---
title: 'Smart Money Concepts - The Blueprint To Trade Like Banks'
source: 'https://youtube.com/watch?v=FNUeYlhbXkU'
video_id: 'FNUeYlhbXkU'
date: 2026-07-19
duration_sec: 858
channel: 'TradingLab'
---

# Smart Money Concepts - The Blueprint To Trade Like Banks

> Source: [Smart Money Concepts - The Blueprint To Trade Like Banks](https://youtube.com/watch?v=FNUeYlhbXkU)

## Summary

This video explains a trading strategy based on 'Smart Money Concepts' used by institutional traders. The strategy focuses on identifying key areas of interest, such as supply/demand zones and order blocks, combined with changes in market structure (CHoCH) and liquidity grabs to enter trades with high probability. The presenter demonstrates the approach using live examples and a custom indicator.

### Key Points

- **Trend Structure Basics** [00:36] — An uptrend consists of higher highs and higher lows. Breaking a previous high is a bullish Break of Structure (BOS). A reversal requires breaking the prior higher low, called a Change of Character (CHoCH).
- **Importance of Areas of Interest** [01:37] — A CHoCH is more powerful when it occurs at a strong area of interest like a supply/demand zone or order block. This increases the likelihood of a sustained move.
- **Key Area of Interest: Liquidity Grab** [02:50] — A liquidity grab is a false breakout above a recent high (for shorts) or below a recent low (for longs) on a higher timeframe. This triggers stop losses, adding momentum to the reversal.
- **Key Area of Interest: Order Block** [04:02] — An order block is a price zone where institutional traders place large orders. Price often reverses strongly from these levels.
- **Entry Using Fair Value Gap** [07:46] — After a liquidity grab and CHoCH, the presenter enters on a retracement to a Fair Value Gap (FVG) or a gap (in stocks). The FVG is the imbalance candle's body range.
- **Trade Management** [10:34] — Stop loss is placed above the recent high (for shorts) or below the recent low (for longs). Take profit is set at the opposite side of the move, often the prior low or high.
- **Alternative: Order Block Without Liquidity Grab** [13:12] — If price respects an order block (does not break through with a big body candle), the same strategy can be applied: wait for a FVG retracement and enter.

### Conclusion

The strategy combines liquidity grabs, changes of character, and fair value gaps to achieve high-probability trades with favorable risk-to-reward ratios. The presenter emphasizes using higher timeframes and strong areas of interest for best results.

