SMC method (Smart Money Concepts)
Updated
Hello traders, today I continue to send you the trading method that large investors often use, which is the SMC method (Smart Money Concepts).
⚡️1. What is the SMC method?
🔼SMC or Smart Money Concept is one of the trading schools that is being used by many professional traders today. The SMC method originates from a training program called The Inner Circle Trader (ICT), founded by a trader named Michael J. Huddleston.
🔼SMC is not simply a trading method, but more broadly, SMC is considered a trading theory. SMC includes principles that describe how the foreign exchange market operates. As a trading method, SMC shows traders how to execute the most specific transaction based on its principles.
🔼Simply understanding the trading idea of the Smart Money Concept (SMC) strategy is to capture price zones with the participation of smart money flows, large organizations, big boys or sharks, and analyze their actions. to strategize to find opportunities to make profits for yourself.
🔼This strategy has a huge advantage: the risk-reward ratio is very high. Once in the right direction, the market moves very quickly, it can be said that traders can make profits with a good RR ratio in just a short time. . The trader's task is to find price zones where smart money will focus on trading.
🔼Regarding analysis and trading techniques according to SMC, it is quite diverse. In this series of articles, I will share with you to understand how smart money flow works, how to determine the price range they participate in trading and how you strategize to move in the same direction as them.
⚡️1. What is the SMC method?
🔼SMC or Smart Money Concept is one of the trading schools that is being used by many professional traders today. The SMC method originates from a training program called The Inner Circle Trader (ICT), founded by a trader named Michael J. Huddleston.
🔼SMC is not simply a trading method, but more broadly, SMC is considered a trading theory. SMC includes principles that describe how the foreign exchange market operates. As a trading method, SMC shows traders how to execute the most specific transaction based on its principles.
🔼Simply understanding the trading idea of the Smart Money Concept (SMC) strategy is to capture price zones with the participation of smart money flows, large organizations, big boys or sharks, and analyze their actions. to strategize to find opportunities to make profits for yourself.
🔼This strategy has a huge advantage: the risk-reward ratio is very high. Once in the right direction, the market moves very quickly, it can be said that traders can make profits with a good RR ratio in just a short time. . The trader's task is to find price zones where smart money will focus on trading.
🔼Regarding analysis and trading techniques according to SMC, it is quite diverse. In this series of articles, I will share with you to understand how smart money flow works, how to determine the price range they participate in trading and how you strategize to move in the same direction as them.
Note
⚡️2. Market structure according to SMCThis is the first concept that traders need to understand to trade according to SMC. The market structure is probably not so strange to us anymore. There are 3 types of markets, which are bullish, bearish and sideways. In there:
🔼 A rising market has a structure where the next peak is higher than the previous peak (Higher High) and the next bottom is higher than the previous bottom (Higher Low). As shown below:
🔼 Market structure is bullish in SMC 🔼
🔼 Price breaks the previous peak to create a higher peak. When a higher peak is created, many traders sell to gain profits, causing the price to decline, liquidity begins to dry up and a correction begins to occur.
🔼 However, the market is in an uptrend and traders continue to buy at higher prices. The market continued to rise, continuing to break the previous peak and continuing the bullish price structure. And the structure continues until a new lower low is created.
Note
🔼 The bearish configuration will be the opposite, the next peak and bottom will be lower than the previous peak and bottom. As shown below:🔼 Example of a bearish price structure: Price breaks the previous low to create the next lower low. When a lower bottom is created, many traders take profits to make a profit, causing the price to turn up and a correction begins to occur.
🔼 However, the market is in a downtrend and traders continue to sell at lower prices. The market continued to decline, continuing to break the previous bottom and continuing the bearish price structure. And the structure continues until higher highs and higher lows are established.
Note
• The sideways structure will have similar tops and bottoms. As shown below:
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.