Full SMC Strategy - Step by Step with Trading Plan

Introduction and Strategy Overview

In this section, the speaker introduces themselves and provides an overview of the SMC strategy. They emphasize the simplicity, mechanical nature, and repeatability of the strategy.

Key Points:

• The trading space can be confusing and filled with scattered information, making it difficult to stick to one strategy.

• The SMC strategy is simple, mechanical, and easily repeatable.

• The strategy is 100% free with no strings attached.

• Viewers are encouraged to watch the video till the end and give it their full attention.

• Understanding market structure, order flow, liquidity concepts, order blocks, and imbalances are key components of this strategy.

Five Simple Steps for Executing the Strategy

This section outlines the five steps involved in executing the SMC strategy. Entry models will also be discussed later in the video.

Key Points:

• Step 1: On the four-hour timeframe, gauge the overall bias and locate major points of interest such as major highs/lows or order blocks/imbalances.

• Step 2: When price enters a point of interest, drop down to either the 15-minute or 5-minute timeframe.

• Step 3: Wait patiently for price to purge liquidity within the point of interest.

• Step 4: Wait for price to impulsively break structure and create imbalance.

• Step 5: Enter at the order block responsible for the break of structure.

Model 1 - High Time Frame Reversal Model

This section focuses on Model 1 - a high time frame reversal model. It explains how to identify a clear liquidity grab and change of character as signals for entering trades.

Key Points:

• Look for a clear liquidity grab where price abruptly reverses and breaks market structure.

• The first break in market structure is classified as a change of character.

• After the change of character, price may leave behind an order block or imbalance, which becomes the four-hour point of interest.

• Drop down to a lower time frame (15-minute or 5-minute) to monitor potential entry opportunities.

Example - Euro USD Model 1 Entry

This section provides an example of a Model 1 entry using Euro USD. A trading plan template is also mentioned.

Key Points:

• Identify major swing highs/lows as points of interest.

• Use the four-hour point of interest to enter trades on a lower time frame (15-minute or 5-minute).

• A trading plan template can be used to outline risk management guidelines and the five-step framework.

The summary includes only the available timestamps from the transcript.

Analyzing Price Movement

The speaker discusses the need to analyze price movement and determine if it is a liquidity grab or a breakout structure. This involves checking for a break to the downside on a lower time frame.

Analyzing Price Movement

• The speaker emphasizes the importance of dropping down to a lower time frame to determine if there is a break to the downside, indicating a liquidity grab rather than a breakout structure.

• By checking off step one of their trading plan, which involves gauging overall bias and locating major points of interest on the four-hour time frame, they have identified their point of interest.

• They proceed to step two, which requires analyzing price movement on the 15-minute time frame.

• On the 15-minute time frame, they identify the current structure and pay attention to the higher low that was created after liquidity was tested from the high. Price is still trading to the upside at this point. -

Waiting for Structural Change

The speaker discusses waiting patiently for price movement and structural change before making any decisions.

Waiting for Structural Change

• As price starts moving downwards and purges liquidity in multiple areas, there are signs of structural change. However, they emphasize that it is important to wait until there is clear structural change before proceeding further. -

• A clear change of character occurs when a low is violated to the downside.

Identifying Imbalance and Order Block

The speaker discusses identifying imbalance and order blocks as part of the trading plan.

Identifying Imbalance and Order Block

• After waiting for price to purge liquidity within the point of interest, they check for any imbalance created. They identify an order block responsible for breaking structure and creating imbalance. -

• The extreme zone is determined by the location of the order block, which is at the furthest possible point to the upside.

• The entry criteria are met as there is a break of structure and clear imbalances created by the order block.

• A trade setup can be established with a limit order at the low of the order block, a stop loss just above the order block's high, and a take profit at either a recent low or a lower level for added safety. The risk-reward ratio is calculated to be 6.61.

Trade Execution and Example

The speaker discusses trade execution based on their trading plan and provides an example.

Trade Execution and Example

• The trade would have been triggered in according to their entry criteria, and the take profit level would have been hit successfully. This serves as an example of Entry Model Number One. -

Analyzing EuroGBP

The speaker shifts focus to analyzing the EuroGBP pair and discusses potential changes in direction.

Analyzing EuroGBP

• The speaker identifies a swing low that is currently being tested and labels it as a liquidity grab. They compare the downward momentum to previous bullish momentum, suggesting a potential change in direction. -

The transcript provided does not contain enough information for further sections or chapters.

Analyzing the 15 Minute Time Frame

The speaker discusses the potential higher time frame liquidity grab and the need for a change of character to the upside in order to enter a trading opportunity. They highlight the importance of violating the previous high and identify an order block as a potential entry point.

