Trading with Smart Money Concepts

in this free video course you will learn everything you need to know about smart money concepts for trading stocks crypto Forex or any other Financial Market by the end of this course you will not only be able to trade smart money Concepts correctly but you will also learn about multiple smart money concept techniques that most Traders don't know about all right so let's begin here by talking about what you can expect to learn from this course and the very first thing we need to cover is of course what is Smart money concept or in other words what is SMC in order to trade smart money Concepts it's of course very important to have a solid understanding of what it is in the first place next we are going to dive into some very important Market structure Concepts we will learn about something called change of character or for short CH o and we will also learn about something called Break of structure or for short B these two concepts are very important and they are fundamental to understand if you want to trade smart money Concept in chapter three we will cover yet another important concept and that is strong and weak price levels strong and weak price levels are very important when it comes to finding good entries and as a result make better trades next up we're going to talk about something called Supply and demand we will both take a look at the basics of supply and demand but even more importantly we will take a look at how you can use supply and demand together with Market structure Concepts such as strong and weak price levels change of character and break of structure because it's actually when you combine supply and demand with these other Concepts you can really start to improve your trading in chapter 5 it's time to cover fa value gaps or for short f VG this right here is a very important smart money concept to understand and I will go over everything you need to know in a simple step-by-step manner last but definitely not least we are going to talk about liquidity grabs this right here is one of my personal favorite Concepts and when you master it you will both be able to take better trades but you will also be able to avoid many of the false signals but all right guys so let's begin here by super quickly taking a look at what is smart money Concepts or SMC and in very simple terms smart money concepts are trading strategies used by the smart money and what do we mean when we talk about smart money well smart money are basically knowledgeable Financial professionals like for example Banks such as Goldman Sachs or JP Morgan hedge funds like for example Bridgewater and that is why I have this image right here many of you guys are probably familiar with him this right here is Ray diio which is the founder of Bridgewater and I actually think that Bridgewater is the largest hedge fund in the world so Dalo and his hedge fund is a great example of smart money but we also have other institutional investors such as mutual funds or Pension funds that are definitely considered smart money but now then what are some important characteristics when it comes to Smart money well first of all the most important characteristic here is that smart money have large amounts of capital and because they have lots of money they are capable of moving the market so if we as smaller investors can understand how smart money moves Market we can trade in the same direction as a smart money and as a result make more profit another important characteristic here is that smart money of often have access to more advanced Market data they often have more sophisticated analysis tools compared to retail Traders like you and me smart money often also have you know large teams of Highly skilled analysts and Traders and that is of course yet another big advantage of the smart money all right so now when we have a basic understanding of what smart money is and also what smart money concept is we are are now ready to start learning about smart money Concepts and the very first thing we need to learn about here is something called Market structure so let's begin here by taking a look at some Market structure Basics Market structure is basically the analysis of how the market has moved in the past to predict how the market will move in the future and the first thing we have to learn here is that the market can be in three states the First Market state is the uptrend and we know that the market is in an uptrend if the market consistently breaks higher highs while at the same time prints higher lows so if you take a look right here we can see an example of an uptrend you can see that the market here is both printing consecutive higher highs while at the same time printing consecutive higher lows as long as the market keeps on printing higher highs and higher lows we are in an uptrend and very soon we will dive deeper into analyzing uptrends but so far this is all you need to know the next state the market can be in is a downtrend and this is basically the opposite of the uptrend so in order to have a downtrend the market needs to consistently break to lower lows while at the same time staying above the highs so right here we have an example of a downtrend as you can see this Market prints consecutive lower highs while at the same same time printing consecutive lower lows and the final State a market can be in is a sideways Market or in other words a trading range and a trading range is very simple that is a market that moves sideways without a clear uptrend or downtrend so right here we have an example of a sideways Market you can see in this case we have the highs here at the same level and the lows at the same level but the sideways Market can also be a market looks something like this for example right here you can see that the market is printing higher Highs but it's also printing a lower low and then it prints a lower highs and lows here at around the same level so a trading range doesn't have to be perfectly straight with highs and lows at the same level it can basically be any kind of Market that are not in a clear uptrend or downtrend and now let's take a look at the uptrend downtrend and sideway Market a bit more in detail because this image I just recently showed you guys is actually a bit flawed and let's begin here by analyzing the uptrend remember from earlier that in order to have an uptrend we need to print higher highs and higher lows and what we actually can see on this image is that we are printing a higher high right here a higher high right here but right here this is yet another higher high so the color of that Circle should actually be a green one because we are still in an uptrend at this point we can also see that we have a low we have a higher low but this right here is yet another higher low so the market at this point in time is still in an uptrend but now let's focus on this point right here this is a very important point because this is the point where the market fails to break to a higher high so at this point we can consider that the market has entered a trading range but one very important thing to consider about trading ranges is that trading ranges are actually very important to exist within uptrends so it's very possible that we see an uptrend right here then for a short while we see a a trading range we can call this a consolidation or a pullback this right here is actually often just a pause in the uptrend and many times after the trading range the trend will continue in the same direction now last but not least let's consider when this Market has actually entered a downtrend well the first important signal actually comes when the price breaks below this point right here because when the price breaks below this point we will for sure print another lower low and this break right here is very important and we will talk about that later on in this course but for now we just need to realize that when the price breaks below this point we will for certain print a lower low but remember here that in order to have a downtrend we need to have both lower highs and lower lows so it's not until we print this high right here that we actually have two lower highs and two lower lows so it's basically at this point the real sort of trend is confirmed all right so now when you know the basics about uptrends downtrends and sideways markets now we are finally ready to take a look at change of character or CA o and break of structure or B and let's begin here by taking a look at break of structure a break of structure occurs when the price breaks a higher high within an uptrend or a lower low within a downtrend so for example right here you can see that this Market is in an uptrend and when the price pushes above this point right here so at this point right here the price breaks to a new high within an uptrend and therefore this is a break of structure or for short BOS when we're talking about the break of structures in uptrend we can call this a bullish break of structure and the same thing actually happens right here you can see at this point the price breaks to yet another higher high so here we have yet another break of structure but now as you can see right here this High actually never got broken so we saw no more breaks of structure in this uptrend instead let's focus on this low right here when the price pushes below the most recent low in an uptrend we call this a change of character or for short CH o and as we can hear on the name a change of character basically means that the character of The Price which is currently in an uptrend is changing so a change of character is a first warning sign that the trend might be coming to an end and now as an exercise I want you guys to try to find the first bearish break of structure on your own so if you want to feel free to pause the video right now and try to find the first bearish break of structure did you find it well remember what a break of structure is it's when we break highs in an uptrend or lows in a downtrend and where in this downtrend did we break the first low well we can see that the first low of the downtrend is right here remember that when we broke this low this was actually a low in an uptrend but the first break of a low in a downtrend was from this low and it confirmed right here so here we have the first bearish break of structure the next bearish break of structure can be found right here you can see at this point we broke to yet another low so this right here is yet another bearish break of structure but now then what about this whole part part right here here it gets a little bit complicated but what we first can notice here is that when the price breaks this point right here we actually have a change of character right because in order to have a downtrend we need to print lower highs and lower lows and when we break this point right here we are no longer printing lower Highs but the next move right here is more complicated because you can see at this point the price actually