Content Page:

Investing

Trading

- What to trade
- Smart Money Concepts
 Introduction
 Market Structure
 Order Blocks
 Supply and Demand Zones
 Liquidity
 Fair Value Gaps
 Premium vs Discount
 Multi Timeframe Trading
 Trading Strat
 Candlesticks

Trading:

What to trade:

- Forex Trading
 Trading currency pairs, based on the value at which buyers
and sellers agree upon

Smart Money Concepts:

- Introduction:
 Smart Money refers to the players in the market that trade
immensely large volumes, such as banks, financial
institutions, and governments
 The goal of Smart Money Trading is not to affect and move the
money in a direction, but to follow the steps of the Smart
Money in order to make money. In other words, predict where
big banks and financial institutions enter trades and which
direction they are going in so as to enter trades at optimal,
high-probability levels.
- Market Structure
 Market is either in an uptrend, downtrend, or sideways. When
the market is in an uptrend, it creates higher highs, and higher
lows, instead of straight up, because the market needs fuel to
move in a direction
 Weak vs Strong Highs and Lows
 Break of Structure vs Change of Character:
 A Break of Structure (BOS) occurs when price breaks a
previous swing high or low in the same direction,
signalling strong continuing momentum.
A Change of Character (CHoCH) occurs when price
breaks the last, significant swing point that created the
BOS. This is the first sign of market shift, indicating that
the trend is ending. Usually, a Change of Character
involves aggressive candles (large and long bodied) that
break support or resistance.
 Consolidation: Market moves sideways in a tight, defined
range, signalling indecision and a pause in trend -> Low
volatility and decreased volume. Usually precedes a strong
breakout, signalling either a continuation or reversal
 Do not try to open small pattern trades that go against the
general trend pattern -> Risky and Unrewarding. Always
identify general patterns before going into detail.
- Order Blocks:
 Places where institutional investors (smart money) have
placed large buy / sell orders, often preceding large
aggressive price movements, and these places function as key
support or resistance levels for price to reverse later
 Rules for high-probability order blocks:
1. Consolidating candle must close below / above
previous candle
2. Create an imbalance (e.g. FVG)
3. Break Structure
 Locating Order Blocks: Identify sharp aggressive moves,
identify the consolidating candles or the last opposing candle
before that move, wait for price to return there to enter a
trade in the direction of the move
- Supply and Demand Zones:
 Areas where significant supply (selling) or demand (buying)
exist
 Often at the base of the consolidation (base-rally or base-
drop)
 Broader than order blocks, covering the whole zone of
consolidation
 Often used for identifying general areas for high probability
reversals in higher timeframes
- Liquidity: (If u don’t spot liquidity, u become the liquidity)
 For Smart Money to buy in in bulk, there needs to be a
substantial number of sellers. To do that, Smart Money pushes
price where retail traders position their stop losses in order to
 trigger sells for Smart Money to buy a position, before the
price reverses in the original direction.
 Liquidity Zones: Where resting pools of orders are sitting and
where institutional activity (Smart Money entering the market)
might have occurred
Equal Highs / Lows (Double Top / Bottom)
Swing highs / lows
Support / Resistance
Trendlines
 External vs Internal Liquidity:
External Liquidity refers to major swing points,
representing significant stop-loss clusters. SMC sweeps
these target points to gather liquidity to enter a
position.
Internal Liquidity exists withing a dealing range, often
used to trap traders before continuing the trend. How do
market makers make retail traders enter positions to
trigger their stop losses? INDUCEMENT.
 Inducement: A strategic, fake price movement designed to
make traders enter positions in order for price to reverse and
trigger stop losses, before carrying on in the true direction
Appears as a structural break, only for price to reverse
quickly, trapping retail traders
Appears just before a true supply / demand zone or
order block where professional traders have POI.
- Fair Value Gap: A price imbalance on candlestick charts where the
market moves strongly in one direction, leaving a gap, or void,
where only buying or selling occurred
 FVG Identification: First and third candle’s wicks do not
overlap the second candle’s body
 Trading Strategy: FVGs are often viewed as inefficiencies that
attract the market to revisit the gap. FVGs are also a strong
signal of high buying or selling pressure, hence traders
typically wait for the price to return to the gap to enter a
position in the direction of the FVG
 Types of FVGs:
3rd Candle Consolidation: 3rd candle closes below its
high, signalling that the market does not have any
aggressive intention to go anywhere yet, hence the
market is highly likely to retrack before moving higher
Aggressive 3rd candle: If 3rd candle expands aggressively
higher, it shows strong intention to move higher
 immediately and leave the FVG behind. -> Breakaway
Gap
Rejection 3rd candle: The 3rd candle rejects aggressively
and leaves a large wick behind, chances of the FVG
holding is very low
- Premium vs Discount:
 Premium: Prices above the 50% of a range, considered
expensive for selling
 Discount: Prices below the 50% of a range, considered cheap
for buying
 Wait for price to retrace back to the discount zone to buy, and
premium zone to sell (Fibonacci tool)
- Multi-Timeframe Trading:
 HTF (4H) Overall Market Direction, External Liquidity, Supply
Demand Zones
 MTF (1H) Trends, Order Blocks, External Liquidity, P vs D
 LTF (M15) Confirmation: Internal Liquidity, FVG, Candlesticks,
OB

Basic Candle Knowledge and Types of Candles:

- Developed by Japanese Rice Trader Munehisa Homma in the 18 th

-
- Wicks represent the rejection of the opposite side. E.g. a green
candle with a long upper shadow shows high rejection, showing that
a reversal is likely to happen because of strong selling pressure.
- Candlestick and Chart Patterns:
 Doji (Market indecision, signalling a pause in trend and
balance between buyers and sellers)

 Common Candlestick Patterns


 Common Reversal Chart Patterns:

Triangles