Best Daily Bias Trading Strategy SMC
Summary
TLDRThis video simplifies the concept of the daily bias in smart money trading. By analyzing higher time frames (daily, weekly, 4-hour charts), traders can predict market direction and improve their win rate. The video emphasizes the importance of supply and demand zones, liquidity areas, and fair value gaps in identifying market control and making more informed trading decisions. It explains how to align lower time frame trades with the higher time frame bias for optimal setups. Practical examples using various charts are provided to help traders apply these concepts effectively.
Takeaways
- 📊 The video simplifies the concept of 'daily bias' in smart money trading, focusing on increasing win rates by improving entry setups.
- 🕒 Daily bias refers to predicting market direction on higher time frames (weekly, daily, 4-hour) to gain insights not visible on lower time frames.
- 📉 Higher time frame levels are more crucial for understanding major price movements and can guide stop loss and target placements.
- 📈 Alignment between higher and lower time frames improves trading success, especially when entry setups match the daily bias.
- 💡 Smart money trading involves tracking institutional traders' behaviors, and trading in line with supply and demand zones helps avoid losses.
- 🛑 Identifying which side is in control (supply or demand) is key, using principles of mitigation where price actions define market control.
- 💧 Liquidity is crucial in market movement, as price tends to move toward liquidity zones, such as buy-side or sell-side liquidity.
- 🔎 The concept of 'fair value gap' indicates imbalances between buyers and sellers, often presenting trading opportunities when the market revisits these gaps.
- 📉 Daily bias analysis must be conducted on higher time frames like daily and 4-hour charts before zooming into lower time frames for trade execution.
- 🛠 Tools like backtesting and economic calendars, along with strategies like identifying liquidity zones and fair value gaps, are essential for making informed trades.
Q & A
What is the daily bias in Smart Money Concepts?
-Daily bias refers to the overall prediction of market direction and sentiment for the upcoming day, based on analysis of higher time frames such as weekly, daily, and 4-hour charts.
Why is it important to determine the daily bias before trading?
-Determining the daily bias helps increase the win rate by providing a clearer understanding of market conditions and identifying better entry setups. It ensures that trades are aligned with the market's overall direction, reducing the risk of losing trades.
What role do higher time frame key levels play in Smart Money trading?
-Higher time frame key levels are more crucial because they provide stronger indications of major price levels where the market is likely to react. These levels help traders set targets, stop losses, and avoid trades that are likely to fail on lower time frames.
How does aligning higher and lower time frames improve trading setups?
-The best trading setups occur when the higher time frame bias aligns with the lower time frame entry setup. This combination increases the chances of a successful trade because the market direction is consistent across multiple time frames.
What is the psychology behind the daily bias in Smart Money Concepts?
-The psychology behind the daily bias involves tracking the behavior of institutional traders. By aligning trades with the bias that reflects institutional activity, traders can improve their success rate and avoid unnecessary losses.
How do supply and demand zones determine which side is in control of the market?
-Supply and demand zones are key in determining market control. When price mitigates a demand zone, the demand takes control, and when it mitigates a supply zone, the supply takes control. Traders aim to trade in the direction of the controlling side.
What is liquidity in the context of Smart Money trading?
-Liquidity refers to areas in the market where large volumes of orders are placed, often around swing highs and lows. Liquidity is targeted by institutional traders to move the market, and identifying these zones helps traders predict price movements.
What are fair value gaps and how do they impact price movement?
-Fair value gaps represent imbalances between buyers and sellers, indicated by spaces between the wicks of three consecutive candles. These gaps often signal inefficiencies that the market will eventually return to fill, providing potential trading opportunities.
Why is backtesting important in trading strategies?
-Backtesting allows traders to evaluate their strategies using historical data before using them in live trading. It helps traders assess the performance of their strategies, refine them, and build confidence in their application.
How should traders apply the daily bias concept to their charts?
-Traders should analyze the market starting from higher time frames like daily and 4-hour charts to establish a directional bias, then zoom into lower time frames for entry setups that align with the higher time frame bias.
