Smart Money Trading: Top Entry Strategies and Supply/Demand Analysis for Profitable Trading
Summary
TLDRThis video script delves into the Smart Money Concept (SMC) for trading, focusing on advanced entry methods to identify high-probability supply and demand zones. It explains two main entry methods: reversal and continuation, with subcategories including change of character, flip entry, and market structure shifts. The script emphasizes the importance of using these methods within higher timeframe zones to enhance profitability and reduce risk. Practical examples and strategies for both aggressive and conservative entry setups are provided, aiming to give traders the edge in financial markets.
Takeaways
- đ The video introduces advanced entry methods for financial market trading, focusing on smart money concepts (SMC) to identify high-probability supply or demand zones and change of character patterns.
- đ It emphasizes the importance of using these methods within higher time frame supply or demand zones to reduce risk and increase the probability of successful trades.
- đ The script differentiates between 'change of character' and 'flip' entry setups, explaining that a valid change of character requires a price reversal from a supply or demand zone and a break below the market structure level.
- đ The 'change of character' is further divided into 'minor' and 'major' changes, with the major change being more significant for market structure shifts and providing higher probability trades.
- đ The video provides a 'pro tip' that a change of character is only valid if it occurs after the price has mitigated a supply or demand zone, ensuring a higher probability of a successful trade.
- đ It outlines two types of entry methods for trading with change of character patterns: aggressive and conservative, each with its own strategy for setting limit orders, stop losses, and take profits.
- đ€ The 'flip' entry setup is described as a way to enter trades quickly during market plummets or surges, requiring a rejection from a higher time frame supply zone and a break of the last demand zone.
- đ The script explains the continuation entry method for missed opportunities, suggesting to wait for price action that breaks structures and then enter trades in the direction of the initial move.
- đ The video promises to cover patterns and tools for entry confirmation in future episodes, indicating a series of educational content on smart money trading concepts.
- đ It encourages viewer engagement by asking for likes, subscriptions, and comments on preferred topics for future videos, showing an interactive approach to content creation.
Q & A
What is the main focus of the video script?
-The main focus of the video script is to share insights and techniques on identifying entry and exit points in the financial markets using the Smart Money Concept (SMC).
What are the two major subcategories of SMC entry methods mentioned in the script?
-The two major subcategories of SMC entry methods are the reversal entry method and the continuation entry method.
What is a 'change of character' in the context of the Smart Money Concept?
-A 'change of character' refers to a situation where the market has changed its trend or order flow over time, indicating a potential shift in market structure.
What are the two types of change of character identified in the script?
-The two types of change of character are minor and major change of character.
What is a 'flip entry setup' in the context of the reversal entry method?
-A 'flip entry setup' is a situation where the market reacts to a significant zone and then breaks it, indicating a potential reversal in market direction.
Why should entry methods be used only in higher time frame supply or demand zones according to the script?
-Entry methods should be used only in higher time frame supply or demand zones because these areas are seen as having a higher probability due to the sponsorship of the higher time frame, and anything outside of these zones increases risk exposure.
What is the importance of a valid change of character for smart money traders?
-Identifying a valid change of character is crucial for smart money traders as it provides an absolute must-have insight for successful trading and enduring losses can occur if a valid change is not spotted.
What is the difference between a minor and a major change of character?
-A major change of character occurs when the price breaks a structure that has created a balance of supply and demand (BOS), while a minor change of character occurs when the price breaks a structure that couldn't make a BOS, and is not confidently considered a shift in the market structure.
How can traders use the aggressive entry type in the context of a change of character?
-Traders can use the aggressive entry type by setting a sell limit order at the lowest point of the supply zone created by the change of character's wave to the downside, placing a stop loss a couple of pips above the supply zone, and targeting the most recent unmitigated demand zone.
What is the conservative entry method and how does it differ from the aggressive entry method?
-The conservative entry method uses two separate time frames: a higher time frame for market analysis and a lower time frame for detecting possible entry confirmations and executing trades. It differs from the aggressive entry method by providing more confirmation setups and lower risk exposure with a smaller stop loss and a higher reward-to-risk ratio.
What is the significance of a flip pattern in the context of the SMC's reversal entries?
