SMC Smart Money Core Strategy｜Understanding Institutional Layout Trading Techniques
Have you ever encountered a situation where the price first touches your stop-loss point
and then suddenly surges in the expected direction?
This is not a coincidence; it is the "smart money" sweeping liquidity.
The so-called smart money refers to institutional traders who are well-informed and experienced.
Their actions often indicate significant changes in the market.
What is SMC (Smart Money Concept)
This is a technical analysis method derived from ICT
that relies not on any traditional indicators,
but solely on observing candlestick trends to analyze liquidity positions and market supply and demand.
It allows us to analyze market dynamics from the perspective of large institutions,
capturing opportunities with high win rates and high risk-reward ratios.
Core terminology that must be mastered:
• OB (Order Block) Order Block: Area where large institutional orders are concentrated.
In a downtrend, if a bullish candlestick results in a price reversal upwards,
that area is a potential order block.
• BOS (Break of Structure) Structure Break: When the price breaks through key highs/lows of the original trend, indicating that the trend may continue.
• CHOCH (Change of Character) Market Structure Change: The first signal of a trend reversal.
For example, forming higher lows in a downtrend and breaking through previous highs.
• FVG (Fair Value Gap) Value Gap: An imbalance area left by rapid price jumps, often a target for future retracements.
Precise Sniping Entry 4 Steps
To improve your win rate, do not rush at signals; please follow this standard process:
1. Identify the Cycle: First, identify the distribution phase in a smaller time frame.
2. Wait for Retracement: Wait for the price to conduct a "compression pullback" towards the supply area.
3. Confirm Entry: Only enter after effective pressure or wedge breakout in the supply area.
4. Set Take Profit: Place the take profit level at the critical low point from the previous period.
5. Practical Advice: Day trading logic.
If you engage in day trading,
the essence of day trading is to earn price differences through market fluctuations to reduce costs.
The best condition for choppy markets: During one-sided uptrends or downtrends, day trading is more challenging and risky.
Combine with volume observation: Long-term volume contraction usually indicates that the main force cannot offload or is washing out; only when a large bullish candle breaks through is it a signal to enter.
The core of trading is to observe who is stronger at the moment and then follow along.
The above is a personal opinion shared, not constituting investment advice; investment carries risks, so friends are advised to assess cautiously.