Outlines
📊 Simplifying Daily Bias in Smart Money Trading
The video introduces the concept of 'daily bias' in smart money trading and highlights its importance for increasing win rates by aligning lower time frame strategies with higher time frame trends. Daily bias analysis focuses on larger time frames (weekly, daily, 4-hour) to understand market conditions and make better trade decisions. The video aims to break down the complexity of this approach into an actionable strategy, covering key topics to be discussed. Viewers are encouraged to support the channel by liking and subscribing for more advanced trading content.
🧭 Why Daily Bias Matters in Trading
The paragraph explains the psychology behind daily bias in trading, emphasizing two key reasons: (1) Higher time frame levels are crucial, as even minor reactions to key levels can signal significant trend changes in lower time frames. (2) Aligning higher and lower time frame analyses boosts success rates. For instance, identifying an uptrend in both higher and lower time frames provides better trade opportunities. The example of a euro-dollar reversal demonstrates how a daily time frame support level can outweigh lower time frame bearish trends.
⚖️ Supply vs. Demand: Who Controls the Market?
This section delves into identifying which side—supply or demand—is controlling the market, a key factor in trading success. The principle revolves around price mitigation. When price touches a demand zone, demand takes control, and vice versa for supply zones. Understanding these zones helps traders make better entry and exit decisions. The video demonstrates this with examples of price action between demand and supply zones and discusses how to track which side is in control to make profitable trades.
🔍 Multi-Time Frame Analysis for Market Bias
This paragraph expands on applying supply-demand concepts across multiple time frames. Analyzing higher time frames (like daily and 4-hour charts) reduces noise from lower time frames and improves accuracy in identifying market bias. The video uses a candlestick chart to explain how bias changes when supply or demand zones are broken. It also emphasizes using economic tools and staying updated with financial news to complement technical analysis.
💡 Liquidity: Identifying Market Moves
Liquidity is a key factor in market moves, often targeted by institutional traders. The video explains how liquidity zones—represented by stop-loss clusters—can be exploited by large institutions. It discusses buy-side and sell-side liquidity, how price targets these zones, and how traders can anticipate market movements. The video emphasizes understanding algorithmic price delivery systems to identify liquidity traps and take better trading positions.
📉 Sell-Side Liquidity and Market Reversals
Building on liquidity concepts, this section focuses on how institutional traders manipulate price towards liquidity zones to trap traders. The video illustrates the concepts of sell-side and buy-side delivery, showing how price moves to capture liquidity. It also provides a detailed example using a euro-dollar 4-hour chart to explain how price targets liquidity areas before reversing direction.
🕳️ Fair Value Gaps: Identifying Imbalances
This paragraph introduces the concept of 'fair value gaps' (FVG), areas of price imbalance caused by institutional participation. FVGs indicate zones where price is likely to return, creating potential trade opportunities. The video explains how to spot FVGs across different time frames and demonstrates their significance using real chart examples, showing how prices fill these gaps after large price movements.
🔄 Combining Concepts to Determine Market Bias
The final section shows how to combine all previously discussed concepts—supply-demand, liquidity, and FVGs—to determine higher time frame bias. By analyzing price movements from larger to smaller time frames, traders can anticipate market trends and optimize their trades. The video wraps up with an example of applying these strategies to a New Zealand dollar 4-hour chart, highlighting how bias shifts based on liquidity zones and FVGs.
Mindmap
Keywords
💡Daily Bias
💡Smart Money Concepts
💡Supply and Demand Zones
💡Liquidity
💡Fair Value Gap (FVG)
💡Break of Structure
💡Order Block
💡Mitigation
💡Algorithmic Price Delivery
💡Higher Time Frame Alignment
Highlights
Understanding the daily bias in smart money trading helps improve win rates by identifying better entry setups and gaining a clearer view of the market's overall conditions.
Daily bias is an analysis conducted on higher time frames like weekly, daily, and 4-hour charts to understand market conditions that aren't visible on lower time frames.
Higher time frame levels are crucial because they can signal significant trend changes, even if lower time frames suggest otherwise.
The best trading setups occur when the higher and lower time frames align, making higher time frame analysis critical for confirming lower time frame entries.
Smart money trading involves tracking institutional traders' behavior and aligning entry setups with their bias.
Three major concepts for identifying daily bias in smart money trading are supply and demand levels, liquidity areas, and fair value gaps.
