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SMC

Understanding LIQUIDITYIn this video I try to explain liquidity as it pertains to training in a simple manner. Liquidity are basically orders in the marketplace. Since trading is a zero-sum game, without liquidity, there is no trading. Simply put, If you wanted to BUY, then you would need someone to SELL to you, and vice versa. Smart Money has deep pockets and needs a large amount of liquidity to facilitate their positions. They want to be able to get in and our of their trades, as well as to be able to trade with capital that would be worth the reward. The largest pools of liquidity usually reside above swing highs and lows, and equal highs and lows (double/triple tops and bottoms). Support and Resistance ideologies dominate the market, and besides that, psychologically it makes sense to put stoplosses at such areas rather than at some random area within a range. There are also breakout traders who see price breaking out of an area as a sign of strength (or weakness if bearish) and they set their entries above/below these levels. This is how liquidity is "engineered" in the market and sentiment manipulated. These pools of liquidity can be seen as a magnet, drawing price to these levels, either to grab liquidity before reversing or continuing in its current direction. - R2F
OANDA:XAUUSDEducation
by Road_2_Funded
14
SMC The best way to detect Order Blocks Due to the great popularity of the Smart Money Concept approach, traders around the world are learning how to identify Order Block in the best way possible. Although there are different variations of the approach, the logic remains the same - accurately identifying a large limit volume in order to get the best entry point and catch the movement of a major player. I will show you, in my opinion, the most accurate practice for detecting Order Block, which in addition will increase the number of potential entries. It is different from the classic application. Check it out! Defining Max and Min on the chart No matter what asset you are trading and timeframe, any logic for finding OB starts with marking the lows and highs (MIN MAX). This is necessary to: Identifying the trend in whose direction we will be looking for the Order Block. Directly for the Order Block itself, as it will be located at one of the MIN or MAX. In our example, we will be looking for an Order Block on USDJPY H1 Note: There are so-called true Min and Max (signed in white on the chart). They determine the direction of the trend on this timeframe and the Order Block can be located in them. But there are also local Min and Max (signed in orange color), which do NOT determine the direction of the trend on this timeframe, but they can also contain an Order Block. Having determined the true Min and Max, it is not difficult to establish the trend direction by comparing the last 4 points of the true MIN MAX. In our case, the trend is downward. Looking for a Order Block by trend OB should be searched at the last MAX (in case of selling) or MIN (in case of buying). It does not matter whether it is a local or a true MIN MAX, the most important thing is the most recent one. And here are the specific rules for this (for a bearish OB): Find the most recent MAX Find the last green candle before the MAX MAX point should be a false breakout of this green candle Draw the boundaries of this green candle - they will be the order block Let's turn to a close-up of our example: All conditions are met. Found order block for sale. Oder Block activation and entry. Once an Order Block is marked, it is not yet sufficient to find an entry. An important condition before entry is Activation of the block. This is how we make sure that a major player is really moving the price in the right direction. Activation is the breakdown of the block in the direction of the trade. In our example, activation is a break of the lower boundary of the block. Attention: if the block order breaks through in the opposite direction, it is considered broken and can no longer be used. After activation, you should wait for the price to return to the block and open a trade there. It is ideal to put a limit order. Stop Loss will always be the upper boundary of the block, Take Profit can be taken variably, there are no rigid rules. Strong blocks can give more than one reaction. Then you can try to enter the block again. Conclusion In this article, we have shown the author's variant of how to find a block order on the trend and showed an example of how to work it out. Such blocks are especially strong and give many good entries. Of course, finding a block order is an important part of the Smart Money concept, but there are many more tools that will help to clarify the entry and exit and make SMC as efficient as possible (e.g. liquidity). We will talk about them in other articles.