breaks to yet another low some Traders will consider this yet another immediate change of character and when we see two change of characters happening sort of immediately after each other you can see here we have both higher highs and lower lows at this point we no longer consider the trend to be either in an uptrend or a downtrend anymore and remember what that market state is called it's called a sideways Market or a trading range so now let's dive a little bit deeper and take a look at something called internal and external break of structure and change of character and here on the screen we have two different time frames the black line right here is the high time frame so it could for example be a daily chart or in other words that every Candlestick represents one day while the red line right here is the low time frame so this might for example be a 1 hour chart and what's important to understand here is that change of character and break of structures are fractile meaning that they appear on all time frames and the break of structures and change of characters that happens on the high time frame we usually call external break of structures so for example right here you can see that we have a break of structure because the price breaks to a higher high and since this happens on the high time frame we can write e for external and then break of structure right here we have yet another external break of structure right and for example right here we're seeing a change of character because the uptrend can no longer maintain higher lows so we write an e for external and then change of character like this but now and this is very important we also of course have break of structures and change of characters on the lower time frame as well you can for example see that right here the low time frame breaks to a new high so this is an internal so I break of structure here we have another internal break of structure and here we have another one but what happens here well at this point we can see that the low time frame can no longer maintain the uptrend so here we have an internal change of character and and this internal change of character is the beginning of a short downtrend on the lower time frame so one thing that you quickly will notice here is that upwards movements on the higher time frame will usually be large uptrends on the lower time frame and moves that goes against the direction of the trend like right here will usually also be small Trends on the lower time frame and this process can go on and on and on so let's for example imagine that we zoom in on this red move right here if we zoom in even further we will notice that this will actually look like a large trend on the even lower time frames and we as Traders can use multiple time frames at the same time to get better entries and exits in the market and as a result take better trades all right so now when we have a deep understanding of change of character and break of structure we are ready to take a look at yet another important Market structure concept and that is strong and weak levels and this concept is something we will use throughout the whole course so make sure to really pay attention now the basics of this concept is very simple a strong level is a level that comes from a move that breaks structure and a weak level comes from a move that fails to break structure so in order to find our strong and weak levels we simply need to analyze the break of structure and change of character and by this point you already know how to do this so for example right here we have a break of structure right and a strong level is a level that comes from the move that breaks structure so what we need to look out for here is the beginning of the move that broke structure and as we can see right here this was the beginning of the move that broke structure so this right here is a strong level but what about this move right here in order for this move to be strong we actually need to break the previous low that is all the way down here so this right here is a move that fails to break structure or in other words this is a weak level and some Traders will also call this right here a strong low because it comes from a low and they will call this right here a weak High because this right here is a high and for the same reason this right here is yet another strong level or strong low because this move broke the previous high and here we have another weak level because in order for this level to be strong this move needs to push below this low right here but what about this move then well this right here is actually a strong level or a strong high and why is this a strong High well this move breaks the previous low remember this right here is a change of character and I see both levels that break structures and levels that Break characters are strong levels for the same reason this right here is a strong High because it breaks the low and this right here is a weak low or weak level because it fails to break above this point and now you might of course wonder why do we learn about strong and weak levels well that will be very clear in the next chapter where we talk about Supply and demand all right so now the time has come to take a look at supply and demand and this right here is a very important smart money concept that we actually can use together with what we learned just recently to create a trading strategy but before we take a look at that we need to of course learn the basics about supply and demand so in simple terms supply and demand is the force behind all price movements in order for the price to go up we need to have more demand than Supply and in order for the price to go down we need to have more Supply than demand in smart money Concepts trading we identify areas on the chart where we see imbalances between the supply and demand and these areas of imbalance are known as supply and demand zones and why do we need to be able to identify Supply and Dem mon zones well we can actually use these Supply and Dem mon zones to defined entry levels in the market so next we will take a look at a step-by-step formula on how to identify supply and demand zones and let's begin here by taking a look at how to identify smart money Concepts demand zones and the formula for this is pretty simple step number one here is that we need to find a strong momentum candle and what is a momentum candle well in simple terms a momentum candle is a Candlestick with a strong and sharp price movement so as an example this candle right here is a momentum candle and to make this simple what I'm looking out for when I'm looking out for momentum candles is that I want this candle to be at least twice the size compared to the real bodies of the previous candles but preferably I want this candle to be maybe three times or even four times as large as the previous candles so what you can do here is that you can look at the the previous three candles or so and you compare the length of the momentum candle to the length of the previous candles right here and you want to look out for a real body that is at least twice the size of these candles and when you have found your momentum candle step two here is to look at the candle before the momentum candle so in this case we want to look at this candle right here step number three is is to draw a Zone around the previous candle and when it comes to drawing supply and demand zones uh Traders will always have different strategies and different methods on exactly how to draw these zones but a straightforward and simple strategy here is to simply draw a Zone around the previous candle so what we want to do here is that we want to draw a Zone from the highest point of the previous candle to the low lest point of the previous candle so the length between these two points will be our demand and this demand zone right here is a zone of imbalance where demand is greater than Supply because in order to create such a large candle like right here we need to see far more demand than Supply and the theory here goes that when the price eventually comes down and goes back to the demand area since this have been a zone of imbalance in the past we expect demand to come in at this area in the future as well and push the price up now let's also quickly take a look at how to identify smart money concept Supply zones and to do this once again the first step is to find a strong momentum candle and as you guys can see right here we have an example of a strong momentum candle why is this a momentum candle well what we do is that we basically take a look look at the previous candles and we can clearly see here that the real body of this candle is more much more than twice the size of the previous candles in this case it's maybe you know five times as large and this is a good sign of a momentum candle The Next Step here is to look at the candle before it and in this case we actually have a special candle this right here is what we call a doe candle and by the way guys if you want to learn more about candlesticks and C Candlestick patterns I actually have a full Candlestick pattern trading course here on the channel so if you guys have the time I highly recommend to check that video out I will make sure to leave a link up in the corner if you guys want to continue to improve your trading after this video step number three in this process is once again to draw a zwn around the previous candle and to keep it simple what we want to do here is that we want to contain the whole previous candle so we draw the Zone from the highest point of that candle down to the low lowest point of that candle so this whole part right here will be our supply Zone and once again the Zone here is Created from an imbalance between supply and demand because in order to push the price this sharply and this fast to the downside we need to see a strong imbalance between buyers and sellers all right so now let's take a look at a real life example of a demand zone so first of all right here we can notice a strong momentum candle we can see that this candle is clearly more than twice the size compared to the previous ones so what we do here is that we draw a demand Zone containing the preceding candle so we want to contain the Wicks and the real body of that previous candle and you can see that after this the price went up it pretty much traded sideways here for a while but when it comes to trading it's really important to be patient here because eventually you can see that the price sharply went down to this demand area we quickly touch the demand and as the theory goes because we had demand at this area in the past it's likely that we see demand in the future and after we touch the demand area we can see that we saw lots of demand coming in and the price completely shot up later on in this video we will take a look at exactly how you can combine this strategy with the market structure knowledge we learned about earlier but for now this is basically what we need to know