AI Summary
This video introduces the Smart Money Concept (SMC) trading strategy, focusing on identifying break of structure (BOS), liquidity grabs, and change of character (CHoCH) to trade market reversals. The presenter uses both illustrated examples and real charts to demonstrate how to follow institutional order flow and avoid common traps.
Chapters
The video aims to teach the Smart Money Concept (SMC), a widely used strategy for trading any market.
In an uptrend, a higher high breaking previous highs is called a break of structure (BOS). In an uptrend, we only buy at BOS points.
When price makes a higher high but quickly reverses, it traps traders who placed stop losses above the old high. This is called a liquidity grab.
After a liquidity grab, if price breaks below a recent low, it signals a change of character (CHoCH) from uptrend to downtrend. Confirmation is needed before trading.
After a CHoCH on the higher timeframe, switch to a lower timeframe (e.g., 15-min) to look for a higher low, which confirms the reversal.
After a confirmed reversal, identify the last major supply zone (for a downtrend) before the BOS. Wait for price to retest that zone before entering.
In a downtrend, look for lower lows and lower highs. A liquidity grab at a low, followed by a break above a recent high, signals a reversal to the upside.
Enter at the demand/supply zone after confirmation, place stop loss just beyond the recent low/high, and target the next significant high/low from before the reversal.
The presenter shows a real chart where price grabbed liquidity at a low and reversed, marking BOS, liquidity grab, CHoCH, and entry zone.
The Smart Money Concept helps traders align with institutional order flow by identifying key structures and reversals. Success requires patience, practice, and confirmation from lower timeframes.
Tutorial Checklist
Study Flashcards (7)
What does BOS stand for in Smart Money Concept?
easy
Click to reveal answer
What does BOS stand for in Smart Money Concept?
Break of Structure.
01:14
What is a liquidity grab?
medium
Click to reveal answer
What is a liquidity grab?
A false breakout that takes out stop losses before reversing the direction.
02:13
What does CHoCH stand for?
easy
Click to reveal answer
What does CHoCH stand for?
Change of Character.
03:39
What is the purpose of marking demand/supply zones after a CHoCH?
medium
Click to reveal answer
What is the purpose of marking demand/supply zones after a CHoCH?
To identify where institutions placed their orders, providing a potential entry point for a reversal trade.
07:23
Why do we need to confirm a reversal on a lower timeframe?
medium
Click to reveal answer
Why do we need to confirm a reversal on a lower timeframe?
To avoid fake reversals and ensure the market is actually changing direction.
05:47
In an uptrend, what structure signals a potential reversal?
hard
Click to reveal answer
In an uptrend, what structure signals a potential reversal?
A liquidity grab at a higher high followed by a break of a recent low (CHoCH).
02:13
Where should you place a stop loss when entering a trade using SMC?
medium
Click to reveal answer
Where should you place a stop loss when entering a trade using SMC?
Just beyond the recent swing high/low (the point that was taken out in the liquidity grab).
11:09
💡 Key Takeaways
Break of Structure Definition
Fundamental concept; all SMC analysis starts with identifying BOS.
01:14Liquidity Grab as Trap
Explains why price often reverses after taking out stops; key for avoiding fakeouts.
02:13Lower Timeframe Confirmation
Essential for filtering false signals and timing entries accurately.
05:47Entry Zone and Stop Placement
Practical trade management rules that align with institutional positioning.