Education
by Smart_Miner
3
How to trade Smart Money Concepts (SMC)This trading strategy was initially popularized by an infamous trader who is also the founder of the Inner Circle Trading (ICT) method which is claimed to be the evolved version of the SMC. Let’s first take a look at the building blocks of this trading strategy and compare it with the well-known trading concepts by industrial titans (Dow, Wyckoff, Elliott). Essentially, SMC puts forth the notion that market makers, including institutions like banks and hedge funds, play a deliberate role in complicating trading endeavours for retail traders. Under the Smart Money Concepts framework, retail traders are advised to construct their strategies around the activities of the "smart money," denoting the capital controlled by these market makers. The core concept involves replicating the trading behaviour of these influential entities, with a specific focus on variables such as supply, demand dynamics, and the structural aspects of the market. Therefore, as an SMC trader, you'll meticulously examine these elements when making trading decisions, aligning your approach with the sophisticated techniques of prominent market figures. By embracing this perspective and closely monitoring the actions of market makers, SMC traders endeavour to establish an advantageous position in their trading activities, aiming to capitalise on market movements driven by smart money. When you initially dive into the Smart Money Concepts (SMC), the technical vocabulary can be a bit overwhelming. To help demystify it, here's an overview of some common terms used by SMC traders. 1. Order Blocks These are used to discuss supply and demand. Some SMC traders consider order blocks as a more refined concept than standard supply and demand, although not everyone agrees on this. An order block signifies a concentrated area of limit orders awaiting execution, identified on a chart by analysing past price movements for significant shifts. These zones serve as pivotal points in price action trading, influencing the market's future direction. When a multitude of buy or sell orders cluster at a specific price level, it establishes a robust support or resistance, capable of absorbing pressure and triggering price reversals or consolidation. 2.Fair Value Gap You should clarify whether your current trading style suits you. If you don't have time to look at charts during the day, you should not focus your strategy on intraday trading using 1 5-minute or 30-minute charts. It is definitely better to develop an approach that works on a 4-hour or daily chart so that you have enough time to analyze the charts before or after work. Ideal time and timeframe This phrase describes an imbalance in the market. It occurs when the price departs from a specific level with limited trading activity, resulting in one-directional price movement. In the case of a bearish trend, the Fair Value Gap represents the price range between the low of the previous candle and the high of the following candle. This area reveals a discrepancy in the market, which may indicate a potential trading opportunity. The same principle applies to a bullish trend but with the opposite conditions. 3.Liquidity Liquidity plays a pivotal role in SMC. It pertains to price levels where orders accumulate, rendering an asset class "liquid." Essentially, these are price points with available orders ready for transactions. Liquidity can manifest in various forms, such as highs and lows or trend line liquidity. How liquidity is handled varies depending on the trader. One of the most common approaches is to use a pivot high or pivot low. For better understanding, a pivot high or low is formed when several adjacent candlesticks have a higher low or lower high. In the picture, we can see the pivot low. The candlestick has the lowest low compared to its three neighbours to the right and left. 4.Break of Structure (BOS) Once you become familiar with this terminology, you'll realize that many SMC concepts are consistent with traditional trading ideas. A fundamental element of SMC market analysis is the emphasis on the "break of structure" (BOS) in the market. 5.Change of Character (ChoCH) For instance, in a chart illustrating breaks of structure, each time the price surpasses the previous high, a break of structure occurs. Conversely, when the price drops below previously established lows, it signals a change of character (ChoCH). SMC traders leverage their understanding of these patterns to make informed decisions based on the market's behaviour.
Education
by Golden_Star1994
2
High & Low Resistance LiquidityLOW RESISTANCCE LQ 1.No liqidation Available SSLQ generated at weak low = low resistance lQ 2. Price is more likely to pullback to the nearest POI 3. high resistance LQ left at new strong high 4. price will move impulsively past low resistance lows to target available SSLQ HIGH RESISTANCCE LQ 1. Strong liquidation Signals potential institutional backing Leaves high resistance LQ 2. Often price will then pull back much deeper (or potentially reverse) 3. The end of the pullback often forms through a liquidation, leaving high resistance LQ at what then becomes the new strong / protected high 4. Price meets some resistance at the sweep zone to the left rather than smashing straight through the weak lows when there's low resistance LQ
EIGHTCAP:XAUUSDEducation
by quangcttn
1