um I also want to quickly show you guys an example of supply and remember the formula here the first step is to look for a strong momentum candle and right here we can indeed see a strong momentum candle what we also can notice here is that this candle is clearly more than twice the size compared to the real body of the previous candles in this case it's maybe almost like 10 times as large so here we have a very strong momentum candle in indicating a strong imbalance between supply and demand The Next Step here is to take a look at the candle that happened before the momentum candle then we drag a Zone from the high to the low of this candle and we Drag The Zone here to the left so here we have our supply area and once again we can see that the price went down here we went up almost touched touched the Supply right here as you can see and on this point we actually saw a sharp moment towards the downside again but once again the Bulls managed to take control and we actually quickly Wicked above this area and this right here was almost like a liquidity grab and we will talk more about liquidity grabs later on in this video because they can be super useful both to avoid fall signals but you can also use liquidity grabs to actually enter the market but as you guys can see here once the price let me actually remove here so you can see uh as you guys can see here once the price reached the supply we eventually saw lots of Supply going in and the market completely collapsed all right so now when we know about supply and demand it's time to take a look at how we can find the best supply and demand zones and to do this we're actually going to combine two concepts we are going to combine what we learned earlier in the video about Market structure with supply and demand so to repeat Market structure rure explains how and why the market moves while supply and demand zones show imbalances in the market so what we want to do here is that we want to combine Market structure with supply and demand to identify higher quality zones and now let's take a look at how to do that in a step-by-step Manner and let's begin here by taking a look at the high quality demand zones to find these zones what we are looking out for is strong lows and remember from earlier in the video the strong lows here are created from the move that break structure so for example right here we have a break of structure which makes this low right here a strong low so let's say we have a candle that looks something like this here and then we see a strong green momentum candle like this when we see this type of move happening at a strong low we can draw out a high quality demand Zone and remember we draw the Zone from the highest point of the previous candle down to the lowest point we want to include the Wicks here and then we drag out the zone to the right so this right here is our demand and what we're looking out for is that we want the price to come back down to this demand area and because we saw demand coming in in the past or in other words we saw an imbalance between demand and Supply in the past we expect demand to come in here in the future as as well and to confirm the entry signal right here what I'm usually looking out for is some kind of Candlestick pattern or another price action signal to confirm the entry one important thing to notice here is that let's say that we found another demand area from this strong low right here so this right here is another strong low because it caused a break of structure one important thing to notice here is that the price will definitely not always go down all the way to the demand area many times the price will reverse before the demand area appears and later on in this course when we talk about fair value gaps we will talk about how we can find good entry points even if the price doesn't hit our supply or demand but now then how do we find our high quality Supply zones well the principle here is pretty similar but the opposite so what we are looking out for now is actually strong highs and remember a strong high is a move that breaks structure so for example this move right here is not a strong High why is this not a strong High well because the move from this point failed to break structure remember in order to break structure the price needs to push below this point right here once again this right here is another weak High because this move failed to break this low right here but if you take a look at the third high right here we can see that this move actually managed to break the previous low causing a change of character and because this is a strong High we can look out for a high quality Supply Zone at that area so let's say we maybe had had a candle that looked something like this at this point and then we saw lots of Supply coming in so we have a red candle strong red candle right here indicating Supply and remember how to draw our supply Zone we include the previous candle we draw out the supply here to the right and our goal here is to basically wait for the price to potentially come up to the supply area and then reverse to the downside once again to justify a short position I usually look out for some kind of signal coming in at this Supply area it can be a bearish Candlestick pattern or simply a strong bearish momentum candle but we want to see some kind of indication that we actually see Supply coming in again at that area so now let's take a look at a real life example of high quality demand and as we can see on this chart we had our first break of structure right here so it's possible that we can find some demand at this low but in this particular case you can see that we had one Candlestick right here this was actually a bullish Hammer which on its own is a bullish reversal signal so this right here was actually a potential trade however we can see that the next candle here was a green candle but it wasn't really showing momentum the third candle after this low was a strong momentum candle so one could argue here that we could draw out a demand area from this candle right here but the reason I did not choose to draw out this demand area even though we actually saw a bounce a beautiful bounce coming in at this level the reason I did not draw out this demand area is that I prefer the demand to come in very near the low uh so let's take a look at the second example you can see that we had another break break of structure right here beautiful break we had a strong breakout candle above the break of structure which is a good sign we also had a sort of tiny liquidity grab here before the breakout appeared uh but what I want to focus on is this area right here so you can see that on this low we saw a very strong momentum candle this is an indication that we are seeing demand coming in so as you guys know by now what I did was that I took the previous candle and I draw out a demand area and also remember here that before we can draw out this demand area we need to see the break of structure because if we don't see a break of structure we don't know if this right here is a strong low but after this break of structure the price went up and printed a new high it came down here went up again actually tested this high and then eventually we fell down all the way here to the demand and this took quite a few candles and this is an important part when it comes to trading supply and demand is that we need to be patient and wait for the price to come back down to the demand area before we take a potential entry it's much better to be patient rather than to force trades forcing trades is never a good idea and it will often lead to losses but what we can see here is that when the price came down and tested the demand we actually saw a bullish signal because the price right here printed a bullish hammer and from this point the price just went straight up here and we even caused another break of structure which means that this uptrend continues but now you might of course wonder you know where do we enter where do we place our stop- loss and Target levels and here there are quite a few different methods but let's take a look at a very simple way of doing this so the entry point is pretty straightforward you can enter at the candle close of the Candlestick pattern or candle that confirms the demand Zone as for your stop loss one way to set it is to set it below the lowest point of the actual pattern or another common method and this this is very common is to set the stop loss just below the actual demand area as for your Target level many Traders will actually take a Target above the break of structure because when we are in an uptrend the bias is is that the uptrend will continue or in other words causing yet another break of structure but what I like to do here is to actually take the target just below the high and why do I do this well the reason is that the previous high and especially in this case when we have a sort of a two clear touches on this resistance area it's very possible that the price can actually reverse once again when we come up when we come up to this resistance so especially in this case it can make sense to take your target used before the resistance so even if the price goes up and test the resistance and then Falls we still lock in profit all right guys so now it's finally time to take a look at fa value gaps or for short fvg and what is a far value Gap well far value gaps or fvgsqsgyxtm so this is pretty similar to the supply and demand remember the supply and demand area is an area where we have an imbalance between supply and demand and in simple terms this is actually also true for fa value gaps but how we identify the fair value Gap is very different from supply and demand um so make sure to really pay attention and Fa value gaps works because large movements or in other words momentum candles creates temporary Market market inefficiencies and during these gaps either buyers or sellers dominate the market so we have a bullish fair value Gap and we also have a bearish fair value Gap and we will take a look at how to identify both of these types of course and how the Traders use fire value gaps well we use them as potential entry points expecting the market to fill these gaps so now let's take a look at how to identify fair value gaps and first of all we have two main types of fair value gaps we have the bullish fair value Gap and we also have the barish fair value Gap we also have lots of different variations of bullish and bearish fair value gaps but the core principle for fair value gaps are the same and here I feel like many Traders sort of over complicate fair value gaps and in many cases this is a bit unnecessary because the core and the basics of fair value gaps is actually pretty simple so let's start here by taking a look at how we can identify the bullish fair value Gap and the first thing we're looking out for when it comes to fa value gaps is that we want to see a strong momentum candle and as a rule of thumb we usually want this