong" or "protected," and the newly
formed high is considered "weak" or "unprotected." The low BoS

is "protected" because if price were to trade lower than the

protected low, we would be seeing the first potential sign of BoS

a trend change.
BoS

e nd
lis h tr
B ul
Bullish Structure:

A low is confirmed as strong or protected once a higher high is created

B ea
r is h
tr e
nd

BoS

BoS

BoS
Bearish structure:

A high is confirmed as strong or protected once a lower low is created

PAGE THREE
 STRUCTURE MAPPING
Structure mapping is used as a way of maintaining consistency in how you mark out breaks of structure.
It is widely accepted that Type 2 is mandatory for breaks of swing structure.
Gathering your own data and forming your own conclusions for iBoS and CHoCH is highly encouraged .

Type 1 Type 2
Wick to Wick Wick to Body

PAGE FOUR
 SWING STRUCTURE
Swing structure are the highest and lowest points price reached before and after a Break of Structure (BoS)

A swing high in an uptrend is the highest point price reached after the BoS
A swing low in an uptrend is the lowest point price reached before the BoS

A swing high in a downtrend is the highest point price reached before the BoS
A swing low in a downtrend is the lowest point price reached after the BoS

Swing High

Swing Low

Swing High
Swing Low

PAGE FIVE
 TEST YOUR Identify Swing Structure on the charts below
KNOWLEDGE

PAGE SIX
 INTERNAL STRUCTURE
Internal Structure is the structure formed between the swing high and swing low
Swing High

Internal High

Internal Low
Swing Low

Swing High

Internal High
Internal Low

Swing Low

PAGE SEVEN
 TEST YOUR Identify Internal Structure on the charts below
KNOWLEDGE

PAGE EIGHT
 FRACTAL STRUCTURE
Fractal structure is a means of identifying the composition of lower time frame swings or price movement

Sell to buy wick Overextended wick Inside bar

When enough When enough When enough indecision

buying/selling pressure is buying/selling pressure is is present to create a
present to significantly present to significantly candle that cannot break
displace the high/low displace the high/low through the high or low
from the close of a from the close of a pivot of the preceding candle,
candle, and the open of candle, it leaves behind a this denotes a ranging
the next, it leaves behind fractal supply/demand market on a lower
a fractal supply/demand zone in the form of a far timeframe.
zone in the form of wicks reaching wick
that overlap bodies

PAGE NINE
 TEST YOUR Identify Fractal Structure on the charts below
KNOWLEDGE

PAGE TEN
 MULTI-TIMEFRAME
STRUCTURE
It is important to have an idea of what the overall trend is on a higher timeframe.
What may seem to be a downtrend on the 1-minute, 5-minute or 15-minute timeframe may very well be a
pullback on an uptrend on the 1-hour or 4-hour chart.

Strong Structure
Weak Structure

PAGE ELEVEN
 BREAK OF STRUCTURE (BOS)
A Break of Structure (BoS) occurs when price trades and closes past a previously stablished swing high or low.

Break of Structure (BoS)

Break of Structure (BoS)

Break of Structure (BoS)

BoS

Break of Structure (BoS)

BoS

Higher High
Higher Low
BoS

PAGE TWELVE
 TEST YOUR Identify Breaks of Structure on the charts below
KNOWLEDGE

PAGE THIRTEEN
 INTERNAL BREAK OF STRUCTURE
(IBOS)
An Internal Break of Structure (iBoS) is when price initiates a break of the structure that has formed between
the swing high and swing low.
Swing High

iBoS
iBoS

iBoS

Swing Low

Swing High

Internal High
Internal Low
CHoCH
iBoS

Swing Low

PAGE FOURTEEN
 TEST YOUR Identify the iInternal Breaks of Structure on the charts below
KNOWLEDGE

PAGE FIFTEEN
 TREND CHANGES
SMC defines a trend by successive breaks of structure in one direction. When structure breaks in the opposite
direction, this is referred to as a change of character.

Market structures can change over time, transitioning from weak to strong, bullish to bearish and vice versa. As a day
trader, remaining adaptable, continuously analyzing market conditions, and adjusting strategies accordingly are
crucial for success.

Remember, market structures are dynamic, and utilizing a combination of technical analysis, risk management, and
experience can help guide your trading decisions effectively.

