SMC articles

Smart Money Concepts (SMC) read the chart through the order flow attributed to institutional traders, the "smart money", and organise it around market structure. An uptrend is a sequence of higher highs (HH) and higher lows (HL); a downtrend is a sequence of lower highs (LH) and lower lows (LL). A break of structure (BOS) is a candle body close beyond the last swing in the trend's direction. A wick that closes back inside does not count.

Each trend has a strong swing that protects it, such as the higher low that produced the last bullish BOS, and a weak swing that is expected to break. A change of character (CHoCH) is the first body close through the protected swing, against the trend. The first BOS in the new direction confirms it. Only external swings count; the smaller internal swings inside a pullback do not.

Liquidity explains why structure breaks. Equal highs and equal lows hold clusters of stop orders, and inducement (IDM) is the minor liquidity taken before price reaches the point of interest (POI). The POI is usually an order block or a fair value gap left by the same move. Longs are looked for in the discount half of the range, shorts in the premium half.

Both guides in this SMC section are free and come with a PDF: break of structure (BOS) and CHoCH trading. They mark structure on the 30-minute, 15-minute or 5-minute chart and refine entries on a lower timeframe.