candle to be more than twice as large as the previous candles or you know even larger like three times or maybe even five five times as large in this case you can see that this candle is almost five times as large as the previous one the next step is to identify the candle before the momentum candle and the candle after the momentum candle then we draw a line here from the highest point of the preceding candle and we draw a line here from the lowest point of the candle that comes after and the distance between this point and this point is the fire value Gap and if the Wicks of this candles was longer let's say that this candle had a wick that look something like this and maybe this other candle had a wick that looks something like this then our fair value Gap would be between this point and this point right so this right here this distance would be our fair value Gap and the same thing but the opposite is true for the bearish fair value Gap we want to identify the momentum candle we take a look at the candle before and after the momentum candle and let's say that for example maybe this candle was all the way down here then our fair value Gap would be from this point to this point so now then let's take a look at how we can use fair value gaps to find entry points in the market and as you can see right here we have an uptrend and I already have multiple demand zones here on the chart and the reason I have these demand zones is basically to demonstrate how fair value gaps are different from demand because they can appear at other spots in the market so remember here that in order to find a good demand or Supply Zone we preferably want the demands to happen here at strong lows but when it comes to fa value gaps we can actually identify them in the middle of a move when it comes to bullish fire value gaps we still preferably want to find the Gap here in a move that breaks structure so for example this move right here will break structure right here so this is a break of structure so preferably we want to find the fair value Gap during this move but the good thing here is that we can for example identify a fair value Gap maybe right here so this could be a fair value Gap or for short fvg and what we are then looking out for is for the price to go up and come back down to test this fair value Gap then we want to look out for some kind of bullish signal coming in at the fa value Gap and this right here can be a good entry point so now let's take a look at an example of how we can use fair value gaps and as you can see already at this point right here we have a pretty clear fair value Gap the reason for this is that we have a strong momentum candle right here and we also have a gap between the lowest point of this candle and the highest point of this candle so we can draw out our fair value Gap Zone just like this and in this case you can see that the price went up here we came down tested the fair value Gap area and then we pushed higher however as for entry points I think that this one was kind of tricky to enter one could argue here that you could enter on the candle close of this red candle because we saw a bounce from the fa value Gap but in this case we didn't really see a clear signal on the fair value Gap so this is actually an example of a trade you might want to avoid this was a bit 50/50 right here but as we can see the price eventually pushed above the break of structure here so now we can once again look for good far far so now we can once again look for good fa value gaps and right here you can see that we have a strong bullish candle we also have some space from the highest point of this candle and the lowest point of the candle that comes after The Gap so here we have yet another fair value Gap the price went up here created a high came down and tested this Gap multiple multiple times and here I want to pay extra attention to this candle right here because right here we can see a very strong bullish hammer and because we have a bullish signal we can actually use this right here as an entry we enter at the candle close of that Hammer as for your stop- loss in this case it makes sense to place it just below this pattern because this stop loss is both below the fa value Gap and it's also below the pattern for your Target you can either place it just below the break of structure here or just above it's also possible to use a fixed risk to reward ratio so you can measure this length right here and using a 2 to one your target would probably be around here and what is very interesting to notice here is that the price actually came up and we went down to actually test this fair value Gap once again and from this point the price shot up and created a new break of structure all right so now let's take a look at the liquidity grab this right here is one of my favorite smart money Concepts because they can very often be great entry signals and it's also pretty easy to you know set your stop- loss and Target level from these liquidity grabs but first of all we need to know about something called liquidity zones and liquidity zones are basically areas with a high concentration of orders so these are areas on the chart where we for example have many stop-loss orders or buy orders that are waiting to get triggered and the theory here is that large players AKA smart money often tries to push the price down or up to trigger these orders and when these orders get triggered this will create liquidity for the smart money so for example let's say that we have a very clear support level right here and because we have a support level that is very clearly visible on the chart chart it's likely that we have many stop-loss orders placed just below this support so smart money might push the price down in order to trigger these orders this in turn will create more selling pressure and smart money then uses the selling pressure to buy a lot at a cheap price so this will in turn push the price up and because the price broke the support right here this will often lead to many Traders actually entering a short position position betting that the market will continue to fall and when you enter a short position you place your stop loss above the current price so now we might have many uh stop-loss orders at this point so you can see that when smart money pushes the price above once again this can in turn trigger the newly created um stop loss from the short Traders and create even more buying pressure so as I just explained the market often reverses after the liquidity grab due to the temporary imbalance that is created and we as Traders can use this reversals as potential entry points so right here we have a classic example of a liquidity grab first of all you can see that this Market is in an uptrend we're printing higher highs right here and higher lows but at this point we can actually see that we had a liquidity grab and now you might of course wonder when the price Falls below this point like we did right here earlier in the video we have learned that this is actually a change of character so why is this not a change of character well for this different Traders will have different methods but what what I usually look out for and what I want to see when I see a liquidity grab is that I want to see a Candlestick that Wicks below the support or resistance and then very quickly pushes above so we might for example have a hammer candle that looks like this this right here is a clear indication of a liquidity grab and this is also the reason why in order to see a true change of character what I'm looking out for here is that I want the candle to close below this low point right here so in order to have a real change of character I usually want to see price action that confirms the change of character so it's very important important to actually analyze the price action at these critical Market structure points and by the way guys if you want to learn more about price action I actually have a full video course on the topic so I will make sure to link that video up in the corner and I highly recommend all of you guys to watch that video after you have seen this one all right so now let's take a look at how to trade liquidity grabs and the first thing we can notice about this chart is that we are in an uptrend because the price continues to break structure while at the same time maintaining the lows right here we printed a new high but here on this green candle we can see something very interesting we can see that the price quickly pushed above the resistance level we need to create yet another break of structure but since the price pushed above and then immediately saw a sharp movement to the downside this is actually an indication that we are seeing a liquidity grab so here it's POS that smart money triggered multiple stop losses that is placed just above this High then they might have used this liquidity to buy a large position and as a result the traders that bought this breakout that is likely to place their stop-loss orders below this point might in turn get triggered and lead to even more downward pressure and one thing I really like about liquidity grabs is that it's it's pretty easy to manage risk and to enter a around these liquidity grabs so one of the most common way to enter is to Simply enter at the candle close of the candle that caused the liquidity grab the stop loss is usually placed above the highest point of this candle because if the price pushes above we have yet another break of structure and this indicates a continuation of the uptrend as for your Target level a common method is to use a simple risk to reward so you can measure this length right here and a risk to reward ratio of two would set your Target around there all right guys so this course is coming to an end very soon but real quick before we wrap up here I want to thank you all so much for watching and if you guys found any kind of help or value from this course it would be super super awesome and helpful if you can show that by dropping a like by liking the video you help out with the YouTube algorithm to push this video out to even more people so I really do appreciate every single like and also guys of course if you have any questions about this video or if you have any suggestions on video topics you want to see in the future please don't hesitate to leave a comment down below I will try my very very best to answer every single comment and last but definitely not least when you are ready to continue your trading journey I highly highly recommend to check out this playlist right here this playlist contains all of the educational trading courses I have made so far and more is coming very soon so yeah guys I hope you all will have an amazing day and I hope to see you guys in another video very very soon take care chiao Chow