-A flip pattern is significant as it represents a quick setup opportunity in the market when there is a significant price movement. It involves the price getting rejected from a higher time frame supply zone, testing the last demand zone, and then breaking through it, indicating a potential change in market direction.
How can traders identify a continuation trade opportunity in the SMC?
-Traders can identify a continuation trade opportunity by waiting for the price to create a break of structures after a change of character or a flip pattern. They can then place their orders in the order block zones that the BOS or flip has created and target the next unmitigated supply or demand zone.
Outlines
đ Introduction to Smart Money Concepts for Trading
The video script introduces the concept of Smart Money Concepts (SMC) for trading in financial markets. It emphasizes the importance of understanding advanced entry methods to identify high-probability supply or demand zones and change of character patterns. The aim is to provide viewers with insights to enhance profitability and reduce risk in trading. The script outlines the structure of the video, which includes a discussion on entry and exit strategies, and encourages viewers to engage with the content by liking and subscribing.
đ Reversing Market Trends: Change of Character in SMC
This paragraph delves into the reversal entry methods of the Smart Money Concept, specifically focusing on the 'change of character' or market structure shift. It explains the difference between minor and major changes of character and how they can be identified in both bullish and bearish markets. The importance of these patterns is highlighted as they indicate a potential shift in market direction. The script also provides a 'pro tip' about the conditions under which a change of character is considered valid for trading purposes.
đ Chart Analysis: Applying Change of Character in Trading
The script provides a practical guide to applying the change of character concept in real trading scenarios. It discusses how to identify valid changes of character on charts and the importance of these patterns in relation to supply and demand zones. The paragraph also introduces the idea of aggressive and conservative entry types for trading, with examples provided on how to set up trades based on these patterns in the market.
đ€ Conservative Entry Strategy and Trade Execution
This section of the script introduces a conservative entry strategy for executing trades using two separate time frames: one for market analysis and another for detecting entry confirmations. The strategy involves identifying major changes of character and waiting for price confirmations before placing sell limit orders. The advantages of this approach are highlighted, including lower risk exposure and a higher reward-to-risk ratio, with a real-world example provided to illustrate the process.
đ Flip Entry Setup: Capitalizing on Quick Market Movements
The script explains the flip entry setup, which is a part of SMC's reversal entries. It describes how to identify a flip pattern in the market, which involves price rejection from a higher time frame supply or demand zone, testing the last demand or supply zone, and breaking through it. The paragraph outlines the steps for setting up trades using both aggressive and conservative entry types in flip zones, with a focus on the importance of reacting to significant zones and breaking them for quick market movements.
đ Continuation Trades: Opportunities After Missed Entries
The final paragraph discusses continuation trades as an alternative for entering the market when initial entry opportunities are missed or when traders wish to open additional positions. It explains how to identify continuation entry points after a change of character or a flip pattern has occurred. The script advises on the conditions under which new positions can be opened and the importance of targeting the next unmitigated supply or demand zone. The video concludes with an invitation for viewers to subscribe and engage with the content for more educational videos on trading strategies.
Mindmap
Keywords
đĄSmart Money Concept (SMC)
đĄEntry Methods
đĄReversal Entry Method
đĄChange of Character
đĄSupply and Demand Zones
đĄContinuation Entry Method
đĄFlip Entry Setup
đĄAggressive Entry
đĄConservative Entry
đĄBreak of Structures
Highlights
Understanding advanced entry methods of the smart money concept can provide an edge in financial markets.
The video shares insights on identifying the best entry and exit points in financial markets.
Introduction of supply and demand zones and change of character patterns for market analysis.
Entry methods should only be used in higher time frame supply or demand zones to reduce risk.
Explanation of change of character in market structure for both minor and major changes.
The importance of identifying valid change of character for smart money traders to avoid losses.
How to spot a valid change of character with candlestick patterns and market structure levels.
The concept of supply and demand zones in relation to change of character for trading decisions.
The difference between minor and major change of character and their impact on market structure.
The significance of supply or demand zones in validating change of character for trading.
Backtest procedure for major and minor change of characters using Trader Edge software.
Real chart examples demonstrating the application of change of character in trading.
Introduction to aggressive and conservative entry types for using change of character patterns.
Detailed explanation of aggressive entry setup using supply zones and stop loss strategies.