The side in control of the market—either supply or demand—determines the best trading opportunities, with traders looking to follow the dominant side.
Supply and demand zones can signal potential market reversals or continuations, making them key areas for smart money traders.
Liquidity exists where stop-losses are placed; identifying buy-side and sell-side liquidity helps in predicting market movements.
Algorithmic price delivery, used by big banks, often targets liquidity zones, creating price movements that traders can anticipate.
Fair value gaps indicate imbalances between buyers and sellers, and the market tends to return to these areas to correct the inefficiency.
When a fair value gap occurs, it often signifies institutional participation, making these areas significant for potential trade setups.
Back-testing is essential to verify the effectiveness of trading strategies before using them in real-world trades.
Aligning the higher time frame bias with lower time frame entry setups is critical for improving the success rate of trades.
Identifying liquidity zones, fair value gaps, and supply/demand areas across multiple time frames creates a comprehensive approach to determining daily market bias.
Transcripts
hey guys welcome back to another episode
in this video we are going to simplify
the concept of the daily bias in smart
money
trading understanding the daily bias
will help you increase your win rate by
finding better entry setups and having a
clearer view of the Market's overall
conditions if your entry models aren't
working well in a lower time frame it's
crucial to identify the direction of the
higher time frame while daily bias may
seem complex this video aims to simplify
it into an easily applicable strategy
that anyone can use on the
chart here's the list of topics we're
going to cover in this
video so if this interests you be sure
to hit the like button to support us in
creating more videos like this also
consider subscribing to our Channel if
you're new as we regularly publish
Advanced trading
[Music]
Concepts
[Music]
so what is the daily bias in smart money
Concepts as the name suggests daily bias
refers to the overall prediction of
Market Direction and sentiment for the
upcoming day so basically it's an
analysis we conduct on higher time
frames such as weekly daily and 4-Hour
charts to better understand market
conditions that may not be visible on
our entry time
frame now most of the daily bias
strategies are overly complicated
without clear guidance that's why in
this video we aim to propose an easy
step-by-step applicable approach but
first why do we even need to determine
the daily bias and what is the
psychology behind it reason number one
Higher time frame levels are more
important a minor reaction to a higher
time frame key level can be a
significant Trend change in the lower
time frames so before placing any trade
we should check how much room we have
before tapping into a higher time frame
Supply or demand area this will help us
understand how to set our targets stop
losses and avoid losing trades here on
the euro dollar 1hour chart we can see a
strong
downtrend however when the price failed
to establish a new lower low and
rejected this level twice the market
reversed now if we zoom out to the Daily
time frame we can see that this area is
considered a strong support area for the
price so despite the heavy bearish
momentum on the 1hour chart we witnessed
a temporary
reversal the higher time frame key
levels are more crucial because they
provide a stronger indication of where
major price levels are located and where
the market is likely to react due to
their stability and reflection of longer
term
Trends number two increasing success
rate the best trading setups occur when
the higher time frame and lower time
frame are in alignment imagine on the
lower time frame we observe a move with
inefficiency breaking above the previous
Market structure in this scenario if the
price manages to pull back to the order
block Zone it would present a perfect
opportunity to enter a long position set
our stop below the swing low and Target
the next level of Market structure ahead
of the
price now what if the lower time frame
analysis aligns with the higher time
frame imagine if the lower time frame
uptrend were part of a bullish movement
on the higher time frame this could
constitute a perfect trade as we have
combined higher time frame levels and
directional bias with a lower time frame
entry setup with all being said the
psychology behind the daily bias and
smart money Concepts is to track the
behavior of institutional Traders so
that we can plan our entry setups
aligned with this
bias now that you understand the
fundamentals let me show you how to
determine the daily bias using smart
money Concepts we use three major major
Concepts in identifying the daily bias
supply and demand levels liquidity areas
and fair value gaps we're going to use a
combination of all the information to
determine the next moves in the
market supply and demand who is in
control now identifying which side is in
control is really important in trading
because it can help you avoid many
unnecessary losses how does the system
work it works based on simple mitigation
principles if the price mitigates a
demand Zone the demand takes control and
if it mitigates a supply Zone the supply
takes control we always want to trade
with the controlling side of the market
let me show you
how here we have a moving downtrend with
