---
title: 'SMC Trading Strategy Explained Step by Step (Full Entry Model)'
source: 'https://youtube.com/watch?v=3ZM2b-Sdg2A'
video_id: '3ZM2b-Sdg2A'
date: 2026-07-19
duration_sec: 1124
channel: 'Justin Bennett'
---

# SMC Trading Strategy Explained Step by Step (Full Entry Model)

> Source: [SMC Trading Strategy Explained Step by Step (Full Entry Model)](https://youtube.com/watch?v=3ZM2b-Sdg2A)

## Summary

This video presents a detailed, step-by-step entry model for Forex trading based on Smart Money Concepts (SMC). The trader explains how to identify external highs/lows, optimal trade entry (OTE) zones, fair value gaps (FEGs), and changes of character (CHoCH) to execute high-probability short trades within a downtrend.

### Key Points

- **Identifying External Low** [00:55] — The first step is to identify a recent external low by looking for a low that breaks below previous internal lows, confirming a bearish breakout structure (BOS).
- **Optimal Trade Entry (OTE)** [02:44] — The OTE zone is a 62% to 79% retracement of the move from the external low to the recent high. This area is used to look for short entries in a bearish trend.
- **Fair Value Gap (FEG)** [04:04] — A one-hour FEG is identified within the OTE zone, providing additional confluence. The trader emphasizes that FEGs often get rebalanced before the trend continues.
- **Lower Timeframe Confirmation** [05:37] — The trader uses a 15-minute timeframe to confirm entries, looking for a change of character (CHoCH) and liquidity sweeps before entering a short.
- **Target Setting** [07:40] — Targets are set based on previous lows and liquidity levels. The first target is at a recent low, and the second target is at equal lows or further liquidity.
- **Entry Execution** [09:01] — After price enters the OTE zone and a five-minute CHoCH confirms bearish momentum, the trader enters a short with a stop loss above the recent lower high.
- **Risk-Reward Ratio** [14:39] — The trader checks that the risk-reward ratio is at least 3:1. In the example, it was 2.86, which is acceptable as it's close to 3R.
- **High Conviction Entry** [16:30] — The entry is considered high conviction due to multiple factors: external low, OTE, FEG, five-minute CHoCH, and favorable risk-reward.

### Conclusion

The SMC entry model combines external structure, OTE, FEG, and lower timeframe confirmation to produce high-probability trades. The trader stresses patience and mechanical execution, avoiding chasing price.