in this free video course you will learn everything you need to know about smart money concepts for trading stocks crypto Forex or any other Financial Market by the end of this course you will not only be able to trade smart money Concepts correctly but you will also learn about multiple smart money concept techniques that most Traders don&#39;t know about all right so let&#39;s begin here by talking about what you can expect to learn from this course and the very first thing we need to cover is of course what is Smart money concept or in other words what is SMC in order to trade smart money Concepts it&#39;s of course very important to have a solid understanding of what it is in the first place next we are going to dive into some very important Market structure Concepts we will learn about something called change of character or for short CH o and we will also learn about something called Break of structure or for short B these two concepts are very important and they are fundamental to understand if you want to trade smart money Concept in chapter three we will cover yet another important concept and that is strong and weak price levels strong and weak price levels are very important when it comes to finding good entries and as a result make better trades next up we&#39;re going to talk about something called Supply and demand we will both take a look at the basics of supply and demand but even more importantly we will take a look at how you can use supply and demand together with Market structure Concepts such as strong and weak price levels change of character and break of structure because it&#39;s actually when you combine supply and demand with these other Concepts you can really start to improve your trading in chapter 5 it&#39;s time to cover fa value gaps or for short f VG this right here is a very important smart money concept to understand and I will go over everything you need to know in a simple step-by-step manner last but definitely not least we are going to talk about liquidity grabs this right here is one of my personal favorite Concepts and when you master it you will both be able to take better trades but you will also be able to avoid many of the false signals but all right guys so let&#39;s begin here by super quickly taking a look at what is smart money Concepts or SMC and in very simple terms smart money concepts are trading strategies used by the smart money and what do we mean when we talk about smart money well smart money are basically knowledgeable Financial professionals like for example Banks such as Goldman Sachs or JP Morgan hedge funds like for example Bridgewater and that is why I have this image right here many of you guys are probably familiar with him this right here is Ray diio which is the founder of Bridgewater and I actually think that Bridgewater is the largest hedge fund in the world so Dalo and his hedge fund is a great example of smart money but we also have other institutional investors such as mutual funds or Pension funds that are definitely considered smart money but now then what are some important characteristics when it comes to Smart money well first of all the most important characteristic here is that smart money have large amounts of capital and because they have lots of money they are capable of moving the market so if we as smaller investors can understand how smart money moves Market we can trade in the same direction as a smart money and as a result make more profit another important characteristic here is that smart money of often have access to more advanced Market data they often have more sophisticated analysis tools compared to retail Traders like you and me smart money often also have you know large teams of Highly skilled analysts and Traders and that is of course yet another big advantage of the smart money all right so now when we have a basic understanding of what smart money is and also what smart money concept is we are are now ready to start learning about smart money Concepts and the very first thing we need to learn about here is something called Market structure so let&#39;s begin here by taking a look at some Market structure Basics Market structure is basically the analysis of how the market has moved in the past to predict how the market will move in the future and the first thing we have to learn here is that the market can be in three states the First Market state is the uptrend and we know that the market is in an uptrend if the market consistently breaks higher highs while at the same time prints higher lows so if you take a look right here we can see an example of an uptrend you can see that the market here is both printing consecutive higher highs while at the same time printing consecutive higher lows as long as the market keeps on printing higher highs and higher lows we are in an uptrend and very soon we will dive deeper into analyzing uptrends but so far this is all you need to know the next state the market can be in is a downtrend and this is basically the opposite of the uptrend so in order to have a downtrend the market needs to consistently break to lower lows while at the same time staying above the highs so right here we have an example of a downtrend as you can see this Market prints consecutive lower highs while at the same same time printing consecutive lower lows and the final State a market can be in is a sideways Market or in other words a trading range and a trading range is very simple that is a market that moves sideways without a clear uptrend or downtrend so right here we have an example of a sideways Market you can see in this case we have the highs here at the same level and the lows at the same level but the sideways Market can also be a market looks something like this for example right here you can see that the market is printing higher Highs but it&#39;s also printing a lower low and then it prints a lower highs and lows here at around the same level so a trading range doesn&#39;t have to be perfectly straight with highs and lows at the same level it can basically be any kind of Market that are not in a clear uptrend or downtrend and now let&#39;s take a look at the uptrend downtrend and sideway Market a bit more in detail because this image I just recently showed you guys is actually a bit flawed and let&#39;s begin here by analyzing the uptrend remember from earlier that in order to have an uptrend we need to print higher highs and higher lows and what we actually can see on this image is that we are printing a higher high right here a higher high right here but right here this is yet another higher high so the color of that Circle should actually be a green one because we are still in an uptrend at this point we can also see that we have a low we have a higher low but this right here is yet another higher low so the market at this point in time is still in an uptrend but now let&#39;s focus on this point right here this is a very important point because this is the point where the market fails to break to a higher high so at this point we can consider that the market has entered a trading range but one very important thing to consider about trading ranges is that trading ranges are actually very important to exist within uptrends so it&#39;s very possible that we see an uptrend right here then for a short while we see a a trading range we can call this a consolidation or a pullback this right here is actually often just a pause in the uptrend and many times after the trading range the trend will continue in the same direction now last but not least let&#39;s consider when this Market has actually entered a downtrend well the first important signal actually comes when the price breaks below this point right here because when the price breaks below this point we will for sure print another lower low and this break right here is very important and we will talk about that later on in this course but for now we just need to realize that when the price breaks below this point we will for certain print a lower low but remember here that in order to have a downtrend we need to have both lower highs and lower lows so it&#39;s not until we print this high right here that we actually have two lower highs and two lower lows so it&#39;s basically at this point the real sort of trend is confirmed all right so now when you know the basics about uptrends downtrends and sideways markets now we are finally ready to take a look at change of character or CA o and break of structure or B and let&#39;s begin here by taking a look at break of structure a break of structure occurs when the price breaks a higher high within an uptrend or a lower low within a downtrend so for example right here you can see that this Market is in an uptrend and when the price pushes above this point right here so at this point right here the price breaks to a new high within an uptrend and therefore this is a break of structure or for short BOS when we&#39;re talking about the break of structures in uptrend we can call this a bullish break of structure and the same thing actually happens right here you can see at this point the price breaks to yet another higher high so here we have yet another break of structure but now as you can see right here this High actually never got broken so we saw no more breaks of structure in this uptrend instead let&#39;s focus on this low right here when the price pushes below the most recent low in an uptrend we call this a change of character or for short CH o and as we can hear on the name a change of character basically means that the character of The Price which is currently in an uptrend is changing so a change of character is a first warning sign that the trend might be coming to an end and now as an exercise I want you guys to try to find the first bearish break of structure on your own so if you want to feel free to pause the video right now and try to find the first bearish break of structure did you find it well remember what a break of structure is it&#39;s when we break highs in an uptrend or lows in a downtrend and where in this downtrend did we break the first low well we can see that the first low of the downtrend is right here remember that when we broke this low this was actually a low in an uptrend but the first break of a low in a downtrend was from this low and it confirmed right here so here we have the first bearish break of structure the next bearish break of structure can be found right here you can see at this point we broke to yet another low so this right here is yet another bearish break of structure but now then what about this whole part part right here here it gets a little bit complicated but what we first can notice here is that when the price breaks this point right here we actually have a change of character right because in order to have a downtrend we need to print lower highs and lower lows and when we break this point right here we are no longer printing lower Highs but the next move right here is more complicated because you can see at this point the price actually breaks to yet another low some Traders will consider this yet another immediate change of character and when we see two change of characters