Conservative entry model using separate time frames for analysis and entry confirmations.
The advantages of conservative entry for lower risk and higher reward to risk ratio.
Continuation entry models for missed opportunities or additional positions in the market.
Upcoming episodes will cover patterns and tools for entry confirmation in smart money concept.
Transcripts
are you tired of feeling like you're
always one step behind the financial
Market understanding the advanced entry
methods of the smart money concept can
give you the edge you need to make
successful trades in this video we'll be
sharing valuable insights and techniques
that can help you identify the best
entry and exit points in the financial
markets and also we're going to show you
the patterns and methods of smart money
Concepts that you need to identify high
probability Supply or demand zones and
change of character patterns that will
give you the edge and insight you need
to stay ahead of the market this episode
will be a complete guide to how you will
enter and exit trades in the market in a
manner that enhances profitability and
reduces risk exposure so Traders if
that's something you're interested in
please give this video a thumbs up to
show your support and subscribe to our
Channel if you are new see you after the
intro
[Music]
Traders so let's get started what are
the entry methods that we can use in the
smart money concept so SMC entry methods
are divided into two major subcategories
the first is the reversal entry method
and the second is the continuation entry
method
also the reversal entry method has two
subcategories change of character or
Market structure shift and number two is
the flip entry setup so before we get
into the detail of these setups I want
to make this clear these entry methods
should only be used in the higher time
frame Supply or demand zones because
these areas are seen as having high
probability due to the sponsorship of
the higher time frame and anything
outside of these zones increases risk
exposure so guys let's start with the
change of character or Market structure
from the reversal methods what is the
meaning of the change of character or
Market structure shift
change of character means that market
has changed its Trend or order flow over
time and already consists of two types
minor and major change of character
identifying a valid change of character
is an absolute must-have for the smart
Money traders
you will endure some losses if you fail
to spot a valid charge so let's see how
we should identify a valid change of
character
suppose we have a bullish Market that
price makes a series of higher highs and
higher lows in this case each high and
low is the market structure level the
most recent higher high and higher low
is the one we monitor
breaking the most recent higher low to
the downward shows that price tends to
go the downside and wants to change its
primary Direction which we consider a
change of character the key point is for
having a valid change of character we
need price to break and close a candle
below the previous Market structure
level if price breaks the most recent
structure with a shadow and closes into
the most recent structures range then
our change of character is invalid the
same concept applies to the bearish
scenario
but there is a pro tip that you always
need to remember
a change of character is valid only
under one condition that price reversed
and came from a supply or demand Zone
before breaking the recent structure and
creating the change of character
if price without mitigating a supply or
a demand Zone creates a change of
character even with a valid Candlestick
pattern we cannot consider it a valid
change of character
for example we have this bullish Market
where price makes these series of higher
highs and higher lows as you can see
here price created this change of
character after it mitigated the higher
time frame Supply Zone
so the next thing to look for is whether
price closed below this higher Low by
the body of a bearish candle
if our Candlestick pattern is valid then
we can assume that price wants to change
its direction and the change of
character is safe to trade
however if price did not mitigate the
upper Supply Zone we would have a
structure like this
in this case if price moves to the
downside it will be rejected when it
reaches the unmitigated order block
and will start a fresh impulsive wave to
the upside instead of changing its
initial Direction
as we have mentioned before the change
of character would occur in two ways
minor and major
so let's see what are the minor and
major change of character
imagine we have structures like these in
the right corner we have the major chalk
schematic figure and in the left corner
we have the figure of the minor change
of character so guys what is the
difference between them
the major change of character occurs
when price breaks the structure which
has created a BOS for example as you can
see here the price has broken out this
structure which already created a BOS on
the other hand as you can see the price
has broken out this structure which
couldn't make a BOS so here we have a
minor change of character that we cannot
confidently consider as a shift in the
market structure so here if price breaks
this structure to the downside then we
can confidently consider a shift in the
market structure
I've seen so many novice SMC traders
that they consider a minor change of
character as a valid change of character
instead of waiting for the price to
create a major change of character which