Potential Higher Time Frame Liquidity Grab

• The speaker identifies a potential higher time frame liquidity grab on the 15-minute time frame.

• They explain that a change of character to the upside is needed for a trading opportunity.

• Violating the previous high is crucial for entering a position.

Change of Character and Order Block

• The speaker observes that there hasn't been a break of the previous high yet, indicating uncertainty.

• They note that there was a push back to the downside, which is not favorable.

• However, they also identify a change of character to the upside, leading them to delete certain lines and label it accordingly.

• An internal liquidity grab is mentioned as well, with price violating a low before pushing back up.

• Imbalance and an order block are identified as potential indicators for entering a position.

Entry Checklist and Parameters

• The speaker goes over their quick entry checklist, ensuring that all criteria are met before setting up parameters.

• They confirm that the order block caused a break of structure, created clear imbalance, and aligns with their trading plan.

• A long position is suggested with specific buy limit order placement, stop loss level, and take profit targets.

Analyzing AUD/USD on Four Hour Time Frame

The speaker examines current price action on AUD/USD on the four-hour time frame. They discuss whether it's a break of structure or liquidity grab and plan to investigate further on lower time frames.

Current Price Action Analysis

• Price movement indicates an upward trend approaching a major high.

• The speaker labels it as a potential liquidity grab but emphasizes the need for confirmation on lower time frames.

Analyzing the 15 Minute Time Frame

The speaker drops down to the 15-minute time frame to investigate further and analyze the structure after the potential liquidity grab.

Structure Analysis and Change of Character

• The current structure is identified with a low and high after the potential liquidity grab.

• A violation of the low is needed for a change of character and validation of their selling bias.

• Price action is played forward to observe how it develops.

Internal Liquidity Grab and Change of Character

• Sideways ranging occurs, followed by an internal liquidity grab.

• Price fails to break higher than the liquidity grab, indicating lack of momentum.

• A push to the downside creates a change of character, prompting deletion of certain lines and labeling accordingly.

Imbalance and Entry System

• Imbalance is observed in multiple areas, confirming previous analysis.

• The order block is used as an entry system based on its alignment with their trading plan.

Parameters for Position Setup

• Specific parameters are suggested for setting up a short position, including buy limit order placement, stop loss level, and take profit targets.

Conclusion

The transcript covers two separate analyses on different time frames. In both cases, the speaker emphasizes the importance of identifying changes in character, confirming breakouts or liquidity grabs, and using order blocks as entry systems. They provide specific parameters for setting up positions based on their analysis.

Bearish Move

The speaker discusses a bearish move and the checklist for entering a trade.

Entry Checklist

• The order block caused a break of structure.

• The order block is in the extreme zone.

• The order block created clear imbalance.

Trade Parameters

• Place a sell limit order at the low of the order block.

• Set the stop loss just above the high of that candle (around 10.5 pips).

• Consider setting the take profit at the high of the order block to account for potential bullish price action continuation.

Unsuccessful Trade Example

The speaker explains an example where a trade did not work out as expected.

• Despite meeting all criteria in the trading plan, this particular trade did not get triggered.

• Price reacted to the imbalance instead of testing the order block.

• As price hit what would have been the take profit level, this trade idea is no longer valid.

• It is important to accept that not every trade will be successful and move on to look for new opportunities.

High Time Frame Continuation Model

The speaker introduces a high time frame continuation model for identifying trades.

1. Look for a break of structure in the direction of the existing trend on higher time frames.

2. Find an order block or imbalance as the point of origin for that move.

3. Highlight that zone as our four-hour point of interest.

4. Switch to lower time frames (15-minute or 5-minute) to locate potential entry opportunities.

5. Wait for liquidity grab and change of character signals before entering a trade using low time frame point of interest.

Point of Interest on Higher Time Frame

The speaker explains that a point of interest on a higher time frame does not need to be perfect.

• A reaction from the point of interest is sufficient.

• In the example of Euro/USD, there was a clear reaction to the highlighted zone, even though it was not a perfect order block.

• This reaction prompts further investigation on lower time frames.

Continuation Trade Example

The speaker provides an example of a continuation trade using Euro/USD on the 15-minute time frame.

• After tapping into the four-hour point of interest, there was a significant push to the upside.

• This push created a change of character signal.

• Look for an order block or imbalance as the low time frame point of interest for entering a trade.

New Section

In this section, the speaker discusses an order block and its significance in trading. They explain how to identify and use order blocks as points of reference for trading decisions.

Order Block and Zones

• An order block is identified as the last bearish candle before a significant push to the upside.

• The speaker labels a four-hour zone and a 15-minute zone on the chart for reference.

