The Only SMT Divergence Video You Need

Summary

In this video, the trader explains the powerful strategy of **SMT Divergence**, a technique used to identify market manipulation by observing discrepancies in the price movements of correlated assets, like **US30** and **NASDAQ**. The trader shares a live trade example, showing how a breakdown in correlation presents an opportunity for profitable trades. Key insights include using price action patterns, such as the **three-candle setup**, and institutional reference points like **fair value gaps** to frame entries. Viewers are encouraged to learn more through the mentorship program for personalized guidance in mastering these strategies.

Takeaways

• 😀 SMT Divergence is a strategy based on the distortion in the correlation of two assets, where one asset deviates from the expected movement of the other, indicating potential market manipulation.
• 😀 The strategy works best with correlated assets like US30 and NASDAQ, where a divergence in price action signals an opportunity for a trade.
• 😀 A key indicator of SMT Divergence is when one asset creates a higher high while the other forms a lower high or fails to do so, signaling a distortion in market behavior.
• 😀 The smart money concept is central to SMT Divergence, where price manipulation by institutional players is identified as a market signal for trade entries.
• 😀 The speaker emphasizes the importance of time and attention in mentorship, contrasting it with the broader teachings available on YouTube, where detailed guidance is given in a smaller, more focused community.
• 😀 Mentorship includes live market analysis and the application of advanced trading concepts like the sniper strategy for NASDAQ, US30, and synthetic indices.
• 😀 A successful SMT Divergence trade is highly likely to win, with an 80% probability of success if the price moves in the anticipated direction after the divergence is identified.
• 😀 When the price shows a lower low in one asset while the other asset moves differently, this is a key signal for trade entry, especially if liquidity sweeps or breaks in structure occur.
• 😀 The strategy involves waiting for specific candle patterns, such as three candles with the middle candle having the highest wick, to confirm the entry point for the trade.
• 😀 The trade setup should be validated by looking for price to break above a previous high and target liquidity resting on the opposite side, with a stop loss set below the low of the confirming candle.

Q & A

What is SMT Divergence and how does it work?

SMT Divergence is a market phenomenon where there is a distortion or crack in the correlation between two assets, typically correlated assets like US30 and NASDAQ. When these assets fail to move in tandem, it signals that smart money may be manipulating the market, presenting an opportunity for traders to take advantage of the price movement.

How does the correlation between US30 and NASDAQ play a role in SMT Divergence?

US30 and NASDAQ are typically positively correlated, meaning they should move in the same direction. SMT Divergence occurs when one of the assets (like US30) shows a distortion in its movement compared to NASDAQ, which suggests a market manipulation, creating an opportunity for trades based on the correction of that movement.

What is a failure swing, and how does it relate to SMT Divergence?

A failure swing occurs when an asset fails to create a higher high as expected, instead forming a lower high. In the context of SMT Divergence, this failure swing indicates a distortion in the correlation between the two assets, which is a key signal for potential market manipulation and an opportunity for traders to enter a trade.

What is the significance of the liquidity sweep mentioned in the video?

A liquidity sweep occurs when price action breaks a significant level, often targeting stop-loss orders or buy/sell orders in the market. In the context of SMT Divergence, a liquidity sweep indicates that smart money is driving price to a key level, which is often followed by a reversal, providing a trading opportunity.

Why is SMT Divergence considered a powerful strategy for traders?

SMT Divergence is considered powerful because it identifies market distortions caused by smart money manipulation. By recognizing these distortions, traders can make high-probability trades with a higher chance of success, especially when following the rules of divergence and liquidity targeting.

How does the concept of 'smart money' influence trading decisions in SMT Divergence?

The concept of 'smart money' refers to large institutional traders who move markets. SMT Divergence helps traders identify when these smart money players are manipulating the market by causing distortions in correlated asset movements. By tracking these distortions, traders can anticipate market reversals or corrections.

What role does timing play in executing trades using SMT Divergence?

Timing is crucial when trading with SMT Divergence. The speaker in the video mentions observing the market during the New York session and waiting for the right signs of divergence. Properly timing the entry after identifying a distortion and waiting for confirmation can significantly improve trade success.

How does the speaker recommend entering a trade after spotting SMT Divergence?

The speaker suggests waiting for three candlesticks, with the middle candle having the highest wick. Once the two surrounding candles close, traders should enter the trade, setting their stop-loss below the low of the highest wick candle and targeting the opposite liquidity or drawn liquidity.

What is the significance of the institutional reference point, like the fair value gap, in the speaker's trading strategy?

Institutional reference points, such as the fair value gap, are significant because they represent key levels where large institutions may have placed orders. In the video, the speaker notes that price targets these levels before moving in the opposite direction, offering a profitable trade opportunity when these areas are tapped.

What is the role of mentorship in trading, according to the speaker?

According to the speaker, mentorship provides traders with personalized attention, allowing for in-depth learning and answering specific questions. The mentorship program offers more detailed explanations, regular meetings, and support, which can be helpful for traders seeking to deepen their understanding and skills in trading using strategies like SMT Divergence.