Why You Are Failing With Smart Money Concepts In 2023 | SMC

ETM FX
10 Apr 202310:58

Summary

TLDRThe video explains why trading reversals as a beginner can be dangerous and unsuccessful; institutions accumulate buy orders on uptrends, so it's better to trade continuations. Using examples, it shows how to turn a supply candle reversal into a continuation setup by tracking order flow. It provides actionable tips like entering buys with institutions and setting stop losses based on swings. Overall, it makes a strong case to novice traders that riding trends is a higher probability strategy than picking tops and bottoms.

Takeaways

  • 😀 Reversals are dangerous for beginner traders - continue trading in the direction of the existing trend instead
  • 👍 Use confirmations like higher timeframe bias and validated institutional candles before trading reversals
  • 💡 Reversals try to stop an entire market move with one candle - high chance of failure without proper context
  • 📈 Accumulation during uptrend adds more buying power over time compared to selling power in supply zones
  • 🤝 Getting long with institutions as they buy is better than trying to stand in front of the trend truck
  • 🔍 Mild reaction needed from supply/demand zone to indicate leftover liquidity to continue move
  • 🚨 If nearby demand level breaks but fails to close below, it indicates more buying power in area
  • 💰 The bounce back up indicates supply zone is now out of money to continue move down
  • ✅ Use stop loss at recent swing point and take profit near next area of liquidity
  • 👍 Student requests for future video topics help guide upcoming content

Q & A

  • Why are reversals dangerous for beginner traders?

    -Reversals require stopping an entire market move with a single candle, which is very difficult. It's easier and safer for beginners to trade continuations and go with the overall market trend.

  • How can you turn a reversal setup into a continuation trade?

    -Look for signs that the supply/demand zone is losing its liquidity as price moves against it. Then you can trade the exhaustion and continuation instead of the reversal.

  • What is the dollar theory referenced in the video?

    -The dollar theory assigns hypothetical dollar values to supply/demand zones to represent their liquidity and power. As price reacts with zones, their dollar values decrease.

  • What is the significance of a micro demand candle holding after a supply candle reaction?

    -It indicates there is more buying power than selling power, so the market is likely to continue upwards after retesting the supply area.

  • What types of clues indicate good continuation setups?

    -Clues like failures to break support/resistance levels, quick rejections and balances off key zones reveal the comparative strengths of buying and selling.

  • Why should beginners avoid trading reversals?

    -Reversals require accurate reads on liquidity and institutional intentions. Beginners lack the experience to judge reversals properly and often end up trying to pick tops and bottoms.

  • What are the next steps after identifying a good continuation setup?

    -Place a stop loss below the last swing low to manage risk, identify a profit target level, and look for an optimal entry point to benefit from the imminent move.

  • How can analyzing lower timeframe price action validate continuation setups?

    -The lower timeframes reveal the small-scale ebbs and flows of liquidity and power struggles between buyers and sellers over key levels.

  • Why is going with institutional buying/selling better than trading against it?

    -Institutions deploy massive capital that can overwhelm smaller retail traders. Trading with the institutions aligns retail trades with the larger market forces.

  • What beginner mistakes contribute to trading failures with smart money concepts?

    -Misreading liquidity, improper risk management, overtrading against significant trends and focusing too much on lower probability reversal setups.

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