SMC Trading Strategy Guide

The SMC (Smart Money Concepts) Master Guide

Step-by-step strategies to understand the market like a professional trader. From basic structure to advanced entry models.

The Trend Blueprint

Strategy Explanation

This is the foundation of SMC. It involves identifying the market's current trend (Uptrend or Downtrend). The market doesn't move in a straight line; it moves in "swings." Understanding these swings is known as understanding Market Structure.

How to Use This Strategy

  1. Identify Swings: Mark Higher Highs (HH) and Higher Lows (HL) on the chart for an uptrend, or Lower Lows (LL) and Lower Highs (LH) for a downtrend.
  2. Break of Structure (BOS): When the price breaks a previous high (HH) to create a new high, it's called a BOS. This signals that the trend is likely to continue.
  3. Change of Character (CHoCH): When the price in an uptrend breaks the previous low (HL), it's the first sign that the trend might be reversing. This is called a CHoCH.

Smart Money Footprints

Strategy Explanation

When large financial institutions (Smart Money) buy or sell in the market, they leave behind "footprints." These are known as Order Blocks (OB) and Fair Value Gaps (FVG). These are areas where the price has a high probability of reversing.

How to Use This Strategy

  1. Find Order Blocks (OB): An Order Block is the last opposite-colored candle before a large, impulsive move. It acts as a potential Supply or Demand zone.
  2. Identify Fair Value Gaps (FVG): An FVG is a price inefficiency or gap between three candles. The market often returns to "fill" these gaps.
  3. Plan Your Entry: When the price returns to your marked OB or FVG area, you can plan to take a trade, after confirming with the market structure.

The Liquidity Hunt

Strategy Explanation

Liquidity means money. The areas in the market with the most Stop Losses are where the most liquidity is. Smart Money "grabs" this liquidity (by hitting retail traders' stop losses) and then moves the market in their intended direction.

How to Use This Strategy

  1. Mark Liquidity Areas: Old highs and lows, trendlines, and equal highs/lows are the most common liquidity zones.
  2. Wait for a Liquidity Grab (Sweep): Before taking a trade, watch for the price to sweep an important high or low (i.e., it goes above/below it and then quickly reverses).
  3. Understand Inducement: This is a trap. Smart Money creates a minor high or low to entice retail traders to enter, then hits their stop losses before making the real move.

The Precision Strike Model

Strategy Explanation

This is the most advanced level, where you combine all the above strategies (Market Structure, Order Blocks, Liquidity) to create a complete trading plan. Entry, stop loss, and target are all predefined, allowing for emotion-free trading.

How to Use This Strategy

  1. High Timeframe (HTF) Analysis: First, mark the overall trend and important zones (OB/FVG) on a higher timeframe (e.g., 4H or Daily).
  2. Low Timeframe (LTF) Confirmation: When the price enters your HTF zone, switch to a lower timeframe (e.g., 5M or 15M) and wait for a Change of Character (CHoCH).
  3. Entry & Risk Management: Enter on the Order Block that forms after the CHoCH. Place your stop loss safely and set your target at the next liquidity zone. Always follow a good Risk-to-Reward ratio (at least 1:2).
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