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Notes 1

The Smart Money Concept (SMC) guide outlines strategies for following institutional investors' movements in the market. Key components include understanding market structure, liquidity concepts, order blocks, and fair value gaps, along with a structured entry model for trades. The guide emphasizes the importance of risk management and maintaining a trading journal for consistency and discipline.

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125 views2 pages

Notes 1

The Smart Money Concept (SMC) guide outlines strategies for following institutional investors' movements in the market. Key components include understanding market structure, liquidity concepts, order blocks, and fair value gaps, along with a structured entry model for trades. The guide emphasizes the importance of risk management and maintaining a trading journal for consistency and discipline.

Uploaded by

crj17.rj17
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Smart Money Concept (SMC) - Step by Step Guide

1. Introduction to Smart Money Concept

Smart Money refers to institutional investors who move the markets using large capital. SMC strategies focus

on following their footsteps, identifying their footprints in price action, and avoiding retail traps.

2. Market Structure

Understanding market structure is crucial. Key elements are:

- BOS (Break of Structure): Indicates continuation of trend.

- CHoCH (Change of Character): Signals potential reversal.

- Swing Highs/Lows: Used to define trend and structure.

- Internal vs External Structure: Internal relates to lower timeframe movements inside a higher timeframe

trend.

3. Liquidity Concepts

Liquidity is where orders are placed by retail traders. Smart money hunts this liquidity:

- Buy-side/Sell-side Liquidity: Highs/lows with stop-loss clusters.

- Equal Highs/Lows: Common targets for liquidity grabs.

- Inducements: Price traps to lure retail traders before reversal.

4. Order Blocks

Order blocks are the last bullish/bearish candle before a strong move. Institutions often re-enter at these

blocks.

- Identify valid order blocks after BOS or CHoCH.

- Use confirmation like rejection wicks or imbalance fill.

5. Fair Value Gaps (FVGs)

FVGs are imbalances where price moved too quickly, leaving gaps.

- Mark the gap between a three-candle structure.

- Price tends to return to FVGs to mitigate unfilled orders.


Smart Money Concept (SMC) - Step by Step Guide

6. Mitigation and Re-entries

Mitigation is when price returns to previous zones to fill unexecuted orders.

- Mitigation Blocks: Broken structure areas with imbalance.

- Look for re-entry at OB + FVG confluence.

7. Smart Money Entry Model

Use a structured entry method like the 3-box model:

1. HTF structure + OB or FVG.

2. LTF confirmation (CHoCH, BOS, FVG fill).

3. Entry + SL below zone.

Always use proper risk management.

8. Case Studies with Charts

Study examples using marked-up charts showing OBs, FVGs, and liquidity zones. Practice identifying these

on live charts (TradingView recommended).

9. Trading Plan & Journal Template

Track every trade with:

- Entry reason (OB, FVG, CHoCH, etc.)

- Screenshots before and after

- Risk:Reward and result

Maintain consistency and discipline.

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