provides a higher probability in the SMC
trading setup compared to the minor one
and they mostly ended up with some
losses
I have already started a back test
procedure with Trader Edge software for
testing the major and minor change of
characters in 100 possible trades for
each in euro dollar pair to see that
which one has more win rate and provide
high probability when we execute trades
based on these patterns and I'm going to
share with you the exact results and
outcomes of trades in the next episodes
so Traders stay tuned for that now let's
jump into the real chart and see more
examples
so here we have the 15 minute time frame
of euro dollar on our chart
as you can see price created a series of
bosses to the downside until it reached
this unmitigated demand Zone which is
created in the higher time frame and
then reversed to the upside
as you can see the price has broken out
this structure to the upside with an
engulfing candle so we spot a choch but
before taking action we need to ask
ourselves a question can we consider
this change of character as a sign of a
valid Market structure shift
the answer is no because price has
broken out a structure that couldn't
create a BOS
so guys in this case by appearing this
minor change of character we cannot be
sure that a market structure shift is
going to happen so we should wait for
price to make a major change of
character
for having a major change of character
price must break and close Above This
Market structure which has created a
bearish BOS
so Traders as you can see we have a
major chalk here that indicates the
downtrend is over and a market structure
shift is going to happen
so there is a crucial point that I want
you to pay attention to as you can see
here price has changed its direction to
the opposite after creating a change of
character
but did price respect the minor chaka's
demand zone or is it respected major
Chalk's demand Zone it is obvious that
price did not respect the minor change
of character's demand Zone and if you
had a buy order in that area you would
miss out on such a perfect trading
opportunity because price always has
more tendency to respect the major
change of characters instead of the
minor chalk let's move on to the next
example
so here we have a pretty strong
downtrend that price created a series of
bos's so we see right here that price
has touched the higher time frames
demand Zone reacted to it and went to
the upside
in the following price has broken out
this Market structure and created this
minor change of character because this
lower high couldn't make a BOS to the
downside most SMC Traders consider this
movement as a market structure shift
they expect price to change its
direction to the upside so they would
Place their buy orders at the highest
point of the area which is created by
the chalk
but as you can see Market structure
shift has not happened price did not
respect the minor change of character's
demand area and stop loss of the traders
who have entered into the market with
long as hit by the price and they ended
up with some losses so Traders this
change of character analysis helps me
have a higher chance of getting
successful trades over just taking any
trades without confirmation
so traders in the following topic
I'm going to show you how to use the
change of character to set up a trade
for using a change of character pattern
to take trades we can already use two
different types of Entry one aggressive
entry type and the second is
conservative entry type so let's discuss
both of them in detail so I'm going to
start with the aggressive entry model
imagine prices created this bullish
structure to the upside after reaching
the higher time frame Supply Zone price
is rejected downward and forms a major
change of character by breaking and
closing below this structure which has
created a bullish POS
So based on this type of entry in the
next step we should set a cell limit
order at the lowest point of the supply
Zone which is created by the change of
character's wave to the downside and
also we should put our stop loss a
couple of pip above the supply Zone and
Target the most recent unmitigated
demand so this is the general schematic
of Chuck's aggressive entry let's go
ahead and see a real example
so here on our price chart we have the
euro dollar 15 minute time frame
as you can see price created a series of
bullish bos's until it reached the
higher time frames Supply Zone
price hit and reversed from this Zone
also created minor and major chalks
so the next step in our aggressive entry
setup is setting a sell limit order at
the lowest of the bearish order block
created by the change of character with
a stop-loss couple of pip above the
highest point of our Zone
and we should Target the most recent
unmitigated demand Zone as our take
profit
as you can see this zone is the closest
unmitigated Zone to the current price so
we put our take profit at this Zone
now all we have to do is wait for the
price to activate our cell limit order
so our take profit is hit by the price
so let's move on to the details of the
next topic the conservative entry we use
two separate time frames to execute our
trades in this entry Model A Higher
timer frame for doing market analysis
and a lower time frame for detecting
possible entry confirmations and
executing buy or sell orders
I prefer to use the 15-minute time frame
for doing my market analysis and then I
zoom into the one minute time frame for
executing my trades
but you can already use the one hour
time frame as your higher time frame and
the five minute time frame is your entry