11:09Full Transcript
[00:03] this video I'm going to teach you guys how to use the smart money concept or SMC all right this is the most amazing strategy that's widely used in any
[00:15] Market nowadays you don't want to miss out this video make sure you watch until the end all right first I'm going to show you guys an illustration and then okay so we're going to start with an uptrend Market
[00:32] uptrend Market still enough trend of structure all right so as you can see here the market is
[00:48] going to be this perfect in the real Market but I want to show you guys uh in and then I'm going to go to the real market and just show you guys exactly how it looks like Okay so this one here this breakup structure this the market
[01:02] made a higher high breaking the previous highs so what do we call this in the smart money concept or the SMC we call this break of structure all right break
[01:14] this break of structure all right break of structure b o s it's called BOS BOS stands for break of structure all right and now we've broken another structure here creating a new high highs right there okay another breakup structure all
[01:28] right Market you're going to Market because and then you don't get confused another break of structure okay because the market is still buying all right and in this concept you have to use the higher time frame the one hour the four
[01:41] type of Trader you are all right and then under the brick of a structure to the upside we still buy in this market we're not selling every time we have a bull pack we buy this
[01:57] uh Market okay and then we have another break of structure right there BOS we have another breakup structure to the upside wiping off this highs and then reversing so this is
[02:13] called high high but at the same time it is a liquidity grab so the market went up faked out and then came down so in the smart money concept this is called liquidity grab so this move is a fake move it took out all the stop losses
[02:29] that was sitting here I was sitting here okay and then reversed right away creating a new low
[02:41] all right so anytime the market creates high highs so anytime the market creates high highs there has to be a demand zone or an auto block creating this highs breaking this structure here so now we have a demand
[02:56] Zone here hypothetically we have another demand Zone breaking this structure creating High highs there has to be a demand Zone within this move there has to be some type of Auto black or a demand Zone an
[03:09] auto plug is a place where the big Banks or institutions create and put their establos to protect their orders okay all right and there has to be a big move or a heavy move before the break of structures to confirm that the break is
[03:24] not fake all right the volume has to be there guys okay and then there's another sub demand zone right there and at the demand Zone another demand Zone all right and then now we have change of character
[03:39] we have the liquidity Swift Market took out this structure here taking off taking out all the you know grabbing all the liquidity or all the stop losses and then faking out reverse boom all right
[04:03] downside the market went from a buy Market to a sell Market but we have to have a confirmation because this law is not confirmed yet unless we have a low
[04:16] and then lower low so we need a confirmation on the lower structure here created low low there has to be some type of Supply in this term okay there has to be
[04:33] going on there's a dividend zones and when the market is going down or the sales Market there is a supply so the market is supply versus demand or Demand all right so now we created a lower low and then
[04:48] we wait according to the low time frame we're going to go to the 15-minute time frame or the 30 minute time frame and wait the market is going to go up
[05:05] you know the move that created the change of character quick this is called the change of character okay or choke for me I just call it very simply uh I call it a we see change of character okay so this is
[05:22] change of character right there so that we change from bias Market to the seller's market but we have to confirm because this could be a fake out you know just like here grabbing this liquidity
[05:34] this liquidity here and then reverse just like you did over here okay so we have to have a confirmation that's telling us the market is reversed okay so what do we do then once we have once we confirm this change of character
[05:47] like the 30 minutes 15 minutes or even five minutes okay so once we go to the lower time frame we look for a confirmation we have a low but it's not really confirmed unless we have a higher
[06:00] low okay okay creating higher low will give us a confirmation so once we hear on the low time frame we create just same same thing breaking structure BOS another BOS another BOS another break of structure you know very good structure
[06:15] right there let me Mark it real quick break a structure right there okay break obstructed right there and then grabbing this liquidity same as it did
[06:29] over here on the lower time frame and then another change of character to give us a confirmation of the lower low here okay we have another change of here okay we have another change of character so now we initiate our trade
[06:44] somewhere here and then write it to the next structure which is right here okay we're gonna write it to another structure right it's right there okay so
[06:57] how do we know this first we had a high high low high high high low high high high low high high high low higher high higher low higher high higher low higher high and then change of character breaking the
[07:10] change of character breaking the previous high lows okay so now we have time frame we have to get the same high high lows but it's going to be a short term so you have to know where the Zone where the end line is or the zone is so
[07:23] once you have this break of a structure or I mean this change of character here you have to mark your demands I mean your supply zones uh right there you have to mark your supply zones before the breakup structure and then wait for
[07:37] the move back to the Civilized Zone according to the lower time frame okay so once you get this move and then you wait for another change of character right there another change of character ch
[07:52] okay another change of character and then you another change of character and then you mark your Supply here and where do you target you target this low here okay you target
[08:06] this low here so on the reverse is what's gonna happen Okay let me just make sure that I mark this on the reverse on the reverse reverse
[08:24] okay let me interview contrary um all right now we have a reverse okay on
[08:37] the downtrend market we have the same thing okay the market creating thing okay the market creating low breaking this low creating a lower high another structure break of structure here low high lower low lower