a series of bearish impulsive and
corrective movements every time the
market makes a structural break a supply
Zone automatically forms this is the
latest Supply Zone in front of the price
and as long as the price trades below it
the supply is in control but if the
price breaks and closes Above This area
the demand takes control and a demand
Zone forms now if the bullish movements
continue and we witness breaks of
structure to the upside each demand Zone
becomes a trading opportunity to go long
since our bias is bullish this bullish
bias continues until the price Taps into
this unmitigated Supply area after
encountering this area we no longer
consider this Market bullish because it
has the power to reverse the price and
induce a temporary correction so we have
a battle between buyers and sellers the
market could enter a phase of
consolidation between the demand and
Supply until one side regains control
again now here if the market breaks the
demand Zone to the downside it shows
that the supply took control and we can
take short entries until we reach the
next unmitigated demand Zone in front of
the price which happens to be a
temporary reversal point for the price
on the other hand if the price breaks
the supply area to the upside it shows
that the demand is in control and we can
take long entries with confidence until
we reach the next unmitigated Supply
area now let's see an example on the
Candlestick chart for the who is in
control topic but before we continue if
you're curious about how we stay updated
on financial news and fundamental
analysis well we rely on fastb one of
the best trading websites with various
useful trading tools this site provides
one of the most accurate and detailed
economic calendar a tool we use every
day before starting our technical
analysis 247 economic live streaming
also allows us to stay informed about
the latest trading world's news and
fundamental analysis so if you want to
benefit from multiple trading tools that
can significantly improve your trading
make sure to check the link in the
description here we have a series of
lower lows and lower highs and an
extreme area of the supply zone now why
is this Supply area so important because
it created a bearish imbalance and a
break of structure so our bias is
bearish and if the price returns to this
area we can take short entries and our
first Target would be this
low now here we can see that the price
has failed to create a new low and it
has broken the supply Zone to the upside
which shows that the demand has taken
control now our bias is bullish and we
can take long entries at demand levels
until we reach the unmitigated Supply
area in front of the price after tapping
into that zone we have no clear bias and
we should wait to find out which side
can take control
again all of our explanations were on a
single time frame so far but usually we
apply this concept across multiple time
frames for example this demand Zone
could have been a key level on a higher
time frame anytime you want to determine
the bias you need to analyze from a
higher time frame down to a lower time
frame an important point to note is that
as you zoom into lower time frames
you're likely to encounter many false
price action signals due to higher
volatility that's that's why it's
crucial to base your analysis primarily
on The Daily and 4-Hour time frames this
is also why trading price action setups
tend to have higher win rates on the
hourly time frame compared to the one
minute as lower time frames carry more
noise now with all that being said to
identify the daily bias we open the
daily and 4-Hour charts and apply this
concept to determine who is in control
then we zoom into our entry time frame
and search for trading opportunities
aligned with the higher time frame
bias now the next concept to apply to
the chart to establish a highquality
method for determining daily bias is the
liquidity
concept you might have heard that
liquidity is what makes the price move
but where is this liquidity it's not
just found above the swing highs or
swing
lows at every price level there's a lot
of liquidity available however what
we're talking about here is stop-loss
liquidity liquidity exists where stop
losses are
located there are two types of liquidity
in the market buy side and sells side
liquidity above a high or a group of
highs represents buide liquidity
liquidity below a low or a group of lows
represents sell-side liquidity now how
does it help in terms of identifying
Market
bias to answer this question you need to
know how the algorithmic price delivery
works the algorithmic price delivery is
engineered Market Behavior by big Banks
and institutions to make the market
fluctuations towards the liquidity zones
on the
chart the price is always coming from a
liquidity zone or moving towards it
liquidity to grab and liquidity to
Target when the price approaches buy
side liquidity the bearish Traders will
go short or they will protect their
previously opened short positions on the
other hand the breakout Traders will go
long if the price breaks through this
level the animated movement that aimed
to grab this liquidity is called the buy
side delivery it's running High to
engage the the liquidity above these
relative equal highs the algorithmic
price delivery has engaged the liquidity
by trapping Traders on both sides and
then the smart money would go
short when the price approaches this
level the bullish Traders will go long
or they will protect their previously