time frame or you can use the four hour
time frame and 15 minute time frame it
is totally up to your personal taste but
the key rule you should always obey is
that your higher time frame which you
would use for market analysis must be
larger at least two times frame
suppose price has created these series
of boss's to the upside and after
touching a higher time frame strong
Supply rejected and created this major
change of character by breaking this
structure to the downside
so what we're going to do in the next
step is draw the supply Zone which is
created by Chalk's wave then we will
zoom into the lower time frame wait for
price to return to the zone and show us
a major change of character
after creating a valid change of
character
we should highlight the order block
created by Chalk's wave on the lower
time frame in the following we should
place our sell limit order at the lowest
point of the Zone with a stop loss a
couple of pip above the Zone's highest
point and for the take profit we should
Target the most recent unmitigated
demand
compared to the aggressive entry type
the advantages of this type of Entry are
that this model has more confirmation
setups and provides lower risk exposure
by providing a minor stop loss and a
higher reward to risk ratio let's go
ahead and see a real example
so we have the 15-minute euro dollar
time frame on our chart as you can see
price has created this series of bos's
to the upside and after touching the
higher time frame Supply Zone It
reversed to the downside and created
this major change of character by
breaking the structure to the downside
next we should draw the supply Zone
created by chalkswave so we have our
confirmation on the higher time frame so
in the next step we should zoom into the
one minute time frame and wait for price
to reach the order block Zone and create
a valid change of character again
as you can see prices reached the zone
and in the following price has broken
out the structure to the downside
and left an incredible inefficiency
behind
so we have got the confirmation we were
looking for in the next step we will
highlight the supply Zone created by
Chuck's wave now we detected our point
of Interest so next we should place our
sell limit order here adjust our stop
loss a couple of pip above the highest
point of the zone and Target the recent
unmitigated demand Zone on the current
time frame or on the higher time frame
as our take profit level
now we have executed our sell limit
let's see what happens
as you can see our sell limit order has
been activated and we have entered the
market
there's a key point you always need to
remember when trying to use the change
of characters in your Trading
chalks are the most effective when they
break through two or more Supply or
demand Zone when they form after a
higher time frame mitigation
when price impulsively breaks through
the zones with few large candles
so let's dive into the details of the
flip entry setup which is the second
part of the smc's reversal entries
the flip entries are one the best ways
to hop in quick setup while the market
plummets or sores and flip is all about
reacting to a significant Zone and then
breaking it now let's see how we can
identify a flip
imagine we have a bullish Market that
price has created a series of higher
highs and higher lows to have a valid
flip pattern first price must get
rejected from a higher time frame Supply
Zone next it should test the last demand
Zone and must be pushed to the upside
and shows a rejection but price should
not create a new higher high and must
break through the last demand Zone which
is tested once and leaves a supply Zone
behind which we call it as the flip Zone
price will test the flip Zone once more
so we should keep an eye on it and put a
limit order there the same concept
applies to the bearish scenario
there is a key point that you need to
remember if price had not reacted on the
last demand or Supply Zone there would
not have been a flip
as you can see the flip pattern is very
similar to the change of characters
pattern but you need to note that in
this particular case every flip is a
change of character but not every change
of character is a flip setting up a
trade with the flip pattern is very
similar to the change of character and
we can use the same trading setups for
both of them
hence we can use aggressive and
conservative entry types to execute
trades in flip zones
but before getting into the details of
each I would like to show you a quick
candle breakdown of the flip pattern
this pattern is most effective when the
price aggressively pushes away from
demand and Supply zones rapidly breaks
through the last demand Zone and leaves
inefficiency behind
if demand was strong it should have
reacted with more momentum and should
have broken out the freshly created
Supply level instead the last demand
couldn't give enough rejection to push
the price to new highs so it turned out
weak which caused it to break this means
that the new Supply zone is back in
control so we're trading the supply side
of the market so next I'm going to show
you how to use aggressive and
conservative entries to place trades
with the flip setup
so I'm going to start with the
aggressive entry
as you can see we have a valid flip
pattern that price rejected from a
higher time frame Supply and couldn't
make a new high and after testing the
most recent demand Zone breaks it
downward
based on the aggressive entry after
identifying the correct flip pattern
first we should highlight the flip Zone
created by the wave which flipped the