HH

HH
HH BoS

LH
HH BoS
HH BoS
HL CHoCH
LH CHoCH
HH BoS

HL BoS
LL
HL

HL LL BoS

LL

PAGE SIXTEEN
 CHANGE OF CHARACTER
(CHOCH)
A Change of Character (CHoCH) is the first sign that structure could be shifting.

A bullish CHoCH occurs when price breaks the latest internal lower high that caused an internal lower low.
A bearish CHoCH occurs when price breaks the latest internal higher low that caused an internal higher high.

CHoCH
CHoCH BoS

PAGE SEVENTEEN
 TEST YOUR Identify The Changes of Character on the charts below
KNOWLEDGE

PAGE EIGHTEEN
 PREMIUM VS. DISCOUNT

Premium
Sell here

Equilibrium 50% of Fibonacci Equilibrium 50% of Fibonacci

Discount Buy here

The Premium and Discount zones can Price moves between premium and discount.
help determine an overall bias by Equilibrium is the 50% level of the
marking out the swing low and swing Fibonacci or Gann box tools when measuring
high, using the Gann box or Fibonacci the movement in price.
tools.
Measuring a bearish move - above 50% is
premium.
Measuring a bullish move - below 50% is
discount.

PAGE NINETEEN
 ORDER FLOW (RANGE, INITIATION,
MITIGATION, CONTINUATION)
Buyers and sellers fight for control in a
range, and when one side wins, price
initiates movement in the winning
direction to break structure. Continuation

After the initiation phase, price returns Initiation

to the initial range to fill remaining Range
pending orders. This phase is called Mitigation
mitigation.

Once price has fulfilled the orders left

by the initiation phase, continuation can
occur. This process is referred to as To identify "who is in control" of the order flow, look
both order flow and RIMC. for price to be forming and respecting new demand
zones while supply is failing, or forming and
respecting new supply zones while demand is
failing.

A supply or demand zone is considered to have

failed when price trades through it and closes
C beyond it. As SMC traders, our trade bias is
M governed by order flow. Order flow is not constant,
C however, and after a few cycles of RIMC, price will
M I
R often enter into a period of consolidation. Because
I
I R of this, the concept or order flow is best utilized in
times of expansion, rather than consolidation. You
R will also notice during trending price action, as in
the drawn example found below, that the mitigation
phase will often coincide with the range phase of
the next RIMC.

PAGE TWENTY
 TEST YOUR Identify Order Flow on the charts below
KNOWLEDGE

PAGE TWENTY ONE

 SUPPLY & DEMAND
Supply and demand zones are used to help describe how SMC traders use order flow to trade. We can use
previously established terminology from RIMC to help visualize supply and demand on a chart.

Supply and demand zones are formed during the range phase of RIMC. If the price action during the range
phase is bearish, followed by bullish price action creating a bullish break of structure, the zone left behind by
that range phase is demand. This is where price is likely to return to during the mitigation phase.

Conversely, if the price action during the range phase is bullish, and the bearish price action steps in to initiate
a bearish break of structure, the zone left behind by that range phase is supply is where it would likely for
price to return to during the mitigation phase.

Higher timeframes will have fewer S&D zones than lower timeframes, but there is a much higher probability
that price will respect higher timeframe S&D zones during any given mitigation phase. In addition, the more
significant the structure that forms alongside the S&D zone, the higher the probability that price will respect
the zone during the mitigation phase. Swing structure is more significant than internal structure, and internal
structure is more significant than a change of character.

Range and mitigation can overlap, and trending markets will often form what we call
"supply or demand chains" when price cycles through multiple instances of RIMC.

PAGE TWENTY TWO

 HIGH PROBABILITY
SUPPLY & DEMAND ZONES
Higher probability supply and demand zones stack multiple confluences.

For example:

Price has returned to mitigate a 4-hour demand zone in the discount area of the range, after breaking swing
structure.
On the 15-minute chart there may be a shift in order flow in alignment with the 4-hour trend.
Once the lower timeframe's order flow is in alignment with the higher timeframe's trend, demand has taken
control.
15-minute pro-order flow demand zones that form inside the higher timeframe's point of interest, are
considered to have a high probability of being respected should price return to mitigate it.