opened long positions on the other hand
the breakout Traders will go short if
the price breaks through this level the
animated movement that aimed to grab
this liquidity is called the sell-side
delivery the algorithmic price delivery
has engaged the liquidity by trapping
Traders on both sides and then the smart
money would go long to engage the buy
side
liquidity now this General analysis is
aimed at finding the overall Market
Direction but not entry setups you can
use any strategy to enter the trading
position but remember before using any
setup with your real account you should
back test it on different pairs to
evaluate the trading strategy's
performance using historical data we do
plenty of back testing as well but but
unfortunately it takes a lot of time
that's why we use Trader Edge to back
test our exclusive trade
strategies if you're interested in using
Trader Edge as your back testing tool be
sure to check out the link in the
description
below now here on the actual chart we
have euro dollar in the 4-Hour time
frame this is the perfect example of how
the market moves toward liquidity areas
here these equal highs represent the buy
side liquidity and the equal lows
represent the sell-side liquidity the
market first moves up to engage the buy
side liquidity and then targets the
sell-side
liquidity once again after sweeping the
liquidity below these equal lows the
market aims to Target the buy side
liquidity above this area of Supply this
scenario happens multiple times until
the price starts to push in the original
bearish
Direction the institutional price
delivery has the power to affect the
price but it cannot change the overall
order flow remember trading is about the
future price movements and the nature of
the future is unpredictable it's
impossible to Define every single
possible scenario but through time and
practice you will realize that some
repetitive patterns happen in the market
over and over again now the next concept
to pay attention to on the chart when
identifying the daily bias is fair value
Gap
areas essentially the fair value Gap
refers to the imbalance between the
buyers and sellers which can be
signified by the space between the Wick
of three consecutive candles on a price
chart now what does it mean in terms of
price action it shows a buy side
imbalance where the buying pressure has
significantly outweighed the selling
pressure possibly due to institutional
activities now the market has entered a
phase of inefficiency which usually
leads it to return to the fair value Gap
area to patch them over if you are a
smart money Trader identifying the fair
value Gap should be one of the first
things you do when you open the trading
chart and your eyes must jump right to
it the fair value Gap tells us that big
players have participated in the market
and impacted the price the market
usually comes back to these spots to
grab any leftover orders which might
give us a trading opportunity but only
if there are still orders
left here on the euro dollar 1H hour
chart we have a bearish trend the latest
impulsive move has started somewhere
around here all the way down to here we
had a cells side imbalance which is
signified by these large candles that
left the fair value Gap areas behind now
that the price is buy side inefficient
it needs to return to the fair value Gap
areas to patch them over which possibly
provides us a trading
opportunity again we have a sharp move
to the downside which created a fair
value Gap area then price makes a
pullback to this area rejects the fvg
and continues pushing
downwards we can apply this concept to
all of the time frames even if you look
at the daily or weekly time frame you
will see that price also makes FBG
areas here on the euro dollar daily time
frame we have a gap area between the
lowest price that traded during this day
and the highest price traded during this
one this area is created due to the
massive selling pressure and only
downside price action during the middle
day so we expect the price to eventually
trade back up into that Gap Zone and
that's the nature of the fair value Gap
now with all being said let me show you
how to apply all of the concepts we
discussed in this video to together to
identify the higher time frame bias the
higher time frame analysis depends on
your entry time frame and it must be two
times higher generally we consider 4
hours daily and weekly as the overall
Market
bias now here on the New Zealand dollar
4H hour chart the recent bearish
movements are evident let's apply the
supply and demand concept first this is
the latest bearish break of structure
and this unmitigated area is considered
our most recent Supply zone so right now
our our bias is bearish as long as the
price trades below this Zone the next
question is where is the
liquidity we know that lots of liquidity
is gathered Above This resistance area
so a runup above this line can Engage
The buy side liquidity which is another
confirmation that the price can continue
pushing
downwards now do we have an imbalance in
the latest
move the answer is yes we have a fair
value Gap area which if we apply the
retracement tool we can see that it is
located in the premium zone so forming a
fair value Gap in the premium area could
be a perfect trading opportunity so we
expect the price to return to the FBG to
patch it over and then we can look for
reversal confirmations in the lower time
frame to go
short guys that's it for this video I
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