recent demand Zone then we set our cell
limit order at the lowest point of the
flip Zone and we will wait for price to
activate our order also we should place
our stop loss a couple of pip above the
flip Zone and we should Target the next
unmitigated demand Zone as our take
profit let's apply these steps to the
real price chart
so here we have euro dollar 15 minute
time frame
as you can see we have a bullish Market
that price has created bullish bos's
mitigated the higher time frame Supply
Zone and reversed to the downside and in
the following price reached the recent
demand Zone and created a tiny reaction
to the upside with these white candles
and then price was pushed to the
downside and has broken out the Zone
with inefficiency so we have a perfect
flip pattern next we should highlight
the flip Zone created by the wave which
flipped the recent demand Zone next I'm
going to place sell limit order at the
lowest point of the flip Zone with the
stop loss a couple of pip above the flip
Zone and I'm going to Target the one
hour time frames unmitigated demand zone
now that we have placed our cell limit
let's see what will happen
as you can see our sell limit order has
been activated and we've entered the
market
so let's move on to the details of the
next topic the conservative entry
imagine we have a perfect flip pattern
in the 15 minute time frame that price
after mitigating the higher time frame
Supply couldn't make a new high and
finally flip the recent demand Zone
after showing us a pullback
so first we should highlight the flip
Zone created by the wave which flipped
the recent demand Zone then we should
zoom into the lower time frame
wait for price to return to the flip
Zone and show us a major change of
character
after creating a valid change of
character next we should highlight the
order block created by Chalk's wave on
the lower time frame in the following we
should place our sell limit order at the
lowest point of the Zone with a stop
loss a couple of pip above the Zone's
highest point and for the take profit we
can Target the higher time frames
unmitigated demand or we can Target the
swing low of the current time frame
let's see an example
so we have Euro Yen 15 minute time frame
on the chart as you can see price
mitigated the higher time frame Supply
Zone It reversed to the downside and in
the following price reached the recent
demand Zone and created a tiny pullback
to the upside with these two white
candles and then price push to the
downside and broke out of the zone and
has left inefficiency behind here we
have a perfect flip pattern
next we should highlight the flip Zone
created by the wave which flipped the
recent demand zone now we have spotted
the flip Zone and next we should zoom
into the one minute time frame and wait
for price to reach the flip Zone and
show us a valid change of character
as you can see price has reached the
flip Zone has broken out this structure
to the downside and left an incredible
inefficiency behind so we've got the
confirmation we were looking for
next we are going to highlight the
supply Zone created by Chalk's wave now
we have detected the point of Interest
so next we should place our sell limit
order here and put the stop loss a
couple of pip above the highest point of
the zone and Target the recent
unmitigated demand
now we have executed our sell limit
let's see what happens now our sell
limit order has been activated and we
have entered the market as you can see
price after triggering our sell limit
went down and finally hit our take
profit and provided a trade with an
eight reward to risk ratio
so guys we already have discussed
reversal entry methods of smart money
trading setup in detail so let's have a
brief explanation of smc's continuation
entry models
if you miss the change of character flip
patterns or Price action didn't give you
an opportunity to enter the market then
taking a continuation trade is the
easiest way to execute trades imagine we
have a bearish market that price after
mitigating the higher time frame's
demand Zone has made a change of
character
Now by emerging a chalk we know that
sellers have lost control and we must
look for a long opportunity so suppose
somehow you miss the change of
character's entry opportunity or you
just want to open another long position
so how would you manage to enter the
market
in this scenario for executing long
positions you should wait for price to
create a break of structures then you
can place your order in the order block
zones that the BOS has created and you
may Target the next unmitigated Supply
Zone but there is a key point that you
need to consider you are only allowed to
open new long positions until price has
not reached the unmitigated Supply Zone
let's see another continuation entry
scenario
if price reaches the higher time frame
Supply or demand Zone creates a tiny
pullback and after that breaks the Zone
then you are allowed to enter into the
market in the initial direction of the
price
you are allowed to set a buy or sell
Order In the Zone created by the wave
which flipped the recent demand or
Supply zone so Traders we have discussed
entry methods of the smart money Concept
in detail
in the following episodes we will cover
another crucial topic of the SMC the
patterns and tools which you can use as
confirmation for your entries so stay
tuned for that I hope this video was
helpful to you
if you enjoyed the video and want us to
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next episode
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