---
title: 'How to Trade Smart Money Concepts | LuxAlgo'
source: 'https://youtube.com/watch?v=xNcHsVJ71qo'
video_id: 'xNcHsVJ71qo'
date: 2026-07-19
duration_sec: 501
channel: 'Tom Crown'
---

# How to Trade Smart Money Concepts | LuxAlgo

> Source: [How to Trade Smart Money Concepts | LuxAlgo](https://youtube.com/watch?v=xNcHsVJ71qo)

## Summary

This video explains how to use the LuxAlgo Smart Money Concepts indicator on TradingView to automate the identification of market structure, order blocks, fair value gaps, and liquidity zones. The presenter demonstrates how to configure the indicator and provides two trade examples using Ethereum.

### Key Points

- **Indicator as Holy Grail** [00:00] — The indicator automatically identifies market structure, fair value gaps, and order blocks, allowing traders to focus on execution.
- **Smart Money Concepts Overview** [00:36] — Smart money concepts involve trading with price action, market structure, order blocks, and imbalances, without traditional indicators.
- **Finding the Indicator** [01:05] — On TradingView, search for 'Smart Money Concepts by LuxAlgo' in the indicators tab and enable it.
- **Enabling Fair Value Gaps** [01:34] — In settings, turn on fair value gaps and extend them to 5 points for better visibility.
- **Market Structure: BOS vs. CHoCH** [02:05] — Break of structure (BOS) occurs when a second swing high/low is broken; change of character (CHoCH) occurs when the most recent swing high/low is broken.
- **Internal vs. Swing Structure** [02:33] — Dashed lines indicate internal structure (within a larger price leg), solid lines indicate swing structure (higher timeframe).
- **Swing Points and Strong/Weak Highs/Lows** [02:59] — Swing points highlight significant structure. Strong highs/lows have broken previous swing points; weak highs/lows are likely to be taken out.
- **Order Blocks** [03:44] — Order blocks are support/resistance areas offering potential entries. Internal order blocks are within swing structure; swing order blocks are more significant.
- **Fair Value Gaps** [04:15] — Fair value gaps are three-candle imbalances that act as magnets for price. Green boxes indicate support (bullish), red boxes resistance (bearish).
- **Equal Highs and Lows** [04:42] — These areas indicate liquidity where stop losses cluster. Price often takes them out before reversing.
- **MTF Levels** [05:07] — Mid-timeframe levels show daily, weekly, and monthly highs/lows, providing higher confidence levels less prone to manipulation.
- **Premium and Discount Zones** [05:39] — The indicator marks premium (expensive) and discount (undervalued) zones. For higher probability, sell in premium, buy in discount.
- **Trade Example 1: Fair Value Gap** [06:06] — On Ethereum, after a change of character and break of structure, wait for price to retrace below the midpoint of a fair value gap. Enter long with stop below the gap, target 1:2 or 1:3 risk-reward.
- **Trade Example 2: Order Block + Structure** [07:08] — In a bullish trend, after a low is taken out (liquidity grab), look for an order block that also breaks structure. Enter on retracement to that area, stop below recent swing low, target local high.

### Conclusion

The LuxAlgo Smart Money Concepts indicator automates the identification of key smart money concepts, making it easier for traders to execute high-probability trades. The video provides practical examples and encourages further exploration of related content.

