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Smart Money Concept

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George Jacob
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39 views2 pages

Smart Money Concept

Uploaded by

George Jacob
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Smart Money Concept – Trading Strategy

list.

The Smart Money Concept (SMC) is a trading approach that focuses on understanding the
behavior of institutional investors (the "smart money") and aligning one's trading strategies
with their activities. Here are some popular trading strategies based on the Smart Money
Concept:

1. Order Block Trading

• Description: Order blocks are areas where institutions place large orders. Price often
revisits these areas, offering potential entry points.
• Strategy: Identify key order blocks on higher timeframes, wait for price to return to
these areas, and look for confirmation (like candlestick patterns or lower timeframe
structure) to enter a trade.

2. Liquidity Hunt

• Description: Institutions often drive prices towards liquidity zones, where retail
traders have placed stop-loss orders, to capture liquidity for their large orders.
• Strategy: Identify areas where liquidity is likely (e.g., around support/resistance
levels, trendlines, or psychological levels). Watch for a sharp move into these zones
followed by a reversal, signaling an entry.

3. Market Structure Shift

• Description: Institutions often cause shifts in market structure to initiate new trends
or end existing ones.
• Strategy: Look for clear breaks of market structure (e.g., higher highs/lows in an
uptrend or lower highs/lows in a downtrend). Enter trades in the direction of the new
trend after a pullback.

4. Wyckoff Accumulation/Distribution

• Description: Wyckoff theory involves phases of accumulation and distribution, where


institutions gather or offload positions before a major move.
• Strategy: Identify Wyckoff phases (e.g., accumulation, distribution) on the chart.
Enter trades at key points like Spring (in accumulation) or Upthrust (in distribution),
confirming the market direction.

5. Institutional Liquidity Zones

• Description: These are zones where institutions are likely to place large buy or sell
orders.
• Strategy: Identify these zones by looking for areas of high trading volume or price
consolidation. Enter trades when price approaches or reacts to these zones, often using
lower timeframes for precise entries.

6. Imbalance Trading

• Description: Price imbalances occur when there are large, one-sided moves that leave
gaps in the market. Institutions often return to these areas to fill the gaps.
• Strategy: Identify price imbalances on the chart. Wait for price to return to these
areas, then look for a reversal or continuation signal to enter a trade.

7. Break of Structure (BOS)

• Description: A Break of Structure indicates a shift in the prevailing market trend,


often triggered by institutional moves.
• Strategy: Identify breaks of key levels or market structures. After a BOS, wait for a
pullback to the level that was broken, and then enter a trade in the direction of the new
trend.

8. Fair Value Gaps (FVG)

• Description: Fair Value Gaps are created when price moves rapidly, leaving a gap
between the high and low of candles. These gaps are often revisited by institutions.
• Strategy: Identify FVGs on the chart. Wait for price to retrace to the gap, then look
for a trade setup in line with the market structure.

These strategies require a solid understanding of price action, market structure, and
institutional behavior. They are often used in combination with other technical analysis tools
for confirmation.

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