Smart Money Concept Basic To advance

 1.THE BASICS

1.1. EXPANSION AND RETRACEMENT

Expansion occurs when there is an impulse

movement towards a direction.

Retracement is the correction movement

after an impulse movement.

1.2. FIBBONACCI RETRACEMENT

USED TO DETERMINE THE END OF THE
RETRACTION MOVEMENT, USUALLY THE PRICE
RETRACTS TO 50% OR UNTIL OTE (0.62, 0.705,
0.79) BEFORE ANOTHER IMPULSE MOVEMENT
OCCURS.

1.3. BMS - BREAK IN MARKET STRUCTURE

 BMS occurs when the price closes above / below a swing high/low, generally, every trader should trade in the direction of the Higher Time Frame BMS. 

NOTES: AFTER BMS ALWAYS WAIT FOR RETRACEMENT.

1.4. Range High and Range Low 

After the BMS there will always be the formation of a new consolidation, that is called RH and RL.

 NOTES: => Trade in the direction of the BMS => After BMS Wait for retracement to 50% OR OTE of Fibonacci levels.

 

1.5. FAILURE SWING (SMS)

 

When there is an uptrend market and the price fails to break the last top (Swing High) and breaks the previous bottom (Swing Low), an SMS is considered to have occurred (vice versa for Bearish).

 

 

 

 

2. MARKET STRUCTURE

 

The price can simply be found in one of the 3 phases below:

 

1.IN  A CONSOLIDATION

 

2.IN AN UPTREND

 

3.IN A DOWNTREND 

2.1. Market Structure In Bullish Conditions

 [VICE VERSA FOR BEARISH CONDITION]

The bullish market is characterized by making Higher Highs and Higher Lows, but this characterization is not enough, it is necessary to say that bullish markets are always breaking swing Highs and respecting swing lows. 

The fact that the price has broken a swing high, indicates that higher prices should be expected, so it is negotiated in the trend in which the market structure was broken 

 

 

3. LIQUIDITY

 

The FOREX market is a zero sum game, which means that for a trader/institution to buy/sell 1 currency pair it's necessary that there is another trader/institution with an opposite position. If Smart Money (Banks) want to buy a currency pair they will need sellers in the market, the existing facility to place these positions In the market is called LIQUIDITY. 

The Liquidity is defined by Stop losses, where the Stop losses exist is where the liquidity also exists, Smart Money need to activate the stop losses of existing orders in the market so that they can place their positions in the market.

The banks manipulate the price because of liquidity, but why? banks negotiate large trading volumes and sometimes find it difficult to find the other side of their trades, so they manipulate the price so that they can have their positions in the market. 

3.1. LIQUIDITY TYPES 

 In the FOREX market there are two types of liquidity, which are:

1.Buy Stops Liquidity (BSL)

 

2.Sell Stops Liquidity (SSL) 

3.2. Buy Stops Liquidity (BSL)

 

The BSL is originated by Stop Losses of sell orders, after the BSL is taken, the market reverses to the downside, because banks use the BSL to place sell orders in the market 

 

What to focus on (for BSL)

 

PMH - Previous Month High

 

PWH - Previous Week High

 

PDH - Previous Day High

 

HOD - High Of Day OLD

 

HIGH - Swing High EQUAL

 

HIGHS = Retail Resistance 

 

 

 

3.4. Sell Stops Liquidity (SSL) 

The SSL is originated by Stop Losses of Buy orders, after the SSL is taken, the market reverses to the Upside, because banks use the SSL to place Buy orders in the market.

3.5. What to focus on (for SSL)

 

PML - Previous Month Low

 

PWL - Previous Week Low

 

PDL - Previous Day Low

 

LOD - Low Of Day

 

OLD LOW - Swing Low

 

EQUAL LOWS = Retail Support 

 

When BSL is taken, the market reverses to the

downside.

When SSL is taken, the market reverses to the

upside.

Stop Hunt: Manipulation For Liquidity 

SH is a movement used to neutralize liquidity

(stop losses). It's a false breakout above /

below the zone where there is LIQUIDITY.

THE MARKET MARKERS (BANKS) USUALLY USE

HIGH IMPACT NEWS TO TAKE LIQUIDITY. 

 

 

High Impact News Events

The High Impact News Events are used to

hunt liquidity in the market, always pay

attention to the news calendar, to know the

pairs that will move, generally, pairs with

many news forecasts("High Impact"), those

pairs are going to move (trending) during

the day or week.

4. ORDER BLOCKS [OB]

 Order Blocks are candles where Market

Makers (Banks) have placed their positions,

generally, the market returns to those

candles and they are never violated ("if they

are really OB's")

There're 2 types of Order Blocks

• Bullish Order Blocks 
• Bearish Order Blocks 

  4.1. BULLISH ORDER BLOCK

The Bullish Order Block is the last bearish
candle before the bullish movement, that
Break The Market Structure Higher.
Represents a high possibility of holding the
price, when the price returns to it.

4.2. BEARISH ORDER BLOCK

The Bearish Order Block is the last bullish
candle before the bearish movement, that
Break The Market Structure Lower.
Represents a high possibility of holding the
price, when the price returns to it. 

