Smart Money Concept – Combining structures + Charitable action

This entry is a unique article in which I will explain how to turn Smart Money Concept (SMC) into a full-scale, working trading system. In an earlier series of articles, I introduced you to such structure elements as: imbalance, trend and its components and pullbacks (just follow the links provided). These are the basic concepts needed to become proficient in working with a clean chart, so if you haven't read this series of articles yet, I recommend you do so before continuing reading this entry.

Largely analytical skills in building the entire trading strategy, it is a very important element that allows you to gain real advantages on the market. On the other hand mental aspect this is the other side of the coin, which will decide whether we will be able to use these advantages. Therefore, right from the start, please realize that SMC is not a system that will do everything for us. In fact, its signals and strengths are very precise and accurate, but let me try to approach SMC from a psychological perspective in this article.

Workshops in exchange for helping cats ????

While still at the beginning of the article, I would like to give you an interesting proposition. Recently, s appeared on Forex Cluba series of articles about the Smart Money Concept. If you are interested in this strategy and would like to work on it, then I'm organizing four workshops in December. The only condition to take part in them is to get involved in helping the Kotkowo Foundation. In addition to the workshops on SMC itself, we will talk about the psychology of trading. Every participant will receive a short e-book, which will help you organize the mental side of trading (especially useful for future traders). proptraders).

What to look at first?

Let's sort out where to start analyzing the market. From what point? When to set a pullback or trend structure? The thing about Smart Money Concept is that it is an analytical strategy current price. As a rule, we will not be interested in the price from 40 years ago. The only exception is when the newest structures are there. Therefore, we go back to a point in the chart where we can:

• determine the current trend,
• find the last TC (continuation of the trend) and ZCT (change in the nature of the trend).

After getting the chart in order, we can move on to analyzing the last leg of the trend. What is the last leg of a trend? We usually call it the breakout move of KT or ZCT that we have found. This is where the most interesting zones confirmed by liquidity will be located. Additionally, our transactions will always be in line with the current trend. In the graphic below I marked the striking leg. You can also see what positions I had and where I closed them. I am looking for zones in the striking leg (blue arrow). As I wrote earlier - the most interesting zones are located near the ZCT structure - we have the lowest trading risk there. Here, in addition, the blue zone was not only a ZCT, but also had liquidity confirmation.

Breakout leg, Smart Money Concept methodology. Source: MetaTrader 4 platform, own study.

Okay, so we have a defined trend and the latest KT and ZCT. Remember – we are not interested in the old! Why? The answer is basically simple. To be able to reach it, we will have to knock out some fresh structure. Therefore, if the nature of our trend changes, why do we need its old continuation? We are looking in a different direction.

What do we do next?

After accurately determining the latest KT and ZCT, we can move on to looking for imbalances and liquidity confirmations. We know exactly where to look for them.

Therefore, the process looks like this:

• setting a trend,
• checking SS or SD and their pullback,
• determination of the latest ZCT and KT,
• looking for entry into a position using liquidity and imbalance confirmation zones (optional).

Where are the mental traps in all this?

• playing old zones that are inconsistent with the trend - looking for a forced entry,
• ignoring the current trend - contrarian entries - we want "Tighten" order to the zone,
• averaging after a trend change – a problem that appears at the stage of not betting stop loss at the zone or ZCT. We are then left with a position inconsistent with the trend,
• analyzing all available intervals - checking all possible structures and zones is a black hole of analysis. This usually happens when the market has gone away from us on a larger time frame and we are looking for a forceful entry on smaller (or any) time frames - we feel like we are missing an opportunity.

Are you interested in the topic?
For more information, I invite you to the workshops that will take place every week in December (the only condition is: taking part in a charity event).

An example of the practical use of the described SMC techniques