Trading logic in multiple time frames of the SMC methodAfter the price breaks through the Swinghigh of the large time frame to create a BOS signal We look for sell down or buy up signals according to the following structure: Swing high(Weak) H4 => 1/5M pullback => break Swinglow 1/5M => 15M pullback => break Swinglow 15M => Pullback 4H => Order block 4H=> Pullback 1/5M => break Swinghigh 1/5M => Pullback 15M => break Swing 15M = > Pullback 4H => break Swinghigh 4H => Create new Swing High (Weak) and Swing Low (Strong)
CAPITALCOM:DXYEducation
by quangcttn
Market Manipulations. Bullish Trap (smart money concepts) In the today's article, we will discuss how smart money manipulate the market with a bullish trap. In simple words, a bullish trap is a FALSE bullish signal created by big players. With a bullish trap, the smart money aims to: 1️⃣ Increase demand on an asset, encouraging the market participant to buy it. 2️⃣ Make sellers close their positions in a loss. When a short position is closed, it is automatically BOUGHT by the market. Take a look at a key horizontal resistance on AUDCHF. Many times in the past, the market dropped from that. For sellers, it is a perfect area to short from. Bullish violation of the underlined zone make sellers close their position in a loss and attracts buyers. Then the market suddenly starts falling heavily, revealing the presence of smart money. Both the sellers and the buyers lose their money because of the manipulation. There are 2 main reasons why the smart money manipulates the markets in a such a way: 1️⃣ - A big player is seeking to close a huge long position When a long position is closed, it is automatically SOLD to the market. In order to sell a huge position, smart money needs a counterpart who will buy their position. Triggering stop losses of sellers and creating a false demand, smart money sell their position partially to the crowd. 2️⃣ - A big player wants to open a huge short position But why the smart money can't just close their long position or open short without a manipulation? A big sell order placed by the institutional trader, closing their long position, can have an impact on the price of the asset. If the sell order is large enough, it can push the price downward as sellers outnumber buyers. Smart money are trying to balance the supply and demand on the market, hiding their presence. It is quite complicated for the newbies and even for experienced traders to recognize a bullish trap. One of the efficient ways is to apply multiple time frame analysis and price action. Remember, that most of the time bullish traps occur on key horizontal or vertical resistances. After you see a breakout, analyze lower time frames. Quite often, after a breakout, the market starts ranging. After a breakout of a key daily resistance, gold started to consolidate within a narrow range on an hourly time frame. Bearish breakout of the support of the range will indicate a strength of the sellers and a highly probable bullish trap. Remember, that you can not spot all the traps, and occasionally you will be fooled by smart money. However, with experience, you will learn to recognize common bullish traps. ❤️Please, support my work with like, thank you!❤️
COINBASE:BTCUSDEducation
by VasilyTrader
3
A guide to Profitable Scalping (why waste a price action)In the world of trading, many participants find themselves constantly waiting for the perfect confirmation for swing positions or entries, often missing out on the rapid movements that characterize financial markets. This is where the art of scalping comes into play, a strategy vastly different from swing trading, yet equally, if not more, compelling for those who master it because it offers way more opportunities to make money. In this blog post, I'll guide you through the essentials of becoming an effective scalper, focusing on market structure theory, the significance of Break of Structure (BOS), and the nuances that set scalping apart from swing trading. Understanding Market Structure Theory To excel in scalping, one must first be well-versed in market structure theory. This theory is the backbone of understanding how markets move and why they behave in certain patterns. It involves analyzing price highs and lows, trends, and ranges to predict future price movements. For a comprehensive understanding of market structure theory, this resource offers an in-depth explanation, it's not complete, but the best one freely available so I suggest you understand the content properly. www.youtube.com The Role of Break of Structure (BOS) A critical concept in scalping is the Break of Structure (BOS). When we observe a confirmed BOS to the upside or downside, it indicates a significant shift in market sentiment. The order block that caused this break becomes a focal point of interest. This is because, in the realm of scalping, these points often act as magnets for price, offering high-probability entry points. Capitalizing on Order Blocks Once a BOS is identified, scalpers must pay close attention to the order block that instigated this shift. When the price returns to this order block, a reaction is typically expected. This reaction is the bread and butter of scalping. Unlike swing traders who seek to capture larger market moves over extended periods, scalpers thrive in these quick, precise moments. Scalping vs. Swing Trading: A Different Focus The primary difference between scalping and swing trading lies in their respective focuses and timeframes. Swing trading involves holding positions for several days to weeks, aiming to profit from substantial price