 
   

5.1. SESSIONS

The Daily Range is defined by 3 important
sessions, which are 

• Asian Session

• London Session

• New York Session

5.2. Asian Session 

The Asian session is characterized by being a

consolidation (of 20 - 40 pips), due to the lack

of liquidity in the market.

Delimitation:
The session starts from 02:00 until 08:00 (UTC
+2). 

 

 

 5.2. London Session

 The London Session is characterized by
making the Low Of Day or High Of Day, it can
be used to take traders to the opposite side of
the true direction of the day (Because Of
Liquidity).

Delimitation:
Not the whole London session need attention,
focus on the first 2-3 Hours at the beginning of
the session: From 09:00 until 11:00/12:00
UTC(+2). 

 

5.3. New York Session

The NY session is characterized by being a

retraction after the London Session made

the Low/High of the day, sometimes the NY

session can make the Low/High of the day.

Delimitation:

Not the whole NY session need attention,
focus on the first 2-3 Hours at the beginning
of the session: From 14:00 until 16:00/17:00
UTC(+2) 

 

 

 

5.4.Accumulation, Manipulation And Distribution
[AMD]
Accumulation:

The accumulation of positions generally occurs
during the Asian session, the accumulation is
characterized by being a consolidation (Asian
session), but it may not be the Asian session. 

Manipulation

usually occurs at the opening of the London

session (sometimes it can be NY open), this

Manipulation consists of taking the price to

the opposite side of the true direction of the

rest of the day.

Distribution: 

 occurs when MMs liquidate (Exit) their

positions.

 

The Market Makers (Banks) Buy/Sell

below/Above the Asian Session/open price

(Because Of Liquidity).

Asian Session/Open Price:

Below: Sell Stops Liquidity [SSL].

Above: Buy Stops Liquidity [BSL]. 

TURTLE SOUP

Turtle Soup is the same as Stop Hunt, is a

movement used to neutralize liquidity (stop

losses). It's a false breakout above / below the

zone where there is liquidity.

Turtle Soup Short [TSS]

Represent a short setup, it's a false break

above a zone where Buy Stops Liquidity Exist. 

 Turtle Soup Long [TSL]

Represent a long setup, it's a false break
Below a zone where Sell Stops Liquidity Exist. 

 

How To Trade Turtle Soup 

 The price usually Sweeps 5-20 pips (even more)

above or below a point where liquidity Exist,

after the price sweep the point, enter a trade

against the movement used to Sweep Stops

(Liquidity) with Minimum 10 pips SL (In Lower

Time Frames).

That means:
BSL Raid => Turtle Soup Short
SSL Raid => Turtle Soup Long 

 

Stop Hunt, Break In Market Structure and

Return To Order Block [SH, BMS, RTO]

Where Market Makers (Banks) have taken

liquidity (SH), they have placed positions in

these areas and generally the price must not

exceed these levels.

How To Trade SH + BMS + RTO

1.First, occurs the SH, that movement is used
   by Market Makers to neutralize Liquidity.
2.Second, there's a Break In Market
   Structure (BMS), Confirming the SH.
3.Third, the price Return To Order Block
   (RTO).

 

Failure Swing (SMS), Break In Market Structure

and Return To Order Block [SMS + BMS + RTO]

When the price fails to break a top or bottom, it
shows that the trend is ending and a reversal
may occur 

How To Trade SMS + BMS + RTO 

1.First, the price fails to break a top or

   bottons.

2.Second, there's a Break In Market

   Structure (BMS), Confirming the SMS.

3.Third, the price Return To Order Block

   (RTO). 

 

 Accumulation, Manipulation And Distribution(AMD)

How To Trade AMD:

- Accumulation: the price will be ranging.

- Manipulation: the price will break the range

direction to trap traders (Because of Liquidity)

- Distribution: the price will go against the

Manipulation movement, and here, look to go

long/short on: Simple RTOs, SH + BMS + RTO,

SMS + BMS + RTO.

CONFLUENCE

Confluence is very important to increase the
chances of winning trades, a trader needs to
have at least two factors of confluence to open
a trade. When the confluence exists, the
trader becomes more confident on his
negotiations.

The Factors Of Confluence Are:
Higher Time Frame Analysis;
Trade during London Open;
Trade during New York Open;
Refine Higher Time Frame key levels in Lower
Time Frame entries;
Combine setups;
Trade during High Impact News Events 

 

 7.2. HTF analysis, LTF Entries

Refine HTF key levels in LTF entries or setups
for confirmation that the HTF analysis will
hold the price.
HTF Key Levels Are:
HTF Order Blocks;
HTF Liquidity Pools;
HTF Market Structure. 

Note: It's not mandatory to refine all HTF key levels. 

Time Frame Setups

For Swing Trading
HTF: Weekly, Daily, H4.
Entries: H1, M30, M15 (Sometimes on H4).

 

For Short Term Trading
HTF: Daily, H4, H1
Entries: M30, M15 (Sometimes on H1).

 

For Day Trades and Scalps
HTF: H4, H1, M30
Entries: M15, M5, M1 (Sometimes on M30). 

 

 

Day Trades and Scalps

Highlight:

Asian Range (To buy High or Sell Low) "If it's

possible".

Enter a trade during:
London Open
New York Open
Price retesting HTF Key Levels
High Impact News Events. 

 

 

 

THNAK  YOU