happening sort of immediately after each other you can see here we have both higher highs and lower lows at this point we no longer consider the trend to be either in an uptrend or a downtrend anymore and remember what that market state is called it&#39;s called a sideways Market or a trading range so now let&#39;s dive a little bit deeper and take a look at something called internal and external break of structure and change of character and here on the screen we have two different time frames the black line right here is the high time frame so it could for example be a daily chart or in other words that every Candlestick represents one day while the red line right here is the low time frame so this might for example be a 1 hour chart and what&#39;s important to understand here is that change of character and break of structures are fractile meaning that they appear on all time frames and the break of structures and change of characters that happens on the high time frame we usually call external break of structures so for example right here you can see that we have a break of structure because the price breaks to a higher high and since this happens on the high time frame we can write e for external and then break of structure right here we have yet another external break of structure right and for example right here we&#39;re seeing a change of character because the uptrend can no longer maintain higher lows so we write an e for external and then change of character like this but now and this is very important we also of course have break of structures and change of characters on the lower time frame as well you can for example see that right here the low time frame breaks to a new high so this is an internal so I break of structure here we have another internal break of structure and here we have another one but what happens here well at this point we can see that the low time frame can no longer maintain the uptrend so here we have an internal change of character and and this internal change of character is the beginning of a short downtrend on the lower time frame so one thing that you quickly will notice here is that upwards movements on the higher time frame will usually be large uptrends on the lower time frame and moves that goes against the direction of the trend like right here will usually also be small Trends on the lower time frame and this process can go on and on and on so let&#39;s for example imagine that we zoom in on this red move right here if we zoom in even further we will notice that this will actually look like a large trend on the even lower time frames and we as Traders can use multiple time frames at the same time to get better entries and exits in the market and as a result take better trades all right so now when we have a deep understanding of change of character and break of structure we are ready to take a look at yet another important Market structure concept and that is strong and weak levels and this concept is something we will use throughout the whole course so make sure to really pay attention now the basics of this concept is very simple a strong level is a level that comes from a move that breaks structure and a weak level comes from a move that fails to break structure so in order to find our strong and weak levels we simply need to analyze the break of structure and change of character and by this point you already know how to do this so for example right here we have a break of structure right and a strong level is a level that comes from the move that breaks structure so what we need to look out for here is the beginning of the move that broke structure and as we can see right here this was the beginning of the move that broke structure so this right here is a strong level but what about this move right here in order for this move to be strong we actually need to break the previous low that is all the way down here so this right here is a move that fails to break structure or in other words this is a weak level and some Traders will also call this right here a strong low because it comes from a low and they will call this right here a weak High because this right here is a high and for the same reason this right here is yet another strong level or strong low because this move broke the previous high and here we have another weak level because in order for this level to be strong this move needs to push below this low right here but what about this move then well this right here is actually a strong level or a strong high and why is this a strong High well this move breaks the previous low remember this right here is a change of character and I see both levels that break structures and levels that Break characters are strong levels for the same reason this right here is a strong High because it breaks the low and this right here is a weak low or weak level because it fails to break above this point and now you might of course wonder why do we learn about strong and weak levels well that will be very clear in the next chapter where we talk about Supply and demand all right so now the time has come to take a look at supply and demand and this right here is a very important smart money concept that we actually can use together with what we learned just recently to create a trading strategy but before we take a look at that we need to of course learn the basics about supply and demand so in simple terms supply and demand is the force behind all price movements in order for the price to go up we need to have more demand than Supply and in order for the price to go down we need to have more Supply than demand in smart money Concepts trading we identify areas on the chart where we see imbalances between the supply and demand and these areas of imbalance are known as supply and demand zones and why do we need to be able to identify Supply and Dem mon zones well we can actually use these Supply and Dem mon zones to defined entry levels in the market so next we will take a look at a step-by-step formula on how to identify supply and demand zones and let&#39;s begin here by taking a look at how to identify smart money Concepts demand zones and the formula for this is pretty simple step number one here is that we need to find a strong momentum candle and what is a momentum candle well in simple terms a momentum candle is a Candlestick with a strong and sharp price movement so as an example this candle right here is a momentum candle and to make this simple what I&#39;m looking out for when I&#39;m looking out for momentum candles is that I want this candle to be at least twice the size compared to the real bodies of the previous candles but preferably I want this candle to be maybe three times or even four times as large as the previous candles so what you can do here is that you can look at the the previous three candles or so and you compare the length of the momentum candle to the length of the previous candles right here and you want to look out for a real body that is at least twice the size of these candles and when you have found your momentum candle step two here is to look at the candle before the momentum candle so in this case we want to look at this candle right here step number three is is to draw a Zone around the previous candle and when it comes to drawing supply and demand zones uh Traders will always have different strategies and different methods on exactly how to draw these zones but a straightforward and simple strategy here is to simply draw a Zone around the previous candle so what we want to do here is that we want to draw a Zone from the highest point of the previous candle to the low lest point of the previous candle so the length between these two points will be our demand and this demand zone right here is a zone of imbalance where demand is greater than Supply because in order to create such a large candle like right here we need to see far more demand than Supply and the theory here goes that when the price eventually comes down and goes back to the demand area since this have been a zone of imbalance in the past we expect demand to come in at this area in the future as well and push the price up now let&#39;s also quickly take a look at how to identify smart money concept Supply zones and to do this once again the first step is to find a strong momentum candle and as you guys can see right here we have an example of a strong momentum candle why is this a momentum candle well what we do is that we basically take a look look at the previous candles and we can clearly see here that the real body of this candle is more much more than twice the size of the previous candles in this case it&#39;s maybe you know five times as large and this is a good sign of a momentum candle The Next Step here is to look at the candle before it and in this case we actually have a special candle this right here is what we call a doe candle and by the way guys if you want to learn more about candlesticks and C Candlestick patterns I actually have a full Candlestick pattern trading course here on the channel so if you guys have the time I highly recommend to check that video out I will make sure to leave a link up in the corner if you guys want to continue to improve your trading after this video step number three in this process is once again to draw a zwn around the previous candle and to keep it simple what we want to do here is that we want to contain the whole previous candle so we draw the Zone from the highest point of that candle down to the low lowest point of that candle so this whole part right here will be our supply Zone and once again the Zone here is Created from an imbalance between supply and demand because in order to push the price this sharply and this fast to the downside we need to see a strong imbalance between buyers and sellers all right so now let&#39;s take a look at a real life example of a demand zone so first of all right here we can notice a strong momentum candle we can see that this candle is clearly more than twice the size compared to the previous ones so what we do here is that we draw a demand Zone containing the preceding candle so we want to contain the Wicks and the real body of that previous candle and you can see that after this the price went up it pretty much traded sideways here for a while but when it comes to trading it&#39;s really important to be patient here because eventually you can see that the price sharply went down to this demand area we quickly touch the demand and as the theory goes because we had demand at this area in the past it&#39;s likely that we see demand in the future and after we touch the demand area we can see that we saw lots of demand coming in and the price completely shot up later on in this video we will take a look at exactly how you can combine this strategy with the market structure knowledge we learned about earlier but for now this is basically what we need to know um I also want to quickly show you guys an example of supply and remember the formula