Structural Supply & Demand Flip Zone

PAGE TWENTY THREE

 SUPPLY & DEMAND ZONE
REFINEMENTS
In using supply and demand zones for technical analysis framework; three different types of refinements can
be utilized when doing chart mark-ups.

Range Pivot Fractal

Using the full range for The pivot for the supply or The fractal for the supply or
supply or demand zone, demand zone, marks out the demand zone, marks out the
mark from the start of the candle that represents the wick that represents the
buy-to-sell or sell-to-buy last internal buy-to-sell or last possible buy-to-sell or
move that results in a sell-to-buy move that sell-to-buy move that
break of structure. results in a break of results in a break of
structure. structure.

These three zones are often refined even further. Many supply and demand traders will look to refine these
zones by adding a Fibonacci or Gann tool to the zone to find the equilibrium and enter into trades if price
retraces to the point of interest.

PAGE TWENTY FOUR

 TEST YOUR Identify Supply & Demand zones on the charts below
KNOWLEDGE

PAGE TWENTY FIVE

 FLIP ZONES
A flip zone is formed through a series of events.
For example, in a bullish flip zone scenario price will retrace to mitigate a supply zone associated with a strong
high, but instead of continuing on to form a lower low, it ranges into a demand zone.
If this demand zone results in price initiating a break of structure above the supply zone, that supply zone is
considered to have failed, and the demand zone is considered a flip zone.
Flip zones can form as the result of a change of character, or a liquidity grab and can be as few as one candle,
or even show up in the form of fractal structure.

HH

LH

HH BoS

LH CHoCH

LL BoS
HL

LL BoS Flip Zone

LL

PAGE TWENTY SIX

 TEST YOUR Identify Flip Zones on the charts below
KNOWLEDGE

PAGE TWENTY SEVEN

 CONCEPT OF LIQUIDITY
Liquidity refers to the volume of orders waiting to be filled in the market. Liquidity forms when there is a high
concentration of orders placed in a tight price range. As traders, we can visualize liquidity in the form of stop
losses for retest trades and pending orders for breakout trades.

A higher low, for example, would have traders who are long, placing their stop loss directly below that low. That
same higher low would have breakout traders waiting to short should price go below it and "break out" of it's
range. Stops from both of those sets of traders amount to a high concentration of sell orders in a tight price
range.

Stop losses for Short trades

OR
Buy stops for Long trades

Stop losses for Long trades

OR
Sell stops for Short trades

"Big Money" requires a high concentration of sell orders to execute their buy orders; for every "buy" there has to
be a "sell." "Smart Money" tries to capitalize on the market by using liquidity concepts to predict "Big Money's"
true intentions.

PAGE TWENTY EIGHT

 WHERE LIQUIDITY FORMS
Liquidity forms wherever there is an accumulation of stop orders.
It is expected that during an uptrend, liquidity will accumulate under strong lows, and during a downtrend, we
can expect liquidity to accumulate above strong highs.
Also, be on the lookout for liquidity to accumulate above double tops and below double bottoms.

Liquidity

Liquidity can also accumulate in-between protected structures, and will be visible in the form of consolidation
and inducement.

Large amounts of liquidity will form to coincide

with supply and demand chains, or trendlines.

The bigger the chain or trendline, the more

liquidity has been built up.

quidity
line Li
d
Tren

PAGE TWENTY NINE

 INDUCEMENT
To be induced means to have been persuaded
to do something. In trading, inducement occurs
when price action persuades traders to enter
losing positions.

Inducement is a form of liquidity that is meant

Inducement point
to entice traders into entering easily liquidated
Strong low
positions.

Three types of Inducement:

Pullback Inducement Leg Inducement Leg & Pullback Inducement
BoS BoS BoS

How to capitalize on Inducement

When waiting for the retracement,

target the zone associated with the
strong high or low for entry rather than
No
the inducement point.
Yes
How to capitalize on Inducement:
Strong Low

PAGE THIRTY
 TEST YOUR Identify Inducement on the charts below
KNOWLEDGE

PAGE THIRTY ONE

 LIQUIDITY SWEEPS
Inducement goes hand in hand with
the concept of liquidity sweeps.
Liquidity sweeps are most visible in
the market when price trades
beyond an inducement point but
does not close past the inducement
point. It can also perform this
function over the course of a few
candles but is most obvious when it
occurs in the form of just a wick.