[08:50] high lower low lower high lower low lower high lower low so on the higher still going down so we're not looking for any buyer's market until we see a change of character or a reversal in this term okay high low high lower low
[09:06] okay so now we have a lower low but what happened now we grabbed the liquidity or the stop losses that was sitting here all the stoplights that was sitting here was grabbed faked out
[09:21] was grabbed faked out and then reversed creating a change of character a change of character once we broke this lower high we have a confirmation that the market is about to reverse but we need to double check and
[09:34] know you know exactly what's going on before we take any trade so we wait be patiently we're going to go to the 15 minute time frame or the 30 minutes one hour or even five minutes okay and then we look for a short term
[09:47] people get trapped they think whenever they see this on the lower time frame this looks like a big downtrend when you go to the lower time frame okay so you just want to make sure where the zone is or what's going on on the higher time
[10:00] frame therefore you don't get trapped so we have a high low low high lower low lower high low low lower high lower low lower highs low low so we break in structures to the downside okay we broke our last structure here grabbed all the
[10:16] liquidity just like the higher time frame over here we grab the liquidity traversed creating a change of character or a reversal so we still wait we don't have no confirmation it we just have to have we have Highs but we just want to
[10:30] have we have Highs but we just want to make sure that we see a lower or a higher lows in order to consider this break an official break okay happened over here you know people thought it was going to continue to the
[10:43] downside but it broke this structure and then reversed so over here same thing we broke this structure we wait for a confirmation and then we we wait for a confirmation and then we Mark our demand Zone within this move
[10:56] before the break of this before the change of this character all right so now now that we have the confirmation we enter the trade
[11:09] right there well stop loss below there couple of Pips and then Target the next previous higher highs which is right there what do you have
[11:26] there what do you have beautiful trade boom okay so this is the Smart money concept smart money concept very very easy all this is how the market works either we like it or not so we just have to make
[11:38] sure we do what we follow what the market tells us okay we don't just create everything anything on top of our head so we that we have to follow exactly what the market is telling us okay this one here
[11:52] you have two options okay you can use the line chart to see everything clearly the line chart to see everything clearly or you can just use the uh what do you the the kind of for me I like to use the line chart
[12:06] all right we have a low break of structure here POS
[12:19] POS POS anytime we break a structure we Mark BOS which is break of structure
[12:31] all right do this practice this all right anytime we break structure to the downside we broke this slow created a lower low we call this our BOS lower low we call this our BOS lastly we broke this structure here
[12:45] calling our last Vos just like I showed you guys on the illustration you know you see the market took out this low all the stop losses that was sitting here was grabbed faked out and then
[13:01] reversed so what happened same thing that I showed you guys on the illustration all right so we have a breakup structure break of structure breakup structure and make sure you use the uh when when you're
[13:13] using the candlesticks make sure you use the Wicks too the wigs are very important because that's the price right there too you know so use the wicks so we have a structure low low lower high lower low lower high low to low
[13:27] lower high lower low lower high lower low lower high lower low higher high okay so what happened here the market grabbed all the liquidity here let me just Mark that real quick and show you guys uh what it looks like boom boom
[13:44] all right where's the data sign all right so there's a liquidity sitting right there because people you know about it they they sold I think in the market is going to continue going down you know I mean they they bought from
[13:58] here thinking the market is gonna I mean they sold sorry thing in the market is going to continue going up but they get you know uh they they bought from here sorry you know and then they will always stop loss over here the market came down
[14:12] took out all these top losses and then reversed to the upside all right so what do we hear what do you have here we have a change of character or a reversal a change of character or a reversal this is called CHR change of character I
[14:26] just use I just use this little uh word CH a change of character you know very very easy nothing very complicated so we have a change of character okay okay all right all right so what we do from here on then we're
[14:43] just gonna go to the lower time frame we don't have any confirmation yet we just want to make sure the market is not lying to us like it did over here breaking the structure grabbing all the liquidity and then going back up so we
[14:55] have to have the confirmation I see that we have a move to the upside but we have to have a confirmation higher low on the lower time frame okay so now we're gonna go to lower time frame 15 minute time frame
[15:13] we have a lot of liquidity sitting here this is all a liquidity sitting here this is all a liquidity okay
[15:25] this is only liquidity so before the change of character
[15:39] don't get confused so there's a break of structure right there okay once we had that break of structure what we're looking for is we're looking
[15:55] for a demand okay this is our last big move that created the break of structures
[16:25] this way the big moves happened okay there's also another imbalance before the break of structure all right so now we grab our
[16:39] we're gonna play a little bit do you have anything yet
[17:01] and then we wait until the market comes back over here frequently change of character over here and then over here over here and then we wait for a confirmation break of structure come back on the low time
[17:17] that okay all right so this is very very easy guys you know uh nothing very complicated it's not as hard as you think it is make sure you just practice and practice and practice and practice all right spend a
[17:30] lot of hours on the chart keep drawing your you know your breakup structures and your change of characters until you understand the concept all right and then every time every time we break a structure you have to look for a big
[17:44] like this okay big moves like that okay all these big moves look at this these are very very amazing uh reversed well thank you very much guys I hope you
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