moves. Traders in this domain often focus on potential targets for a trade, analyzing broader market trends and economic factors. Conversely, scalping is a short-term strategy where trades last from a few minutes to hours. The focus here is not on the potential extent of a price move but, on the risk, -to-reward ratio. Scalpers typically aim for a 1 to 3 risk-reward ratio, meaning they risk one unit to gain three. This approach requires quick decision-making so it's much more involved than swing trading. Before we go on to see some examples following are the key things to remember to be effective in scalping To be an effective scalper, you need to: 1. Develop a proper Understanding of Market Structure 2. Identify High-Probability Order Blocks 3. Master Risk Management: Given the high-speed nature of scalping, managing risk is paramount. This involves setting strict stop-loss orders and having a clear risk-to-reward ratio for each trade. 4. Stay Disciplined and Agile: Scalping requires discipline to follow your trading plan and agility to adapt quickly to changing market conditions. Examples: Scalable OBs with results. This happened today: on SPX and NAS100 NAS100: SPX: How to pick an order block to trade for scalping: Entry for Scalping should be between 0.25 to 0.5 level inside the Order Block, you can use FIB tool to get these levels, this is highlighted in the Images above. 1. Do not go above 4h TF for this strategy. 2. Make sure Order block is caused a BOS 3. Notice the time frame of BOS, Pick the Order block in relation to the BOS timeframe. 4. Makes sure Prior to BOS the Order block resulted in FVG 5. Make sure the Order Block is not too big as it will result in greater risk, which I do not prefer. 6. If price does not hit your entry do not chase price, move on to next one. I want to emphasize here again , the goal of scalping is to capture the small move , not the whole move , so your focus should be one getting 2X or max 3X of your trade once , you do you get out and move on to next one , the good thing about this strategy is you can always find multiple assets where BOS is happening on anywhere from 1h to 4H TF. Finally, nothing in the world of trading is 100% so it's possible this may not work sometimes, which you should be okay with as long as it works more than 50% of the time. I n my experience it works more than 80% of the time. Conclusion Scalping is a dynamic and potentially lucrative trading strategy that requires a unique skill set, distinct from swing trading. By understanding market structure theory, focusing on order blocks following a BOS, and maintaining a disciplined approach to risk management, traders can exploit the rapid movements of the market for steady income. Remember, the key to successful scalping lies in quick, informed decisions and an unwavering commitment to your strategy. Like and Leave comment to this post to seek further clarifications if needed. Happy trading!
Education
by zakoraio
This is My Favourite ICT Day Trading ModelHello traders, This is the complete breakdown of my favourite ICT Day Trading Model. This is so easy to replicate on any two time frames. One must be higher, while the second one which is for entry should be lower. The higher time frame is for market direction, orderflow, trend. Identify your discount and premium levels on higher time frame. above 50% of your fib is premium, while below 50% is your discount. If price is bearish, you are to look for sell opportunities when price retrace back to your premium levels. Then go to your lower time frame to look for selling opportunities. Your entry should be taken mostly within London kill zone. For you to have a quality A+ trade setup, time and price must align together with your trade idea. Your trade idea have a high probability of working out if you take your entry within London Kill Zone. Look at my chart diagram to understand the model.
Education
by Elijahenoch7
2
Order Blocks - The only explanation you will ever needHere's the only guide on order blocks you're ever going to need 😎✏️ Order blocks may seem scary and difficult to find - Once you know what you're looking for, it's like taking candy from a baby 🍭 The key elements you need to have in place before getting the hang of this basic SMC application is as follows - 🟢 Trend spotting 🟢 Market structure Those are the 2 greatest tools a trader could ever have at their disposal. Make sure you know how to identify trend and market structure well - The rest will fall in place. Happy hunting! 🦁🐯🦈 Apex out ✌️ OANDA:GBPUSD OANDA:EURUSD
Education
by Apexfx_Alpha
SMC Trading Basics. Change of Character - CHoCH In the today's post, we will discuss one of the most crucial concepts in SMC - Change of Character. Change of Character relates to market trend analysis. In order to understand its meaning properly, first, we will discuss how Smart Money traders execute trend analysis. 🔘 Smart Money Traders apply price action for the identification of the direction of the market. They believe that the trend is bullish , if the price forms at least 2 bullish impulse with 2 consequent higher highs and a higher low between them. The market trend is considered to be bearish , if the market forms at least 2 bearish impulses with 2 consequent lower lows and a lower high between them. Here is how the trend analysis looks in practice. One perceives the price action as the set of impulse and retracement legs. According to the rules described above, USDCAD is trading in a bullish trend because the pair set 2 higher lows and 2 higher highs. 