What Are Smart Money Concepts?
Introduction:
If you’ve been trading for a while, you’ve probably noticed that sometimes the market moves in ways that just don’t make sense. You’ve got your technical analysis all set, but the market seems to go in the opposite direction. That’s where Smart Money Concepts (SMC) come in.
At its core, SMC is all about understanding how big players in the market (think hedge funds, institutions, and banks) move prices. These players have massive amounts of capital and information, and they don’t trade like the average retail trader. Understanding their behavior can help you see where the market is going next before it happens.
What is Smart Money?
In the world of trading, smart money refers to the institutional investors who move markets with their huge orders. Unlike retail traders, who might be relying on indicators or patterns, smart money trades based on liquidity, market structure, and order flow.
While retail traders are typically reacting to price movements, smart money is the one causing those moves. They’re out there seeking out places where they can accumulate positions or distribute them. The tricky part is that they’ll often make the market go in one direction just to trap retail traders and get them to take positions before flipping it back to where they wanted it to go in the first place.
Key Concepts in Smart Money Trading
1. Market Structure
Market structure refers to the way price moves in a trend. It’s essentially a pattern of higher highs and higher lows for an uptrend, or lower highs and lower lows for a downtrend.
Smart money uses these patterns to their advantage. When they see the market creating a series of higher highs and higher lows, they’ll take advantage of that momentum to push prices further, knowing retail traders will follow along.
But when they want to reverse the market, they’ll push it in the opposite direction, creating a market structure shift or a break of structure, which signals that the trend is over and a new one is starting.
2. Liquidity
Liquidity refers to the amount of orders available to be filled at different price levels. Smart money knows exactly where retail traders are likely to place their stops or buy orders.
They’ll often push the price to these levels, triggering those stops and collecting the liquidity. Once that liquidity is grabbed, they’ll reverse the price and move it in the intended direction.
A common way to spot liquidity is by looking for equal highs or equal lows, where traders often place their stop-loss orders. These are often areas smart money will target.
3. Order Blocks
Order blocks are areas on the chart where institutions have placed big orders. These are key levels that represent where price might return to later, and they can act as areas of support or resistance.
Order blocks are usually found after big price moves. Institutions place these orders to either accumulate positions or offload them, and price often comes back to these levels to fill orders that were left behind.
4. Fair Value Gaps (FVG)
Fair value gaps, or imbalances, are price areas where the market moves quickly, leaving gaps between candlesticks. These gaps represent areas where the market has moved too fast for regular orders to fill, and price tends to return to these levels to fill the gaps.
Smart money knows that these imbalances are critical areas for future price action, and they’ll use them to re-enter the market after a move has been completed.
Why Does Smart Money Matter?
Understanding smart money concepts is like learning to think like an institution. Instead of chasing after price based on typical retail indicators, you start looking for the big moves that smart money is making. You begin to notice when the market is setting traps for retail traders, and how these large players accumulate positions before pushing price in a big way.
With SMC, you stop guessing and start anticipating. By looking for liquidity zones, order blocks, and market structure shifts, you can get in sync with the big players and follow their moves, not fight them.
Conclusion
Smart Money Concepts are all about shifting your perspective. Instead of thinking like a retail trader looking for quick breakouts, oversold/overbought conditions, or chasing trends — start looking at the market as the big players do. Pay attention to where the liquidity is, identify key order blocks, and use market structure shifts to guide your trades.
By learning to spot these key signs, you’ll stop being the one who’s trapped and start being the one who’s in sync with the smart money.
Ready to trade smarter? Keep an eye on those order blocks and liquidity zones — they’re where the real money is made.
Next Steps
- Start practicing by reviewing charts through the SMC lens.
- Keep refining your understanding of market structure, liquidity, and order blocks.
- Stay patient, smart money trades aren’t about quick wins, but about positioning yourself for big moves.
__________________________________________
Thanks for your support!
If you found this guide helpful or learned something new, drop a like 👍 and leave a comment, I’d love to hear your thoughts! 🚀
Make sure to follow me for more price action insights, free indicators, and trading strategies. Let’s grow and trade smarter together! 📈
Introduction:
If you’ve been trading for a while, you’ve probably noticed that sometimes the market moves in ways that just don’t make sense. You’ve got your technical analysis all set, but the market seems to go in the opposite direction. That’s where Smart Money Concepts (SMC) come in.
At its core, SMC is all about understanding how big players in the market (think hedge funds, institutions, and banks) move prices. These players have massive amounts of capital and information, and they don’t trade like the average retail trader. Understanding their behavior can help you see where the market is going next before it happens.
What is Smart Money?
