Advanced Smart Money Concept
Smart Money Concepts (SMC) refers to trading strategies used by big
financial players like banks (Goldman Sachs, JP Morgan), hedge
funds (Like Wall Street of New York) These "smart money" traders
have deep market knowledge and large capital, allowing them to
influence prices and market trends.
What makes these players "smart money"?
Several key advantages separate them from retail traders:
Capital Advantage: Big players control billions of dollars, allowing them
to move the market and create trends that smaller traders try to follow.
Data Advantage: They use advanced data, research, and algorithms that
regular traders don’t have access to.
Talent Advantage: They employ top analysts and traders, often experts
in Mathematics, Economics, and Computer Science from Top
Universities.
Psychological Advantage: They understand market psychology and use
it to trick retail traders who rely on basic technical analysis.
Order Block (OB): Price areas where large market participants such as
institutional traders have previously placed significant buy or sell
orders. Or levels on a chart where a large number of limit orders, stop-
loss orders, and take-profit orders are placed by traders.
They are often seen as:
Bullish Order Blocks (demand zones) – where institutions have
placed large buy orders.
Bearish Order Blocks (supply zones) – where institutions have
placed large sell orders.
How to Identify an Order Block
Order blocks are formed by institutions placing large orders before major price
movements. To find them, follow these steps:
1. Look for Strong Price Moves (Impulse Moves)
Identify a sharp breakout in price after a consolidation phase.
This suggests that smart money has entered the market with large buy or sell
orders.
2. Identify the Last Opposite Candle Before the Move
For a Bullish Order Block (Buy Zone): Look for the last bearish candle
before a strong bullish move.
For a Bearish Order Block (Sell Zone): Look for the last bullish candle
before a strong bearish move.
Mitigation is when smart money (institutions, banks, hedge funds) return to an old order
block or breaker block to close or balance their previous positions before continuing in their
intended direction. Or market returns bck to an order block to clear liquidity and us the
order block or breaker block
RULES BEFORE PICKING AN ENTRY (POI)
THERE SHOULD BE A BREAK OF STRUCTURE OR MSS (CHOCH)
IT NEEDS TO HAVE LIQUIDITY PROTECTING IT
IT NEEDS TO BE UNMITIGATED
THE POI MUST BE VERY CLOSE TO LIQUIDITY