🔘Of course, trends do not last forever. A skill of the identification of the market reversal is a key to substantial profits in trading. Change of Character will help you quite accurately identify a bullish and bearish trend violation. 📉In a bearish trend , the main focus is the level of the last lower high. While the market is trading below or on that, the trend remains bearish . However, its bullish violation is a very important bullish signal, it is called a Change of Character, and it signifies a c onfirmed violation of a bearish trend. In a bearish trend , CHoCH is a very powerful bullish pattern. Take a look, how accurate CHoCH indicated the trend reversal on Gold. After a massive selloff, a bullish breakout of the level of the last lower high confirmed the initiation of a strong bullish wave. 📈In a bullish trend , the main point of interest is the level of the last higher low . While the price is trading above that or on that, the trend remains bullish . A bearish violation of the last higher low level signifies the violation of a current bullish trend. It is called a Change of Character, and it is a very accurate bearish pattern. Take a look at the example on Dollar Index below. In a bullish trend, bearish violation of the last higher low level quite accurately predicted a coming bearish reversal. Change of Character is one of the simplest, yet accurate SMC patterns that you should know. First, learn to properly execute the price action analysis and identify HH, HL, LL, LH and then CHoCH will be your main tool for the identification of the trend reversal. ❤️Please, support my work with like, thank you!❤️
OANDA:XAUUSDEducation
by VasilyTrader
7
Understanding Smart Money Concepts: CHoCH and BOS entriesIf you were a trader like me, that was having a hard time understanding Change of Character and Break of Structure concepts for a long time, I hope that this example gives you clarity to be able to identify entries better. So let's begin! The first thing you want to identify are high timeframe points of liquidity (AT, BELOW or NEAR) highs and lows. In this example, we have identified a clear zone around 14800 and 14700 on the 4hr chart. Once price dips into that area, we take things down into the 1min timeframe to look for a structural SMC analysis. This next chart shows you how to come up with specific structural points that will give you a better clue about a potential reversal (as in our case) or continuation. In this idea, we will specifically talk about reversals. In any reversal near a point of interest, it is important for price to develop both a CHoCH, and BOS. The BOS is necessary so that price shows us a clear demand to continue the trend upward. It is important to note, in the 1 min chart in my example, that once price has shown a CHoCH, price MUST come back to (or below) the price where the CHoCH broke out from, and create a new higher high (BOS). Next, we wait for price to retrace at or below the CHoCH breakout, and RESPECT a liquidity point of entry (an FVG or an Order Block). Price must NOT confirm a CANDLE BODY below the lowest low on this retracement. It is important to point out that there are occasions where the retracement from the high of the BOS actually comes all the way down to the low, breaks price with ONLY A WICK. This is to be understood as a grab of liquidity only, because a candle body did not confirm below the low. From there, our entrance will either be at the high of a structure that was made WITHIN the BOS retracement, OR (like in our case there were not visible structures for entry) we can take a trade at the 50% premium discount zone, with our STOP at or a bit below the low the BOS made, target the high of our entire structure to the upside in the main chart. I hope this tutorial helped some of you that have been struggling to understand smart money concept entries be able to have a better understanding of how and when to enter into trades at key reversal points of interest. If you felt that this was useful, please drop a like on this idea.
CME_MINI:NQ1!Education
by Zulu_Kilo
3
Dealing with News releasesUse any economic calendar to monitor news releases. (forexfactory, myfxbook). Below is how I adapt to news when trading my personal edge, including the pairs GBPUSD, EURUSD, AUDUSD and XAUUSD in my times. If you have tested pairs with other currencies, for example with CAD etc, make sure to be aware of related news there too. Which news do I adapt to: 💀 USD high impact news - I have closed out any trades on any of my pairs before the news release, regardless of if I am in deep profit or loss on the trade. I do not enter trades on any of my pairs within 30 mins before or after a high impact USD news release. 💀 GBP high impact news - I have closed out any trade on a GBP or EUR trade before the news release, regardless of if I am in deep profit or loss on the trade. I do not enter trades on any GBP or EUR pair within 30 mins before or after a high impact USD news release. If the news release is CPI/ Inflation or Interest Rates, I also close out/ don’t enter trades on all my other pairs too. 💀 EUR high impact news - I am not concerned about EUR news as it does not tend to affect my pairs much in my experience. The only EUR news I close out/ do not enter trades on is Inflation/ CPI. Note the EUR news only applies to news on the economic calendar with the European flag next to it - not the random countries within the EU, such as Germany, Italy etc.