here the first step is to look for a strong momentum candle and right here we can indeed see a strong momentum candle what we also can notice here is that this candle is clearly more than twice the size compared to the real body of the previous candles in this case it&#39;s maybe almost like 10 times as large so here we have a very strong momentum candle in indicating a strong imbalance between supply and demand The Next Step here is to take a look at the candle that happened before the momentum candle then we drag a Zone from the high to the low of this candle and we Drag The Zone here to the left so here we have our supply area and once again we can see that the price went down here we went up almost touched touched the Supply right here as you can see and on this point we actually saw a sharp moment towards the downside again but once again the Bulls managed to take control and we actually quickly Wicked above this area and this right here was almost like a liquidity grab and we will talk more about liquidity grabs later on in this video because they can be super useful both to avoid fall signals but you can also use liquidity grabs to actually enter the market but as you guys can see here once the price let me actually remove here so you can see uh as you guys can see here once the price reached the supply we eventually saw lots of Supply going in and the market completely collapsed all right so now when we know about supply and demand it&#39;s time to take a look at how we can find the best supply and demand zones and to do this we&#39;re actually going to combine two concepts we are going to combine what we learned earlier in the video about Market structure with supply and demand so to repeat Market structure rure explains how and why the market moves while supply and demand zones show imbalances in the market so what we want to do here is that we want to combine Market structure with supply and demand to identify higher quality zones and now let&#39;s take a look at how to do that in a step-by-step Manner and let&#39;s begin here by taking a look at the high quality demand zones to find these zones what we are looking out for is strong lows and remember from earlier in the video the strong lows here are created from the move that break structure so for example right here we have a break of structure which makes this low right here a strong low so let&#39;s say we have a candle that looks something like this here and then we see a strong green momentum candle like this when we see this type of move happening at a strong low we can draw out a high quality demand Zone and remember we draw the Zone from the highest point of the previous candle down to the lowest point we want to include the Wicks here and then we drag out the zone to the right so this right here is our demand and what we&#39;re looking out for is that we want the price to come back down to this demand area and because we saw demand coming in in the past or in other words we saw an imbalance between demand and Supply in the past we expect demand to come in here in the future as as well and to confirm the entry signal right here what I&#39;m usually looking out for is some kind of Candlestick pattern or another price action signal to confirm the entry one important thing to notice here is that let&#39;s say that we found another demand area from this strong low right here so this right here is another strong low because it caused a break of structure one important thing to notice here is that the price will definitely not always go down all the way to the demand area many times the price will reverse before the demand area appears and later on in this course when we talk about fair value gaps we will talk about how we can find good entry points even if the price doesn&#39;t hit our supply or demand but now then how do we find our high quality Supply zones well the principle here is pretty similar but the opposite so what we are looking out for now is actually strong highs and remember a strong high is a move that breaks structure so for example this move right here is not a strong High why is this not a strong High well because the move from this point failed to break structure remember in order to break structure the price needs to push below this point right here once again this right here is another weak High because this move failed to break this low right here but if you take a look at the third high right here we can see that this move actually managed to break the previous low causing a change of character and because this is a strong High we can look out for a high quality Supply Zone at that area so let&#39;s say we maybe had had a candle that looked something like this at this point and then we saw lots of Supply coming in so we have a red candle strong red candle right here indicating Supply and remember how to draw our supply Zone we include the previous candle we draw out the supply here to the right and our goal here is to basically wait for the price to potentially come up to the supply area and then reverse to the downside once again to justify a short position I usually look out for some kind of signal coming in at this Supply area it can be a bearish Candlestick pattern or simply a strong bearish momentum candle but we want to see some kind of indication that we actually see Supply coming in again at that area so now let&#39;s take a look at a real life example of high quality demand and as we can see on this chart we had our first break of structure right here so it&#39;s possible that we can find some demand at this low but in this particular case you can see that we had one Candlestick right here this was actually a bullish Hammer which on its own is a bullish reversal signal so this right here was actually a potential trade however we can see that the next candle here was a green candle but it wasn&#39;t really showing momentum the third candle after this low was a strong momentum candle so one could argue here that we could draw out a demand area from this candle right here but the reason I did not choose to draw out this demand area even though we actually saw a bounce a beautiful bounce coming in at this level the reason I did not draw out this demand area is that I prefer the demand to come in very near the low uh so let&#39;s take a look at the second example you can see that we had another break break of structure right here beautiful break we had a strong breakout candle above the break of structure which is a good sign we also had a sort of tiny liquidity grab here before the breakout appeared uh but what I want to focus on is this area right here so you can see that on this low we saw a very strong momentum candle this is an indication that we are seeing demand coming in so as you guys know by now what I did was that I took the previous candle and I draw out a demand area and also remember here that before we can draw out this demand area we need to see the break of structure because if we don&#39;t see a break of structure we don&#39;t know if this right here is a strong low but after this break of structure the price went up and printed a new high it came down here went up again actually tested this high and then eventually we fell down all the way here to the demand and this took quite a few candles and this is an important part when it comes to trading supply and demand is that we need to be patient and wait for the price to come back down to the demand area before we take a potential entry it&#39;s much better to be patient rather than to force trades forcing trades is never a good idea and it will often lead to losses but what we can see here is that when the price came down and tested the demand we actually saw a bullish signal because the price right here printed a bullish hammer and from this point the price just went straight up here and we even caused another break of structure which means that this uptrend continues but now you might of course wonder you know where do we enter where do we place our stop- loss and Target levels and here there are quite a few different methods but let&#39;s take a look at a very simple way of doing this so the entry point is pretty straightforward you can enter at the candle close of the Candlestick pattern or candle that confirms the demand Zone as for your stop loss one way to set it is to set it below the lowest point of the actual pattern or another common method and this this is very common is to set the stop loss just below the actual demand area as for your Target level many Traders will actually take a Target above the break of structure because when we are in an uptrend the bias is is that the uptrend will continue or in other words causing yet another break of structure but what I like to do here is to actually take the target just below the high and why do I do this well the reason is that the previous high and especially in this case when we have a sort of a two clear touches on this resistance area it&#39;s very possible that the price can actually reverse once again when we come up when we come up to this resistance so especially in this case it can make sense to take your target used before the resistance so even if the price goes up and test the resistance and then Falls we still lock in profit all right guys so now it&#39;s finally time to take a look at fa value gaps or for short fvg and what is a far value Gap well far value gaps or fvgsqsgyxtm so this is pretty similar to the supply and demand remember the supply and demand area is an area where we have an imbalance between supply and demand and in simple terms this is actually also true for fa value gaps but how we identify the fair value Gap is very different from supply and demand um so make sure to really pay attention and Fa value gaps works because large movements or in other words momentum candles creates temporary Market market inefficiencies and during these gaps either buyers or sellers dominate the market so we have a bullish fair value Gap and we also have a bearish fair value Gap and we will take a look at how to identify both of these types of course and how the Traders use fire value gaps well we use them as potential entry points expecting the market to fill these gaps so now let&#39;s take a look at how to identify fair value gaps and first of all we have two main types of fair value gaps we have the bullish fair value Gap and we also have the barish fair value Gap we also have lots of different variations of bullish and bearish fair value gaps but the core principle for fair value gaps are the same and here I feel like many Traders sort of over complicate fair value gaps and in many cases this is a bit unnecessary because the core and the basics of fair value gaps is actually pretty simple so let&#39;s start here by taking a look at how we can identify the bullish fair value Gap and the first thing we&#39;re looking out for when it comes to fa value gaps is that we want to see a strong momentum candle and as a rule of thumb we usually