## Transcript

if you're trading based on price action then  this one indicator will be your Holy Grail   it will automatically do the hard Lifting for  you by identifying Market structure fair value   gaps and Order blocks so you can focus on the  important stuff literally all you have to do  
is press the buy or sell button whenever this  indicator prints out a setup in this video we   will cover everything you need to know about this  indicator and how you can use it to improve your Trading
smart money Concepts have gone viral over the last  year and everyone's trading them but for those of   you who are not familiar yet we'll summarize  it quickly basically trading only using price   action with no indicators or patterns deviating  from the traditional trading styles using Market  
structure order blocks and imbalances along  with liquidity smart Money traders are able   to identify exits and entries for trads however  this can be a lot of work on your side so this  
one free indicator covers everything about smart  money Concepts making it easier for new traders   to succeed to find it we're going to go to  tradingview.com as always in the indicators  
tab we're going to pull it down to the search bar  and type in smart money concepts by Lux algo after   enabling this indicator you'll see that order  blocks structure and liquidity are marked out   for you to turn on F value gaps which you want to  do go to the settings of the indicator and scroll  
down to turn it on I suggest extending them to  Five Points this helps you see them better on   the chart this indicator at first may seem very  Advanced to you especially if you're a new user  
but after watching this video you will learn  all the terms and how to effectively use this   indicator to profit in trading first we'll start  out with Market structure this will be displayed   by B and CH h BOS stands for break of structure  and C stands for change of character both are  
going to be important the difference between them  is the amount of structure or the severity of the   break so the change of character will be displayed  when the most recent swing high or low are broken   with a candle close above or below the swing point  when break of structure is displayed it means that  
a second swing high or low was broken you'll also  notice some different types of lines there's one   with a dashed line and one with a solid thicker  line the structure with dashes are internal  
structure that is basically structure inside of  a bigger price Lake this would be swing structure   swing structure are the big solid lines and this  is a more significant higher time frame break of  
structure this is going to be a more critical  signal in the market structure section we can   also see two additional options that we can turn  on we have swing points and strong or weak highs   and lows I recommend playing around with these and  seeing what works best for you but when we turn on  
swing points we can see more labels are added to  our chart this option is to highlight significant   points of structure like whenever it makes a  higher high or lower high Etc strong or weak   highs and lows are specific points of structure  that meet this criteria a strong High has broken  
past the swing low so now that high should be  strong and it shouldn't be taken out the same   goes for a strong low it has made a higher high  so now that low should be considered strong but  
what makes a weak higher low a weak high is when  it fails to break past a previous swing low now   the high will be targeted meaning price will  likely take out the high because it's a weak   one and when the low breaks that weak High it  should become a strong low similarly a weak  
low is when it fails to break past the previous  swing High typically then we would look for the   low to become targeted next we're going to talk  about order blocks order blocks are an area where   support and resistance are likely found and can  offer potentially excellent entries for trades we  
have two types of order blocks internal and swing  just like structure swing order blocks are more   significant and on a higher time frame compared  to the internal order blocks which we typically   see inside the swing structure we also have fair  value gaps something I'm sure you've heard of and  
are a critical tool in my trading these are  imbalances on the chart that are made up of   three candlesticks a bullish fair value Gap is  marked as a green box on the chart designating   support and a bearish fair value Gap is marked  in a red box signaling resistance these areas  
can act as magnets for price and typically we  expect price to gravitate towards them you can   use them as a way to enter a trade after a valid  setup has formed next on our list is equal highs  
and lows turning on this option in settings will  show you areas of equal highs and equal lows these   are areas where liquidity is resting meaning  there's likely a large amount of stop losses  
located just above or below them whenever you  see them you can expect the market to take it   out before a potential reversal occurs coming  in next is MTF levels meaning mid time frame  
levels you can turn this on and then there'll be  three levels that you'll see the daily weekly and   monthly they show you the previous highs and lows  on these higher time frames there are also areas   of liquidity and these can present great trading  opportunities remember every time frame is valid  
in trading but the bigger the time frame the  less prone to manipulation they are and the   higher confidence that we get have in these levels  as Traders finally we have premium and discount   zones basically it marks out the local range of  the market and divides it with an equilibrium  
point this is the midpoint between the premium  and the discount areas premium we basically view   as expensive and discount we basically view as  undervalued for higher probability trades you  
want to sell when we're at premium and buy when  we're at discount exclusively now that we've   covered pretty much everything this indicator  offers offers we can move on to some examples   of how we would use this to enter trades the first  example we'll use the default settings but we're  
going to turn off all the order blocks and turn  on Fair Value gaps also we'll disable the auto   threshold and extend it up to Five Points lastly  we'll turn on swing points in this example we're   looking at ethereum and what we can see is that  it's been ranging for a long time what we see  
the indicator doing is highlighting that it's  making higher highs and higher lows then we see   a change of character following up by a break  of structure a big impulsive candle shows that   the momentum came in and played out on the chart  now we're convinced that the market is likely to  
continue and Trend higher so we want to enter a  long trade we can see that there is a large fair   value Gap what we want to do is wait for price  to trade below the midpoint of the fair value   Gap we also have Confluence of the previous  highs as an additional level of support we  
can enter long at that area with our stop just  below the fair value Gap and our Target can be   a 1 to2 or a 1:3 risk reward board ratio for our  second example we're going to turn those order   blocks back on and we're only going to be using  the internal order blocks and Market structure  
for this first thing we want is a trending Market  whether it's up or down in this example we have a   bullish case indicated by our higher highs and  again higher lows first we want to see a low   taken out this is logical because this is where  liquidity is resting after our stop Hunt is over  
we want to see an order block paint but we also  want it to break structure so as we can see we   have a break of structure right above an order  block now we want to wait for price to retrace   to this area we can either place a limit orders  or we can wait for price to tap the area first  
and enter based on reaction with a market order  so now we can drop down to a lower time frame   and wait for this break of structure we can then  enter on a newly created fair value gap or order   block with our stop loss below the most recent  swing low and we can Target the local high by  
now you should understand pretty much everything  this indicator has to offer I do have a lot more   videos on Lux algo smart money Concepts and  just trading in general so check them out for   more background information to get Lux algo  look in the video description below for the  
link to sign up and you'll get a discount using  my code I hope you found this video helpful and   make sure to subscribe hit the like button and  share this out to someone who might enjoy it