Smart money concept trading strategy - (SMC) Benefits,rules,and how to learn.

What Is Smart Money Concept in Trading?

 The "smart money" concept in trading refers to the collective actions of experienced and knowledgeable investors or institutions who are seen as having better insights and information about the market compared to the average trader. These investors are often thought to make more informed decisions based on thorough research, analysis, and understanding of market dynamics. As a result, many traders pay attention to the movements of these "smart money" players to gain insights or follow their strategies in the hopes of achieving better trading outcomes.

Smart Money is mainly interested in supply (how much of something is available), demand (how much people want something), and how the market works overall. Market makers, also known as the "smart money," often show clues about their trades on the chart, and traders who follow the smart money idea look for these clues to make their own decisions.

What is smart money concept rule?

Smart Money Concepts is the Combination of Key level strategy and Traditional Supply Demand with Market structure to optimize win rate, reward per risk ration and help trader to control emotion better.

Is Smart money concept profitable?

SMC traders think that when the market opens either too high or too low compared to what it's actually worth, it shows smart investors are making moves. They use these gaps to figure out where smart investors are putting their money, so they can try to make money too.

Who created smart money concept?

Smart Money Concepts originated with The Inner Circle Trader (ICT), which is a program offered by a trader named Michael J. Huddleston.

How to learn SMC trading?

Step 1: Determine the Trend

When trading the SMC, the first step is figuring out the main direction of the market. This means understanding how the market is set up. If you get this right, you'll likely find good trades on the side of the market that's going in the direction you expect.

If the price keeps dropping and forming lower highs and lower lows, it's in a downtrend. But if it keeps rising and making higher highs and higher lows, it's in an uptrend. When there's a noticeable change in how the market behaves, called a change of character (Choch), it often means the trend is changing too.

The chart we're looking at indicates that the trend has shifted from being negative to positive after the change of character. This means we shouldn't be trying to sell this pair anymore. Instead, we should be looking to buy when the conditions for entering a trade show up on the chart.

Step 2: Identify High Probability Order Block

After figuring out which way the market is going, we focus on finding where the big players in the market are getting ready to make their trades. This is important because we want to trade in the same direction as them.

A good place to trade is usually where something significant happens in the market, like a big change or breaking an important level. It's also helpful if there's lots of trading activity or if the price is at a fair value compared to other prices.

Step 3: Determine Your Entry and Exit Points

After that, you need to find where the major traders are getting into the market. Once you find a significant area where supply or demand is strong, it's easier to spot where to enter and exit trades. In our example, we'll enter the trade just above where the buyers are strong, and we'll set a stop loss just below that area. Our goal for taking profit will be at the highest point of the market structure.

Smart Money Concept vs Price Action – What’s the Difference?

We've found that the smart money strategy is based on strong methods for understanding price movements. In fact, smart money and price action trading share a lot of similarities. Some people might even say they're basically the same thing.