Education
by algoat
Blueprint to Success: How to Master Trading Sessions & Planning👑 Pre-Trading Sessions & Planning: 🔥 Key Details + Concepts -------------------------------------- (Psychological, Technical & Concepts): 🟠 Psychological: - Don’t trade if your emotions aren’t aligning with what is on the screen. - If you’re not super happy about entering, and you don’t fully accept the loss, don’t take the trade. - Don’t ‘force’ something to work because it won’t. - Trade as if you are looking for buys and sells in your markup. This removes mental bias, and effectively emotion in trading. 🟠 Technical: - Cause is the most important factor in trading – find what caused the injection of volume (‘follow the money’). Did it get effectively mitigated? Did it leave imbalance? … Find that block of orders and don’t get liquidated - The more inducement respected, the more liquidity to take out, the bigger the move - Zones to trade from must have resting orders to mitigate. Make sure they have inducement above/below (or create it), and they are the cause of structural breaks, demand/supply fails etc - Start analysing on the daily first! Find the intention of price and follow it - Mark out S/R – (support becomes resistance levels vice versa) as that level will be liquidated to usually meet our orderblock above/below it - Previous daily/weekly highs/lows can act as strong structural inducement points - Price needs reason to move to certain levels – imbalance - Often when we have a low Phase 2 inducement, we will sweep it’s orderblock as a SMT because of the zone’s large imbalance = lack of inducement - If you don’t spot the buyers/sellers who got swept before entering, you’ll become liquidated - Mark out pullback zones too - If we break our LPOD/S, we are effectively going to run through all mitigated price until the next valid orderblock - Ensure you wait for your respective time-frame reaction (e.g., don’t look for a 1m reversal from a 4h zone) - If price taps the outside of a zone but doesn’t enter it, it can still be used as inducement - We don’t recommend stacking countertrend trades - A mitigation can be confirmed when price sweeps into its previous range over another small-range inducement. 🟠 Concepts - The demand/supply that took out the Phase 1 inducement then gets broken confirms a shift in market structure. If it is respected, we can trade a continuation. - A ‘slight mitigation’ is when price sweeps liquidity into a range, but doesn’t properly mitigate the orderblock where the high-volume orders lie. Even though we may react from there, we can come back to this orderblock and properly mitigate it, using the ‘slight mitigation’ level as a point of inducement. - It is important for the AR (automatic rally) to ‘fail’ in a reversal range after the B/SC (Buyers/sellers climax) as it often grabs the LPOD/S (the last point of demand & supply), so it is successfully mitigated - News candles can be targeted high/lows as they don’t have inducement - Price works with momentum. You will never see something shoot up or down randomly - Refine zones by excluding the inducement it swept before it – draw a line through the orderblock from the inducement it swept. This will refine your orderblock to the pure manipulation *has exceptions* - If an inducement phase isn’t very clean or only sweeps a small range, there will be another opportunity as more manipulation is needed to fuel a larger move - Weak highs and lows are determined after a leg has been properly mitigated; the 5-15m TF is best to determine an active zone - A high/low is likely to be targeted when it wicks the other side’s high/low (to sweep) instead of having a candle closing over (BoS) - The first part of a ChoCh is often formed from Phase 1 inducement getting swept, creating a slight pullback, then breaking it again to hit the refinement Used Word Definitions: - LPOD/S – Last point of demand/supply - ChoCh – Change of character (a sweep of liquidity then a break of structure) - BoS – Break of structure (a failure of supply or demand creating a price leg break) - OB – Orderblock (a valid zone to trade from) - FVG – Fair value gap (a form of inefficiency/price gaps