## Transcript

These are smart money concepts. The same concepts big banks, hedge funds, and big institutions use. And theres a reason for that. Because of how successful they are. This is not your ordinary indicator strategy.
These concepts go deep down to the core of how the markets are structured. And luckily And Im gonna explain the exact formula, so you can copy the style of these trades and Alright, Ive already wasted too much time. Lets get straight into it.
First, we need to go over the structure of a trend. To make sure we are using these concepts to see the strategy in action and at the very end we ll go over a secret trick to make this
strategy perform to a whole new level. So to put it as simply as possible a normal uptrend will look like this. Making higher highs and higher lows. Every time a new high is broken, this is what s called a bullish BOS or a bullish break of
structure. Breaking the previous high. It will then eventually lose momentum, and starts heading the other direction. This is very important to understand. In order for this to be an official reversal, price has to break the prior higher low, which
a CHoCH, or a change of character. Now you ll see these absolutely everywhere you look if you go look at a chart right now. But what we are looking for is something extremely
significant, we want this previous high to be in an area of interest. For example, a supply or demand zone, or an order block. The stronger this area of interest is the
rate of the change of character. Picture it like this. A kite, yeah, its pretty good flying. This is like a change of character by itself. It gets the job done, but it s a kite. But if you grab that same change of character
and add a strong area of interest to it. That kite, turns into a F16 Fighter Jet. Big difference. Once we have a change of character and a area of interest, we can expect price to start heading downwards. Making lower highs, and lowers. Creating bearish break of structures.
Then it will repeat the whole process again, by creating a bullish Change of character. So that s the idea behind the strategy very simple, but there are some specifics we have to go over to make this strategy as successful as possible.
First the most important thing is you need to locate a key area of interest. We want this area of interest to be as strong as humanly possible. The stronger it is, the more likely the chart will move in the direction you want it to.
So what do I mean by strong areas of interest? Well there are a couple of things you can The first one is a liquidity in a key supply or demand zone on a high time frame.
What you would do is go on a higher time frame like the 1 hour or above. The higher the timeframe, the stronger the area will be. Next, you want to find a very key area of supply or demand. You can find this by finding areas where price rejected multiple times. Like here for example.
What you want is price to do is a liquidity grab. A liquidity grab is simply when price breaks this recent high or low, does a fake out and reverses in the opposite direction. The reason we want a fakeout is this. There are going to be people entering long
positions of this recent break. So you know what they are going to do? Set there stop losses here. So if price does end up doing a false breakout, once price comes down, it will hit all their stop losses adding fuel to the fire and increasing
the momentum and the likelihood of the price continuing to head down. Which we can take advantage of, by entering a short and making that sweet ol cash as the chart tanks. So a false breakout or a liquidity grab on
a high time frame is the first example of a key are of interest. The 2nd way you can look for a key area of interest is by finding an orderblock. An orderblock is basically an area where the big money institution likes to enter or exit. These areas are high
interest because usually price does strong reversals at these levels. Which is exactly I already made an indicator, that will show you all of this. It will show you Break of
structures, change of characters, key areas for liquidity grabs, and show you orderblocks So im going to be using that indicator for the examples in this strategy. You can do this strategy without the indicator, but one, it will not only help you identify
these key areas and let you identify them quickly on the fly. But 2, it will show you It s a game changer, and I use it myself on a day to day basis when I trade.
my description, I guarantee you ll love it. So what I do when using this strategy, Ill go to the settings of the indicator and disable absolutely everything besides the smart money
strategy. As you can see, the indicator has already Ok so lets do some live examples. Hey tradinglab do you know how to double your
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One of the key things to look at, are these low and high lines. These are the lines price needs to break, and do a liquidity grab at like I was talking just zoom out on a high time frame and find where price is rejecting or getting supported
a lot. Make that line and that s the line price has to do a liquidity grab. Here the indicator does it for us. If we want to do a short, we want price to do a liquidity grab at the high. If we want to do a long, we want price to a do a liquidity
Here s a live example with a trade I took myself using these exact same concepts. price has to make a liquidity grab for us. If you aren t using the indicator you would
just zoom out and see where price rejected or supported a lot. So the very first thing we look for is price to do a liquidty grab or a false breakout. Lets see what happens. Price came up to this area of interest passed
it and rejected. So this is the liquidity grab we are looking for. Since its was our bearish area of interest, we will look for signs to enter a short. The next step is we need price to make a change of character. The indicator will label this
the video. As you can see price fell very hard after doing this liquidity grab and made a gap while falling down. This is very important, so keep this in mind for later. After that, it falls a little more creating a change of character.
That is step 2 completed. Price MUST make a change of character after the liquidity grab or the signal is no good. So we have 2 indications this is a good short. Next we need to know where to enter. What I like doing is entering on a Fair Value
or goes up so fast that it doesn t give buyers or sellers enough time to enter the market. Which creates an imbalance in the market. Often time price will want to come back up
or down to this fair value gap and reject. You can have bullish fair value gaps and bearish extremely strong. My indicator will mark these for you. Red
rectangles being bearish fair value gaps. Green rectangles for bullish fair value gaps. Quick tip. If you are using the indicator, I only like turning the fair values gaps on after I find a liquidity grab and a change of character. Because they do make the chart
a little messy. So in this scenario I would enable them here. If you aren t using the indicator and want to do it manually, You can mark a Fair Value gap by taking the previous candle s wick before the big move, then taking the next candles
wick after the big move. This rectangle area is the fair value gap itself. If the big move is moving down, it s a bearish fair value gap. If the big move is moving up it s a bullish price falls or goes up super fast. It will create a gap, like the one here. This basically
If you don t trade stocks and trade forex or something, just look for fair value gaps, and just disregard this gap thing as these will not happen in forex.
But since this is a stock example. There are gaps on this chart. So we will be using them in this example along with fair value gaps. So now that we have a liquidity grab and a change of character. I go to the settings of the indicator and enable fair value gaps.
This will indicate where all the fair value gaps are automatically for us. Want we want is price to come back up a fair value gap or a gap after making a change of price will most likely want to return to this point because there is an imbalance in the
Price comes back up to the gap just like we thought It would. Now if you want to be in the trade for sure, you can enter right at the beginning of the gap. So you would enter a short right here. If you want a little better entry you can
wait for price to come up to the half way point of the gap. So you would enter here. I find a lot of times price will come to this half way point and then reject. But just keep in mind, sometime price will only come to the starting point of the gap,
and if you were waiting for the half point, you would of missed out on the trade. So in you can do it. So price made a bearish liquidity grab, a
change of character, then came back up to a normal gap or a fair value gap. This is where we enter our short trade. We set our stop loss at the high of this move, we set our take profit at the low. What I like about this strategy is that it
gives really great risk to reward ratios every time. Which is great. Lets see what happens. Winning trade. Now just to prove to you how successful this strategy really is. Im not gonna even cherry pick charts. Im simply just going to stay
on this chart and you can see one, how often this happens in the market, and 2 how successful this strategy is. So you can see once price hit our take profit, while doing that it actually broke our low line and rejected. Creating a bullish liquidty
grab. So we can start looking for a long trade now. The next thing we need, is a bullish Price goes up and making a change of character. That s step two completed.
Now we need price to enter into a fair value gap. As you can see price created two bullish enter a trade. If you want to be on the safer side, you should wait for price to come down to the lower fair value gap so this one right here. Just know,
price will not always do this and will end up just rejecting on the higher one. So you I usually just do the first value gap so this one, but if you want better entries and better
risk to rewards, wait for the lower value gap. Just know, you may miss out on some trade. So we wait for price to hit this fair value gap. Which it does. move, or set it all the way below this liquidity line. It really just depends on your personal
risk tolerance. Either or will work, but Id recommend doing your own testing. After we set our stop loss we set our take profit at the high of the last move. And look what happens, another easy trade. Oh but wait, we aren t done yet.
As you can see when price hit our take profit it did another liquidty grab from the previous high. So we keep our eyes out for another potential short. We see price makes a bearish change of character, so that s step 2 completed. Next, all we need
is for price to come back up this bearish fair value gap for our entery. Set our stop loss either at the high of this move, or set it all the way above the liquidty
grab, depending on your risk tolerance. Set the take profit at the low of the last As you can see none of these were cherry picked at all. a fair value gap all in correlation, it brings in a massive success rate.
Now heres one more extra little trick you can do with this strategy. That performs insanely well. Instead of looking for a liquidty grab you block and respect it like this. It NEEDs to respect it. If it breaks through
it like this, with a big bodied candle, its not a good order block. Its okay if it has big wicks going through it, it just needs to show signs of slowing down and respecting the order block. Once you see price respecting the order block,
you can do the same strategy just with order block. We wait for price to create a fair value gap and come to it. Which it does. We set our stop loss, set our take profit. Boom. More easy money.
Next, we are going to go over what hedge funds, yes the big boys who controls billion of dollars in the stock maret every day think about technical analysis. And the answer may just surprise you. Go check that out, thanks for watching and ill see you guys next time.