In the world of trading, smart money refers to the institutional investors who move markets with their huge orders. Unlike retail traders, who might be relying on indicators or patterns, smart money trades based on liquidity, market structure, and order flow.
While retail traders are typically reacting to price movements, smart money is the one causing those moves. They’re out there seeking out places where they can accumulate positions or distribute them. The tricky part is that they’ll often make the market go in one direction just to trap retail traders and get them to take positions before flipping it back to where they wanted it to go in the first place.
Key Concepts in Smart Money Trading
1. Market Structure
Market structure refers to the way price moves in a trend. It’s essentially a pattern of higher highs and higher lows for an uptrend, or lower highs and lower lows for a downtrend.
Smart money uses these patterns to their advantage. When they see the market creating a series of higher highs and higher lows, they’ll take advantage of that momentum to push prices further, knowing retail traders will follow along.
But when they want to reverse the market, they’ll push it in the opposite direction, creating a market structure shift or a break of structure, which signals that the trend is over and a new one is starting.
2. Liquidity
Liquidity refers to the amount of orders available to be filled at different price levels. Smart money knows exactly where retail traders are likely to place their stops or buy orders.
They’ll often push the price to these levels, triggering those stops and collecting the liquidity. Once that liquidity is grabbed, they’ll reverse the price and move it in the intended direction.
A common way to spot liquidity is by looking for equal highs or equal lows, where traders often place their stop-loss orders. These are often areas smart money will target.
3. Order Blocks
Order blocks are areas on the chart where institutions have placed big orders. These are key levels that represent where price might return to later, and they can act as areas of support or resistance.
Order blocks are usually found after big price moves. Institutions place these orders to either accumulate positions or offload them, and price often comes back to these levels to fill orders that were left behind.
4. Fair Value Gaps (FVG)
Fair value gaps, or imbalances, are price areas where the market moves quickly, leaving gaps between candlesticks. These gaps represent areas where the market has moved too fast for regular orders to fill, and price tends to return to these levels to fill the gaps.
Smart money knows that these imbalances are critical areas for future price action, and they’ll use them to re-enter the market after a move has been completed.
Why Does Smart Money Matter?
Understanding smart money concepts is like learning to think like an institution. Instead of chasing after price based on typical retail indicators, you start looking for the big moves that smart money is making. You begin to notice when the market is setting traps for retail traders, and how these large players accumulate positions before pushing price in a big way.
With SMC, you stop guessing and start anticipating. By looking for liquidity zones, order blocks, and market structure shifts, you can get in sync with the big players and follow their moves, not fight them.
Conclusion
Smart Money Concepts are all about shifting your perspective. Instead of thinking like a retail trader looking for quick breakouts, oversold/overbought conditions, or chasing trends — start looking at the market as the big players do. Pay attention to where the liquidity is, identify key order blocks, and use market structure shifts to guide your trades.
By learning to spot these key signs, you’ll stop being the one who’s trapped and start being the one who’s in sync with the smart money.
Ready to trade smarter? Keep an eye on those order blocks and liquidity zones — they’re where the real money is made.
Next Steps
- Start practicing by reviewing charts through the SMC lens.
- Keep refining your understanding of market structure, liquidity, and order blocks.
- Stay patient, smart money trades aren’t about quick wins, but about positioning yourself for big moves.
__________________________________________
Thanks for your support!
If you found this guide helpful or learned something new, drop a like 👍 and leave a comment, I’d love to hear your thoughts! 🚀
Make sure to follow me for more price action insights, free indicators, and trading strategies. Let’s grow and trade smarter together! 📈
𝟔 𝐘𝐄𝐀𝐑𝐒 𝐄𝐗𝐏𝐄𝐑𝐈𝐄𝐍𝐂𝐄𝐃 𝐓𝐑𝐀𝐃𝐄𝐑
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💎 Free Signals
t.me/codeandcandle
🎁 Free Discord community
bit.ly/TehThomas
✅ Best exchange - 20% cashback
bit.ly/BloFin20
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
𝟔 𝐘𝐄𝐀𝐑𝐒 𝐄𝐗𝐏𝐄𝐑𝐈𝐄𝐍𝐂𝐄𝐃 𝐓𝐑𝐀𝐃𝐄𝐑
💎 Free Signals
t.me/codeandcandle
🎁 Free Discord community
bit.ly/TehThomas
✅ Best exchange - 20% cashback
bit.ly/BloFin20
💎 Free Signals
t.me/codeandcandle
🎁 Free Discord community
bit.ly/TehThomas
✅ Best exchange - 20% cashback
bit.ly/BloFin20
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.