in the market) - IMB – Imbalance (a form of inefficiency/price gaps in the market) - IPA – Inefficient price action (imbalance) - S&D – Supply and demand (the levels of buying and selling) - IFC – Institutionally funded candle (a candle created by institutions to push price to a certain area) - IPB – Inducement Pullback (The level where price pullbacks before a continuation) - PA – Price action (how price is moving) - B2S – Buy to sell (often seen as a wick to mitigate or sweep) - S2B – Sell to buy (often seen as a wick to mitigate or sweep) - AOI – Area of interest (an area of price that is reactive or tradable) - POI – Point of interest (a specific point where price is reactive or tradable) - IND – Inducement (placement of liquidity that is used to manipulate traders) - EQH/L’s – Equal highs/lows - SMT – Smart money trap (a zone that doesn’t have liquidity under/above it, and gets run, trapping SMC traders) - MSS - Market Structure Shift (a confirmed shift in the markets direction towards the next reversal zone) - Vectors – Large-bodied, impulsive candles that are to push price to its purposeful target - V-SR – V-Shaped Recovery (quick movement of price to enter and exit a zone) - TF – Time frame - FR – Failed Reaction (Internal supply/demand failure) - OF – Order-flow (the movement of money through the market) - True Zone – The actual orderblock that will be used which holds the high volume or orders - PDH/PWH or PDL/PWL – Previous daily/weekly high/low 🟠 Colour Codes: 🟠 Time and Price (Times in AEST): ASIA > FRANKFURT > LONDON > NEW YORK - Asia: – Asia is important to analyse as it can create the model for New York and London its purpose is to create liquidity above and below its session. Mark the bottom and top to create a range, as well as the midline. Often, price will aim to take a high/low or both (AWS) starting with Frankfurt + London Open. If Asia takes a form of liquidity and is impulsive, a continuation trade can be played. - Frankfurt: - Frankfurt often prepares London for its main movement of the day. It often does this by taking out the high or low of Asia to create an orderblock mitigation for London, creates more Phase 1 inducement for London to take out, or helps to move price to an already-made valid orderblock. - London: - When London opens, there is a volatility spike in price. London’s purpose is to attack the liquidity created during Asia. Often, London creates a continuation mitigation after 1.5 hours, but can also contribute to a larger liquidity build-up for New York. Entries that induce + mitigate can be taken at the open (sometimes +30). After 2 hours of opening, we often see a shift in direction. - Pre-NY: - Before New York opens, we often see an impulsive move that directly contributes to the New York session. Sometimes, we can create a valid zone for New York to play from by mitigating high-volume orders. Most often, we see an impulse in price to move into a higher timeframe orderblock to then become targeted liquidity, or we create more low timeframe reversal inducement to then be swept. - New York: –We open with a volatile shift of momentum. New York’s purpose is to attack the liquidity created during the London session, or to create a continuation from London. The New York trap usually starts 1 hour after opening and reverses. After 1.5 hours of opening (MMM), we often see a clean mitigation of the ‘correct’ orderblock and liquidate the opening move. Sometimes, New York Open can mitigate the high-volume orders and continue in the correct direction of the day. - London Close – mitigates the peak of NY open / Reversal for a continuation in NY open direction. Sometimes there is a mitigation-inducement before London Close. - Magic Minute Mitigations (MMM) - refer to high probability trading times that mitigate active continuation orderblocks. We can best see these 1.5 hours after London and New York Opens – rarely, we can see these 3.5 hours after these opens instead. In the next post I will continue with my 8-step daily markup process and my Asian session manipulation formulas. If you found this article helpful, please share it with your friends and leave a comment! Cheers!