• The checklist for trading using order blocks includes waiting for price to purge liquidity within the point of interest.

• Liquidity grab occurs when price violates a low and taps into the order block.

New Section

In this section, the speaker continues discussing the checklist for trading with order blocks. They explain how to wait for price to impulsively break structure and create imbalance.

Impulsive Break of Structure

• Price breaks structure and creates imbalance after purging liquidity within the point of interest.

• The speaker identifies an order block responsible for breaking structure.

• Trade parameters are set with a buy limit order at the high of the order block.

• Stop loss is set larger due to a significant wick, approximately 19 pips.

• Significant imbalances within large bearish candles suggest potential correction.

New Section

In this section, the speaker discusses setting profit targets based on trade parameters. They consider targeting either the order block or recent highs.

Profit Targets

• Two options for profit targets: targetting the order block or recent highs.

• The speaker chooses to play it safe by targeting the low of the order block.

• This allows them to achieve a one-to-five risk-reward ratio.

New Section

In this section, the speaker checks off the entry list and prepares to play price forward to observe the trade's progress.

Entry Checklist

• The order block caused a break of structure.

• The order block is the extreme zone, furthest down in the bullish leg.

• The order block created clear imbalance with a significant push to the upside.

New Section

In this section, the speaker plays price forward to observe how the trade progresses.

Trade Progression

• Within three 15-minute candles, take profit is hit.

• The speaker zooms in on the reaction from the order block, highlighting its precision and power.

• They mention that capitalizing on such opportunities requires a broker or prop firm with a tight spread.

New Section

In this section, the speaker discusses demonstrating another example of a continuation entry using Model 2 on an asset outside of the Forex Market.

Example Outside Forex Market

• The speaker switches to analyzing US 100 on the four-hour timeframe.

• Clear momentum to the downside with bearish order flow is observed.

• An order block breaking market structure stands out as a point of interest.

New Section

In this section, the speaker waits for price to enter the identified zone and drops down to a five-minute timeframe for better perspective.

Price Entry and Liquidity Purge

• Price enters the zone identified as an order block breaking market structure.

• Liquidity purge occurs from a high before trading lower without creating a break of structure to the upside.

• A recent structural low is identified as potential support for entering a range.

New Section

In this section, price progression is observed to determine if there will be an impulsive break of structure and create imbalance.

Price Progression

• A big push to the upside fails to create a new high, suggesting the market is still within a range.

• The speaker decides to delete previous structural development and considers a recent liquidity grab as the point of interest.

New Section

The speaker discusses a change of character in the market and identifies an order block as the point of origin for a bearish move.

Entry Checklist

• The speaker observes a change of character in the market, with a push to the upside followed by a return to the downside.

• An imbalance is created within this move, along with an order block identified as the point of origin for the bearish move.

• The order block caused a break of structure and clear imbalance within a candle.

• The extreme zone within this small bearish leg is classified as the order block and associated imbalance.

• Trade parameters are set, including placing a sell limit order at the low of the order block and setting a stop loss at the high of another candle that represents the bearish leg.

• The overall risk-reward ratio is calculated to be 4.71.

New Section

The speaker emphasizes the importance of stop loss placement and shares an example where their trading idea remained intact despite technical violation of an order block.

Importance of Stop Loss Placement

• The speaker highlights that stop loss placement is crucial for determining points of invalidation in trading ideas.

• They placed their stop loss at a level that would invalidate their trading idea if price surpassed it.

• In this specific example, although technically violated, the overall premise of the trade remained intact.

• This demonstrates how higher time frame continuation strategies can be utilized successfully even when facing technical violations.

New Section

The speaker presents an example on Euro JPY where an order block has been violated but still offers potential trading opportunities based on reaction points.

Higher Time Frame Point of Interest

• Despite an order block being violated to the upside, it can still present valid trading opportunities.

• The higher time frame point of interest does not have to be perfect; it serves as a potential reaction point.

• Major highs, lows, order blocks, and imbalances can all act as points of interest on the higher time frame.

• The speaker assumes that price will continue the higher time frame narrative to the downside and views the violated order block as a retracement back into an unmitigated order block.

• Monitoring lower time frames is essential to confirm or refute this narrative.

New Section

The speaker examines entry opportunities on the 15-minute time frame for going short on Euro JPY.

Entry Opportunities

• Despite the violation of an order block on the higher time frame, there is an immediate push back to the downside.

• This creates an opportunity for short trades on the 15-minute time frame.

• The overall bias is bearish, with significant swings to the downside.

• The speaker emphasizes that being correct on bias is not necessary; they are assuming price will continue in line with the higher time frame narrative.

Timestamps may vary slightly due to differences in transcription.

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