A liquidity sweep can also appear in

the form of a change of character that
does not result in a change of the
trend direction.

PAGE THIRTY TWO

 TEST YOUR Identify Liquidity Sweeps on the charts below
KNOWLEDGE

PAGE THIRTY THREE

 MULTI-TIMEFRAME ANALYSIS
Multi-timeframe analysis is the process by which higher timeframe market structure, order flow, and supply
and demand zones are used to determine price's upcoming objective. An intermediate timeframe analysis can
be implemented to determine high probability points of interest where an edge can be executed. Then, if
desired, it is possible to observe an even lower timeframe in order to potentially maximize the risk to reward
potential based on certain entry model scenarios.
It is important when utilizing SMC that the "top-down" approach be taken for the analysis.

There are two primary combinations of timeframes that SMC traders tend to gravitate towards

1D/4H/M15

4H/M15/M1

The highest probability entries will occur when the MTF and LTF order flows are in alignment with the HTF's next
objective.

Using a LTF entry model to capitalize on MTF high probability points of interest, whilst having those points of
interest support the fulfillment of the HTF objective offers the highest possible risk to reward scenarios.

With this MTF approach, it is possible to predict upcoming price movement and set alerts to optimize the amount
of time spent in front of the charts. Utilizing alerts, allow for a more hands-off approach with regard to the
markets until price returns to mitigate a high probability point of interest on the medium timeframe. At which
point it would be possible to consider an entry on a lower timeframe.

PAGE THIRTY FOUR

 MULTI-TIMEFRAME ANALYSIS CON'D

The higher timeframe is where the market's upcoming objective is identified. It is expected that price follow
order flow theory in one direction until it fails to build liquidity for its next cycle of RIMC. Using this as a
guideline; a few presumptions can be determined; when tested they carry high probabilities.

With a break of swing structure as a result of initiation, we can expect a pullback on that timeframe.

Pullbacks are the visual representation of the mitigation phase of order flow.

The price target for any given mitigation phase is the range formed before the initiation.

The mitigation phase on a higher timeframe has the potential to be a complete trend on a lower
timeframe.

In practical application, after a HTF break of structure, the "short the initiation phase" once the MTF and LTF
order flows are in alignment towards fulfillment of the mitigation phase, can be seen.

What determines when the mitigation phase has ended?

The highest probability entries will once again begin to show up once MTF and LTF order flow has aligned with
the HTF's next objective however, keeping in mind that it cannot be known with 100% certainty.

Following the identification of a scenario in which the mitigation phase has likely ended, search for
realignment on the MTF and LTF toward the fulfillment of the continuation phase.

The price target for any given continuation phase is the liquidity left behind by the end of the initiation
phase.

PAGE TWENTY FIVE

 BUILDING THE STORY
This page is titled "Building the Story" as it reflects what learning SMC allows the trader to do:

To visualize the story of where price has been, what it's doing now, and predict its next
objective with high probability.

It is highly recommended to learn, study, and practice the concepts in order, beginning with Market
Structure, Order Flow, and Supply & Demand.

First, define the scenarios that make up "market structure", as market structure is the visual foundation for
nearly all analyses conducted on the charts.

BoS

CHoCH

iBoS

Order flow is the process that creates market structure on a candlestick chart, but properly defined market
structure is needed to adequately describe order flow.

R
C
I
M M
I C
R

PAGE THIRTY SIX

 BUILDING THE STORY (CONT'D)
Bridging the concepts of order flow and market structure to locate, draw, and describe supply and demand.

Demand Flip Supply

It will become apparent after mastering the above core concepts that, while market structure, order flow,
and supply & demand are used to visualize, describe, and to an extent act on what goes on in the market;
liquidity is the true reason price moves.

With consistent story-building on higher timeframes, an entire world with the potential for higher probability
successful trades is unlocked. By utilizing a higher timeframe than the entry timeframe for additional analysis,
one is able to more consistently predict price's underlying objective.

That higher timeframe objective can be used in combination with lower timeframe order flow to form a
directional bias and entry criteria for the trade.

PAGE THIRTY SEVEN

NOTES
NOTES