Education
by algoat
Mastering Liquidity in Trading: Unraveling the Power of SMC 🔥Liquidity is what moves the market. Liquidity and liquidity pools are created and targeted by the markets and a lack of understanding on this topic is the main reason why the trading mind fails even if the analyst mind is correct. Traders who have been victim to their stop losses being taken by a wick before price running in their favour are the perfect example of having the correct analytical mind but a weak trading one. Liquidity is unlike an order block or price inefficiency or anything else that can be physically identified on a chart. It is invisible, however, it is still possible to identify without the need of indicators or anything other than price action alone. Simply put, liquidity is money in the market. Typically, this money comes in the form of retail orders and stop losses. Knowing this allows us to understand that if the market targets liquidity, and liquidity comes in the form of retail stop losses, the market must be hunting and going against retail strategies. 🟢The first and most prominent of these retail strategies is the idea of support and resistance. On the chart we can see an example of what retail traders would refer to as a level of resistance. In doing this they would short price from this level expecting a move down. This creates a liquidity pool just above this ‘resistance level’ where the average retail trader would place their stop losses. This liquidity pool is now a target for the market. So instead of trading this move down, we wait for the liquidity grab and use the rest of this strategy to capitalise on the bearish move that we can expect. On the Chart is a demonstration of the market hunting liquidity before making its next move. Again this is where traders would be correct in terms of bias but incorrect in terms of trading. This is an example of what an informed chart looks like. Instead of highlighting support and resistance levels, we highlight equal lows and equal highs respectively. Equals are usually in the form of otherwise referred to double tops or double bottoms but can also be more than that. The key difference, however, is that we would anticipate the market hunting the liquidity above the equal highs and below the equal lows. Due to this, we avoid being a victim to the market stopping us out by a wick and falling in our direction. The second most prominent retail strategy or idea is the trend-line. Every time a trend-line formation is present within the market, we can now understand the amount of stop losses and, therefore, liquidity that would be sitting under this ‘trend-line’. Above is an example of the importance of recognising trend-line liquidity. Once the liquidity above the equal highs has been hunted, we need to establish the next liquidity pool in the market. Seeing a break above the ‘resistance level’ would be seen as a ‘bullish breakout’ by the average trader. However, we can identify that as a liquidity purge and higher high, in which case we can expect a higher low to be made - which would mean a bearish retracement. On top of this, we can see a build up of trend-line liquidity just above the discount end of the parent price range. This gives us an added confluence and confidence in the fact that we can expect lower prices with the liquidity underneath the trend-line as our first target. Above is an example of liquidity being grabbed on the bullish side (above the equal highs) sending the uninformed trader long based off of a ‘bullish breakout’, then hunting the liquidity on the bearish side (below the trend-line) and sending the uninformed trader short based off of the break of the trend-line. This is typical of the market - it shakes out impatient and uninformed traders on both sides of the market before making the actual move. Here is another examples of how trendline liquidity gets purged by the market. On the chart we can see a trend-line where many traders would be longing the market, unaware that they will be victims of a liquidity purge. Below we can see that liquidity purge below the trend-line which would send the average trader short. Using the rest of the strategy, we are able to understand that price will react from specific levels to go long Below we can see the completion of this market cycle with our levels being respected and the real bullish leg being made. 🔥🟠🔥🔥🟠🔥 BONUS CHEATSHEETS👇👇👇👇
Education
by algoat
2
Unlocking the Secrets of Price Inefficiency: Dive Deep into FVG👑Price inefficiencies are also known as imbalances, gaps or voids. Healthy price action moves in a zigzag fashion, making highs and lows in line with the directional bias at any given moment. When price isn’t trending we find it consolidates, in which case highs lows are still being made. However, we may also see price move in straight lines with huge volume and momentum. When this happens, price finds itself unable to deliver price in an efficient manner. For example, in a bullish environment, price may continue to make higher highs without providing higher lows at a discount price. When price moves with this much momentum, it leaves behind imbalances. 🟠An imbalance can be identified by open space in price action, where the wicks on either side of a candle do not match each other. On the left is an example of price inefficiency, since the wick high of candle 1 does not meet the wick low of candle 3, leading to an imbalance on candle 2. 🟠This is an example of healthy price action with no imbalances. This is because all candles have wicks on either side of them. Since wicks were bodies during live price action and are bodies on lower time frames, this shows that price was delivered efficiently to buyers and sellers in this area. Whereas the example above shows an imbalance on a bullish candle, which shows that price was only available to buyers in that imbalance and therefore is not efficient. 👉For price to be efficient, it needs to be delivered to buyers and sellers. This helps us understand that in our original bullish imbalance, price has to come back and fill that imbalance using bearish price action in order to make that price available to sellers. This re-balancing could take hours, days, weeks or years, but it is our job to understand that it must happen at some point. Inline with the rest of the strategy, we can use this knowledge to pick out the specific imbalances that will be filled and how we can capitalise on this. 🟠This is an example of the correctly identified imbalance and where we expect price to react from 🟠This is an example when is our level being met, it is at this point that we use the rest of the strategy and knowledge to capitalise on the move that is about to unfold with high risk:reward entries. 🟠This is the completion of this particular market cycle, with our level being respected and price giving us a nice bullish leg. 🔴Bearish Order Flow: 🟢Bullish Order Flow:
CAPITALCOM:US500Education
by algoat