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Smart Money Concept

The document discusses market structure and concepts like bulls and bears, inducements, liquidity, pullbacks, break of structure, and change of character. It provides definitions and rules for identifying valid patterns and signals in market trends and reversals.

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st lalnunmawia
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2K views13 pages

Smart Money Concept

The document discusses market structure and concepts like bulls and bears, inducements, liquidity, pullbacks, break of structure, and change of character. It provides definitions and rules for identifying valid patterns and signals in market trends and reversals.

Uploaded by

st lalnunmawia
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Real MARKET Structure hriat loh chuan Trader ten pawisa kan loss nasa mai mai thin.

Market trend chuan Up leh down a nei a, Bull leh Bear tiin kan sawi bawk thin
thin.

Bull : HH HL

Bear :LHLL

Trend is your friend

Marking every High and low hi HH HL a ni vek lo a, hei hi retail trader tih dan, Smart money
concept ah chuan a dang ta daih a,
HHHL zawn chuan nan thil chi 2 a awm ta a.

1.HH hi market in first recent inducement a take out phawt a ngai

2.Candle body must close below inducement and close above high other wise it is liquidity
sweep..

Inducement chu first pull back,, ALWAYS CHECK FROM PREV SWING

Liquidity : Pending orders, stop loss

Liquidity is just an area where stop losses and pending orders are sittings
Pending orders:

BUY stop/buy limit

Sell stop/sell limit

Equal High/Equal Lows

Inducement /Pull Back:: Inducement is a trap before and area of order block/Supply/ Demand .
Price will induce impatient buyers/seller into the market before the zone is met to create liquidity

Once they trap and


d stop out true move begins

Pull back:: Correction against the trend ( temporaray dip)

Every pull back is not valid

Liquidity sweep neutralizing


utralizing retail market order) USE BY banks to execute large orders

Liquidity sweeping move is quick and efficient it reflects footprints of Smart money Executions.
Pull back valid pill back
When price take out (sweep) the Previous low or High.It is called Valid pull back
Bullish : Low of Highest candle must be broken

Bearish High of lowest candle must be broken

Valid Inducement: First valid pullback


INDUCEMENT SHIFT
INDUCEMENT SHIFT RULES

1if Market do not sweep current inducement and Create a New High/Low, then inducement will
be shifted to New Valid Pull back

2.If market sweep current inducement but candle did not cclose
ose below it and creates a new
High/Low, this break of Inducements will also be called as inducement 2
If market breaks both the inducement and make a new high, we can assume that it moves up
from the Order Block

3. When price take first inducement by closing below inducement and close above current high,
it is valid HH and Valid HL. Breaking HL will results in CHoch, But take notes, when market
move from Low to high in an impulse swing ( without pullbac
pullback),
), the low of the swing will act
as inducement. If so HL will become inducement not HL
Break of Structure - How to Identify Valid or Fake BOS?

1.Break of Structure (BOS) indicates the Continuation of Trend.

 When market is Bullish and breaks its Previous Swing High for Bullish continuation.
 When market is Bearish and breaks its Previous Swing Low for Bearish continuation.

2.BOS depends on time frame you using for Analysis. To find a Valid Setup in Market Direction,
We must Have Great Knowledge
ge of Valid BOS

IS EVERY Break of High/Low is a break of Structure( BOS)


Retail trader approach
SMC approach

BOS depends on two basic rules

1. Price Swing must take out Inducement ( but candle closing is not mandatory like HH,HL
2. Candle must close above/
above/below recent high/low
3. IF candle not close above high/low its liquidity sweep, always wait for new candle to
confirm valid BOS
4. If candle close above recent high, but not above previous candle ( breaking candle high)
its not valid BOS
Change of Character (CHoCH)

Change of Character is a SMC tool to find Trend Reversal Point. It gives a Leading Indication of
Market Reversal as Compared to FX Lagging Indicators. Big Institutions and Smart Money
Mostly Establish their Profits in Major Trend Direct
Direction.
ion. But What About if Trend Reversed?
Here, We will Study the Change of Character (CHoCH) in Complete Details to Follow the Smart
Money Foot Prints. Remember, BOS continues in the same Direction (HH in Uptrend and LL in
Downtrend) and CHoCH is a Structure Reversal Zone in Mapping that violates the Previous
Pattern and Indicate the Change of Market Direction.

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