want this candle to be more than twice as large as the previous candles or you know even larger like three times or maybe even five five times as large in this case you can see that this candle is almost five times as large as the previous one the next step is to identify the candle before the momentum candle and the candle after the momentum candle then we draw a line here from the highest point of the preceding candle and we draw a line here from the lowest point of the candle that comes after and the distance between this point and this point is the fire value Gap and if the Wicks of this candles was longer let&#39;s say that this candle had a wick that look something like this and maybe this other candle had a wick that looks something like this then our fair value Gap would be between this point and this point right so this right here this distance would be our fair value Gap and the same thing but the opposite is true for the bearish fair value Gap we want to identify the momentum candle we take a look at the candle before and after the momentum candle and let&#39;s say that for example maybe this candle was all the way down here then our fair value Gap would be from this point to this point so now then let&#39;s take a look at how we can use fair value gaps to find entry points in the market and as you can see right here we have an uptrend and I already have multiple demand zones here on the chart and the reason I have these demand zones is basically to demonstrate how fair value gaps are different from demand because they can appear at other spots in the market so remember here that in order to find a good demand or Supply Zone we preferably want the demands to happen here at strong lows but when it comes to fa value gaps we can actually identify them in the middle of a move when it comes to bullish fire value gaps we still preferably want to find the Gap here in a move that breaks structure so for example this move right here will break structure right here so this is a break of structure so preferably we want to find the fair value Gap during this move but the good thing here is that we can for example identify a fair value Gap maybe right here so this could be a fair value Gap or for short fvg and what we are then looking out for is for the price to go up and come back down to test this fair value Gap then we want to look out for some kind of bullish signal coming in at the fa value Gap and this right here can be a good entry point so now let&#39;s take a look at an example of how we can use fair value gaps and as you can see already at this point right here we have a pretty clear fair value Gap the reason for this is that we have a strong momentum candle right here and we also have a gap between the lowest point of this candle and the highest point of this candle so we can draw out our fair value Gap Zone just like this and in this case you can see that the price went up here we came down tested the fair value Gap area and then we pushed higher however as for entry points I think that this one was kind of tricky to enter one could argue here that you could enter on the candle close of this red candle because we saw a bounce from the fa value Gap but in this case we didn&#39;t really see a clear signal on the fair value Gap so this is actually an example of a trade you might want to avoid this was a bit 50/50 right here but as we can see the price eventually pushed above the break of structure here so now we can once again look for good far far so now we can once again look for good fa value gaps and right here you can see that we have a strong bullish candle we also have some space from the highest point of this candle and the lowest point of the candle that comes after The Gap so here we have yet another fair value Gap the price went up here created a high came down and tested this Gap multiple multiple times and here I want to pay extra attention to this candle right here because right here we can see a very strong bullish hammer and because we have a bullish signal we can actually use this right here as an entry we enter at the candle close of that Hammer as for your stop- loss in this case it makes sense to place it just below this pattern because this stop loss is both below the fa value Gap and it&#39;s also below the pattern for your Target you can either place it just below the break of structure here or just above it&#39;s also possible to use a fixed risk to reward ratio so you can measure this length right here and using a 2 to one your target would probably be around here and what is very interesting to notice here is that the price actually came up and we went down to actually test this fair value Gap once again and from this point the price shot up and created a new break of structure all right so now let&#39;s take a look at the liquidity grab this right here is one of my favorite smart money Concepts because they can very often be great entry signals and it&#39;s also pretty easy to you know set your stop- loss and Target level from these liquidity grabs but first of all we need to know about something called liquidity zones and liquidity zones are basically areas with a high concentration of orders so these are areas on the chart where we for example have many stop-loss orders or buy orders that are waiting to get triggered and the theory here is that large players AKA smart money often tries to push the price down or up to trigger these orders and when these orders get triggered this will create liquidity for the smart money so for example let&#39;s say that we have a very clear support level right here and because we have a support level that is very clearly visible on the chart chart it&#39;s likely that we have many stop-loss orders placed just below this support so smart money might push the price down in order to trigger these orders this in turn will create more selling pressure and smart money then uses the selling pressure to buy a lot at a cheap price so this will in turn push the price up and because the price broke the support right here this will often lead to many Traders actually entering a short position position betting that the market will continue to fall and when you enter a short position you place your stop loss above the current price so now we might have many uh stop-loss orders at this point so you can see that when smart money pushes the price above once again this can in turn trigger the newly created um stop loss from the short Traders and create even more buying pressure so as I just explained the market often reverses after the liquidity grab due to the temporary imbalance that is created and we as Traders can use this reversals as potential entry points so right here we have a classic example of a liquidity grab first of all you can see that this Market is in an uptrend we&#39;re printing higher highs right here and higher lows but at this point we can actually see that we had a liquidity grab and now you might of course wonder when the price Falls below this point like we did right here earlier in the video we have learned that this is actually a change of character so why is this not a change of character well for this different Traders will have different methods but what what I usually look out for and what I want to see when I see a liquidity grab is that I want to see a Candlestick that Wicks below the support or resistance and then very quickly pushes above so we might for example have a hammer candle that looks like this this right here is a clear indication of a liquidity grab and this is also the reason why in order to see a true change of character what I&#39;m looking out for here is that I want the candle to close below this low point right here so in order to have a real change of character I usually want to see price action that confirms the change of character so it&#39;s very important important to actually analyze the price action at these critical Market structure points and by the way guys if you want to learn more about price action I actually have a full video course on the topic so I will make sure to link that video up in the corner and I highly recommend all of you guys to watch that video after you have seen this one all right so now let&#39;s take a look at how to trade liquidity grabs and the first thing we can notice about this chart is that we are in an uptrend because the price continues to break structure while at the same time maintaining the lows right here we printed a new high but here on this green candle we can see something very interesting we can see that the price quickly pushed above the resistance level we need to create yet another break of structure but since the price pushed above and then immediately saw a sharp movement to the downside this is actually an indication that we are seeing a liquidity grab so here it&#39;s POS that smart money triggered multiple stop losses that is placed just above this High then they might have used this liquidity to buy a large position and as a result the traders that bought this breakout that is likely to place their stop-loss orders below this point might in turn get triggered and lead to even more downward pressure and one thing I really like about liquidity grabs is that it&#39;s it&#39;s pretty easy to manage risk and to enter a around these liquidity grabs so one of the most common way to enter is to Simply enter at the candle close of the candle that caused the liquidity grab the stop loss is usually placed above the highest point of this candle because if the price pushes above we have yet another break of structure and this indicates a continuation of the uptrend as for your Target level a common method is to use a simple risk to reward so you can measure this length right here and a risk to reward ratio of two would set your Target around there all right guys so this course is coming to an end very soon but real quick before we wrap up here I want to thank you all so much for watching and if you guys found any kind of help or value from this course it would be super super awesome and helpful if you can show that by dropping a like by liking the video you help out with the YouTube algorithm to push this video out to even more people so I really do appreciate every single like and also guys of course if you have any questions about this video or if you have any suggestions on video topics you want to see in the future please don&#39;t hesitate to leave a comment down below I will try my very very best to answer every single comment and last but definitely not least when you are ready to continue your trading journey I highly highly recommend to check out this playlist right here this playlist contains all of the educational trading courses I have made so far and more is coming very soon so yeah guys I hope you all will have an amazing day and I hope to see you guys in another video very very soon take care chiao Chow

Transcript for:Trading with Smart Money Concepts

Transcript for:
Trading with Smart Money Concepts