SMC Secrets EXPOSED With Power Of Three

Understanding the Power of Three in Smart Money Concepts

Introduction to the Power of Three

• The video introduces the "Power of Three," a trading setup within Smart Money Concepts, focusing on its identification and application.

• Viewers are encouraged to like and subscribe for more content related to trading strategies.

Phases of the Power of Three

Accumulation Phase

• This phase involves price consolidation without a clear trend, forming equal highs and lows that gather stop losses and liquidity.

Manipulation Phase

• Characterized by a failed breakout or "fake out," where price breaks below support but does not sustain this movement.

• A fake out occurs when traders close long positions or enter shorts, leading to a reversal if the price returns to consolidation.

Distribution Phase

• After accumulating enough liquidity through manipulation, smart money typically triggers a sharp move in the opposite direction during this phase.

Trading Strategy Using the Power of Three

Entry Points

• Traders should enter after confirming manipulation; this is indicated by price returning inside the range post-fake out.

• Stop loss placement should be above swing highs with targets set at significant levels ahead.

Continuation Trades

• If initial movements are missed, wait for new market structures and pullbacks for better entry points with favorable risk-to-reward ratios.

Daily Candlestick Analysis

• The daily candlestick pattern illustrates opening high, moving low, then closing high—aiming to capture significant intraday moves using the power of three.

Real Trading Examples

Application on Gold Chart

• The example shows gold's 30-minute chart demonstrating consolidation with liquidity building above/below boundaries.

Short Position Example

• Following confirmation of manipulation (price returning inside range), traders can open short positions targeting lower prices while managing risk effectively.

Importance of Combining Strategies

• The effectiveness of the power of three increases when combined with other smart money concepts, such as higher time frame supply zones for additional confirmation.

Understanding Market Dynamics and Trading Strategies

The Importance of Trend Alignment

• A key level can reject price movements; trading in line with the overall trend increases confidence, especially during downtrends on higher time frames.

• Analyzing the Pound Yen 4-hour chart reveals a long-term downtrend that recently failed to create new lows, indicating a loss of bearish momentum.

• A break above two key supply levels suggests demand is gaining control, hinting at a potential counter-trend formation.

Analyzing Lower Time Frames

• On the 30-minute chart, price forms a consolidation range with liquidity resting above and below this range, indicating possible stop-loss hunts.

• A breakout below the range followed by rejection at resistance shows sellers' attempts to regain control; failure indicates buyers are dominant.

• Identifying manipulation phases allows for setting long entries based on confirmed bullish movement after initial opportunities are missed.

Evaluating Trading Strategies Across Assets

• Testing trading strategies across various assets (currency pairs, stocks, cryptocurrencies) is crucial for determining effectiveness due to differing market behaviors.

• Performance evaluation should consider volatility and liquidity variations across different trading sessions and time frames.

Session Influence on Price Movement

• Different trading sessions affect market activity; for instance, the Asian session typically sees slower price movements due to limited activity.

• The London session often triggers significant price movements as it engages liquidity above previous ranges, demonstrating manipulation dynamics.

Phases of Accumulation and Manipulation

• Understanding the sequence of consolidation during Asian sessions followed by manipulation in London helps predict future price movements effectively.

• Identifying equal highs and lows can assist in recognizing consolidation areas when direct observation proves challenging.

Liquidity Gathering for Continuation Movements

• For bullish trends, identifying equal lows indicates gathered liquidity; subsequent returns inside ranges confirm manipulative breakouts before upward movement resumes.

• Successful continuation requires sufficient liquidity from both buyers and sellers; manipulation occurs until enough liquidity is accumulated for desired price movement.

Key Considerations in Live Trading

• After confirming manipulation phases, traders should look for pullbacks to enter trades while being cautious of significant levels that could reverse prices.

• Real money trading involves emotional factors not present in simulations; adhering strictly to a well-defined trading plan is essential for success.