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The document outlines the top nine smart money concepts in trading, which are strategies used by experienced traders and financial institutions to make informed trading decisions. Key concepts include order blocks, fair value gaps, supply and demand zones, and liquidity pools, among others, which help traders understand market movements and improve their trading effectiveness. The guide aims to simplify these concepts for both new and experienced traders to enhance their market insights.

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27 views3 pages

edited (19)

The document outlines the top nine smart money concepts in trading, which are strategies used by experienced traders and financial institutions to make informed trading decisions. Key concepts include order blocks, fair value gaps, supply and demand zones, and liquidity pools, among others, which help traders understand market movements and improve their trading effectiveness. The guide aims to simplify these concepts for both new and experienced traders to enhance their market insights.

Uploaded by

jay
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
You are on page 1/ 3

Top 9 Smart Money Concepts in Trading

forexbee.co/smart-money-concepts

January 3, 2024

Introduction
Trading in the financial markets isn’t just about guessing; it’s about making informed
decisions. That’s where smart money concepts come in. These concepts are the
strategies used by experienced traders and big financial institutions. They help in
understanding market movements and making profitable trades.

In this guide, we’re going to make smart money concepts easy to understand and use. No
matter if you’re new to trading or have been at it for a while, these key ideas are
important. They’ll give you a clearer view of the market and help you trade more
effectively, just like the experienced traders.

What are Smart Money Concepts?


Smart money concepts are the tricks used by big, experienced traders and institutions in
the forex market. Think of them as the special moves used by the market’s big players to
make profits. Knowing these can help you understand the market better and improve your
own trading.

These concepts are important because they show you how the market really works.
They’re like a behind-the-scenes look at what drives prices up or down. By using these
concepts, you can make smarter trades, just like the pros.

Let’s check out the main smart money concepts:

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Smart Money
Concept Description Image

Order Blocks Finding where big traders are likely to buy or sell a
lot.

Fair Value Gaps Gaps that act as price magnets and are typically
filled.

Supply and Zones where price fills the pending orders of market
Demand Zones makers.

Change of When the market starts acting differently, signaling a


Character Trading possible trend change.

Break of Structure Points where the normal pattern of the market


changes.

Liquidity Pools Places where a lot of trading happens.

Stop-Loss When big traders make moves to trigger smaller


Hunting traders’ stop-losses.

False Breakouts Times when the market looks like it’s moving one way
but then goes the other way.

Kill Zones Times during the day when the market is buzzing
with activity.

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Understanding these concepts can really help you trade smarter and more like the big
guys in the market.

1. Order Blocks

Order blocks in forex refer to the collection of orders of big banks and institutions in forex
trading. The big banks do not just open a buy/sell order, but they distribute a single order
into a check of blocks to maximize the profit potential. These chunks of orders are called
order blocks in trading.

Types of Order Blocks

Order blocks are generally of two types:

Bullish Order Block: This forms after a bullish impulsive wave breaks a ranging market
structure or block. When the price returns to this block zone, it’s an opportunity to open
buy orders, aligning your trades with the institutions.

Bearish Order Block: This is formed after


a bearish impulsive wave breaks the price
range or block. When the price revisits this
zone, it’s time to consider opening sell
orders.

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