3 Best Smart Money Trading Strategy (Advanced)

Smart Money Concepts and Trading Strategies

This episode of Smart Risk focuses on advanced tutorial about smart money concepts and trading strategies. The concepts of demand and supply, market structure, liquidity, and order blocks are explained in detail.

Demand and Supply Zones

• Demand or supply zones are areas where price rapidly pushes away, creating inefficiency and a break of structure or change of character.

• Factors to consider when identifying these zones include inefficiency, break of structure/change of character, and creation of liquidity.

• Inefficiency occurs when there are gaps between candles, indicating a higher likelihood for price to return to the area.

• Break of structure refers to price breaking a level in the same trend direction, signaling trend continuation.

• Change of character happens when price breaks a level in the opposite direction, suggesting a possible trend change.

• Liquidity is important for smart money traders as they need sellers (in an uptrend) or buyers (in a downtrend) to place their positions.

• Liquidity zones provide further confirmation for executing trades.

Order Blocks

• Order blocks are optimized supply and demand zones that represent the last recent candle creating inefficiency.

• Valid order blocks must have inefficiency, lead to a break of structure or change of character, and be unmitigated (not tested by price yet).

• Wicks can also be considered as order blocks if they meet certain criteria.

Market Structure

• Understanding who is in control (demand or supply) is crucial for trading decisions.

• Analyzing the market structure helps determine which side is dominant.

• Price movement from unmitigated supply/demand zones indicates control by that side.

• Risk entries can be used when there is a bullish higher time frame bias or when the structure has been broken but not reached an unmitigated zone.

Trading Plan with Smart Money Strategies

This section covers a complete trading plan with three smart money trading strategies known as sniper entries. It emphasizes the importance of learning advanced trading concepts, strategies, entry reasons, and maintaining discipline.

Sniper Entries

• Sniper entries are one of the best smart money trading strategies.

• These entries require understanding demand and supply zones, market structure, and liquidity.

• The goal is to enter trades at optimal levels with high probability of success.

• Discipline in following the trading plan is crucial for consistent profitability.

Conclusion

The video concludes by summarizing the concepts of smart money trading and emphasizing the importance of understanding demand and supply zones, market structure, liquidity, order blocks, and implementing a disciplined trading plan.

Timestamps have been associated with relevant sections in accordance with the transcript provided.

Trading Plan for Strategies

This section discusses the trading plan for implementing different strategies in Forex trading.

Choosing a Pair and Session

• It is recommended to choose only one currency pair to trade and focus on one session, preferably London or New York.

• Master the chosen pair by backtesting it extensively over a few months on the chart.

Analyzing Market Structure in Higher Time Frames

• Analyze market structure in higher time frames to determine market direction and identify optimal supply and demand zones or order blocks.

• Look for breaks of structure, inefficiencies, and changes in control between supply and demand zones.

• Example: Euro Dollar 4-hour time frame analysis.

Observing Lower Time Frames for Entry Patterns

• Use lower time frames to execute trades based on three entry patterns: supply or demand flip, change of character, and continuation.

• Each pattern has specific criteria for entry.

• Example: Euro Dollar 1-hour time frame analysis.

Entry Pattern: Supply or Demand Flip

This section explains the first entry pattern called supply or demand flip.

• Price creates a new high or low, tests the last demand or supply zone, but fails to continue in that direction.

• Instead of creating a higher high or lower low, price breaks through the last zone with an impulsive move, leaving behind a new supply or demand zone.

• Place limit orders at the retested zone for entry.

Entry Pattern: Change of Character

This section discusses the second entry pattern called change of character.

• Change of character pattern forms after mitigating a higher time frame supply or demand zone.

• Short-term trend changes its character with inefficiency, leaving behind a perfect supply or demand zone.

• Place orders at this level based on the overall market direction.

Entry Pattern: Continuation

This section explains the third entry pattern called continuation.

• Continuation pattern is traded when there is a clear trending market.

• Valid order blocks in both higher and lower time frames provide opportunities for trades.

• Manage risk effectively as there can be multiple entries while trading this pattern.

The transcript was provided in English, so the summary and study notes are also written in English.

New Section

This section provides an overview of a true multi-time frame analysis and discusses the concepts of order blocks, liquidity zones, and trend changes.

Understanding Multi-Time Frame Analysis

• A true multi-time frame analysis involves analyzing different time frames to gain a comprehensive understanding of the market.

• Starting with the four-hour time frame, we can observe that price broke the last demand zone to the downside, creating an inefficiency. This candle becomes our order block and a potential short opportunity.

• Zooming in to the one-hour time frame, we see an uptrend. Reversal signals are needed before placing any trades. Additionally, equal highs indicate a liquidity zone for potential sellers.

• Further zooming in to the 15-minute time frame reveals interesting developments after mitigating the four-hour order block. We identify supply and demand flip patterns indicating possible trend changes.

New Section

In this section, we explore the supply and demand flip pattern and discuss how to execute trades based on it.

Executing Trades using Supply and Demand Flip Pattern

• The market breaks through structure with inefficiency, leaving behind an extreme demand zone.

• However, after testing this demand zone, the market fails to make a new higher high, indicating momentum loss.

• Subsequently, the market breaks this demand zone to the downside with momentum, signaling a possible trend change.

• The candle that created this inefficiency becomes our order block supply zone.

• To execute a trade based on this pattern:

• Place a sell order below the order block zone with stop loss above the swing high.

• Target the next level of structure.

• Adjust stop loss and secure profits whenever a new order block is formed.

Conclusion

In conclusion, this transcript provides insights into conducting a true multi-time frame analysis and executing trades based on supply and demand flip patterns. By analyzing different time frames, identifying order blocks and liquidity zones, and monitoring trend changes, traders can make informed trading decisions.