## Transcript

you because in this video, I'm sharing my enter the market, where I set my stop loss Bennett, Forex trader since 2007, full-time
educational purposes only and not financial Now, every entry model, a good entry model So for that, let's walk through this chart
get a little bit of an uptrend here on the clearly the market has been trending lower even though this could be the start of a
So this could just be more relief here through and what we get. what we can see here, and this is important
high or low, is identifying recent breakup First of all, internal highs back here.
And even though this isn't confirmed yet external low because you can see that off and then we extended higher.
qualification I need for an external low what we did is we took out this low here. breakup structure. So
here to really confirm this as our external low. you can see we tested this high up here. So let's move this forward and see what we get.
breakup structure here on the hourly. So that is a confirmed BOS here on the So now from here, we have a confirmed
that this is in fact our external low. going to be a lower high, remember that we this is the level down here that sellers
what we get. I would go ahead and mark out this high up here. This is not saying it's set in stone here,
if it is, in fact, one. We have a tentative external high. you saw my recent video on OTE, you can see
So external low down here up to this recent high. right there into the OTE optimal trade entry. that OTE video if you missed that.
And I'll also be using that in this video All right, so moving this forward, again, and we certainly have not closed below this
So moving this forward here, let's see what So no change of character. move here from the URL closing below,
Okay, so again, we never took out this high at this low was always our external low. a potential move lower to be in line with
bearish. forward because I would wait to see if a lower low and we kind of do right there
what I can do from here is I am going to about in that OTE video. video if you missed it.
And what this is, So let's talk about that quickly here. the start of this displacement, which gave
here to this new external low. to the low, you can see we do have this Now what this is, is this is a 62% to 79%
this, how often the market does come back you get a confirmed breakup structure or this means is that everything below this
discount and because we have a bearish this premium area to look for shorts. Okay. look to short anything below the 50%.
those of you that struggle with trying to you get moves like this, because what a lot this, they see the market take these out
And yes, sometimes you do get the market However, most times, in fact, about seven back to rebalance things like this.
Oftentimes you do get the market coming move above these lows back here. stopped out.
I cannot short is I'm going to stay here on the one hour right here off this low.
I'll put that in the description of this I share four rules for trading FEGs in that video. Okay, so if we change this here to FEG,
one-hour FEG, just so we keep it even more And this FEG too is right there within that the overall structure that we're looking for.
I also like to look at lower timeframes to know that come up there and tag that level.
I'm not just blindly entering up here, 15-minute timeframe, see that there's an So this is also giving me an area of
this So this one here is going to be, I'm going So right now we have our one-hour FEG up here.
in line with our OTE. of character or this OTE area following
because again, at this point, we don't know All we're doing is just outlining what stay patient if you find yourself chasing
Now, what I would also do in this case is have these levels drawn just because they in this case for targets.
So this lowdown here stands out, which you that we have the market trending lower. if this holds up, that this right here is
from the euro within a larger downtrend. yes, we have this down here as a potential we have is equal lows.
this is interesting because if I move in first low. we still have is liquidity building below
In fact, this was about a pip, maybe half a that was sitting here below this low. And so So you know that if there's liquidity back
this is a level that within this overall probably gets taken out. Okay, now I'm not going to label them like
So let's go ahead and move back here to the Okay, so we have everything outlined here. So let's play this forward and see what we
there we come into our OTE. It doesn't matter that we didn't come up here okay, because I know that I need more
a moment. enough for me So moving here to the five minute
here on the five minute timeframe. here on the five minute, right? this level,
continue making higher highs and higher lows. And so in order to have a very high is I need more confluence within this
what I need here, and it's the same exact is I need to see Now, one interesting part here too, just to
and lows typically or ideally should sweep Now, notice here we have this low here. This over here, you had internal lows.
Now, you can also see we have higher highs. of structure on the hourly, on this So this right here confirms that this low
timeframe, what I need to see now is I need And then from there, I know I have a high We have seen liquidity taken.
this area back here following this large So we've seen the market rebalance this area. I need to see now a five minute change of
is likely to hold as the high. this market has now tested So technically, this is not a change of
All right, so more consolidation here. There's nothing for me to do here. So this confirms
We had actually a lower high develop going character plus, which isn't all that into it, this is actually a stronger
Now, this is where it gets a little bit because if you'll notice, everything that It's all been very black and white.
It's just a matter of looking for the OTE marked, you have FEGs marked, you have All of this is just very, very mechanical.
this is the most subjective part because this five minute change of character down here on this confirmation or do you
potentially rebalance something that here though and this is what I do. you'll notice how we really don't have much
15-minute. that there's nothing for the market to come back through here, no FEG, and even if there
So there's nothing really here for me to for something like this, like if this and just done this and then closed down here,
I would be looking to short this on that And the reason for that is because I want to have a favorable risk-reward ratio.
anything for the market to come back and you're waiting for a move up here to get a you could miss the trade.
subjective part of this entire entry model. this five minute time frame, right, we have So from here, that's enough because we
here as an entry so I can have a tighter stop. Now remember, we have to move a little bit So in this case, hypothetically speaking, I
Now as far as a stop loss, okay, technically have my stop loss up here above But as I said before, this right here is
because we had this lower high form before And because of that, what I know is that if get the euro moving lower, this high up
indication that the market's moving higher. at an invalidation level. That's part of its job,
at a point that would invalidate the trade Now the next thing I need to check is... based on those levels I marked out before
So this down here would be target one, And then we have target two being these lows. Now what I need to determine is from my N
is this at least a three to one that it is a 2.86. and stress over 0.14R
a 2.3, 2.4, even 2.5, in the 3R zone, forward and see what we get,
that this right here is starting to rotate Now, one thing too, before I do this, I do premium area outlined up here.
So what gives? Why is that the case? And that this up here served one purpose. It served to rebalance this move.
change of character serves to confirm that rotate lower and be in line with what we're one-hour timeframe and even the four-hour
confirms that we've rebalanced this candle. those orders that didn't fill because this bears have once again taken over following
So this right here is the high conviction follow this exact same model. But for me, this is the most high
from here, I'm still getting a 3R trade. So that also fits within my rules because So for me, guys, this is valid.
Now you can see right there, that was our So from here, because I have two targets, Okay, 50% there at that first target.
sideways. We're not taking out any significant highs. And then you can see over here,
that right there, it looks like you would that first target was hit within an hour. Remember, this is a 15 minute time frame.
loss above that lower high, Over here toward the final target, that If you're waiting 24 hours as a swing
referring to a swing trader on the hourly definition of a swing trader, which is There's nothing complex about this.
factors in our favor here, starting with We then had our OTE up here, optimal trade That was the second factor.
factors. So on the five minute time frame, that was We then had a favorable risk reward ratio
our risk. The more factors you have in your favor, So again, all of this is very, very simple,
So hopefully this video has helped. And I'm going to put the video up right So if you missed that video, this explains
So I'll see you in the next video. Until then, trade well.