Best Daily Bias Trading Strategy SMC

Summary

This 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

00:00

📊 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.

05:00

🧭 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.

10:00

⚖️ 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.

15:01

🔍 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.

Keywords

💡Daily Bias

The daily bias refers to the overall prediction of market direction and sentiment for the upcoming day. In the context of smart money trading, this concept is crucial because it helps traders align their lower time frame setups with the broader market conditions derived from higher time frames, such as the daily or weekly charts. The video emphasizes how understanding the daily bias can significantly increase win rates by improving entry setups.

💡Smart Money Concepts

Smart Money Concepts (SMC) in trading refers to strategies that follow the behavior of institutional traders, such as big banks and financial institutions. The video simplifies the SMC approach to help individual traders track institutional moves, align with their trades, and identify key supply and demand zones for better market predictions. Smart money trading focuses on identifying high-probability setups that align with the market bias driven by large players.

💡Supply and Demand Zones

Supply and demand zones are key areas in the market where price is likely to react due to the presence of large institutional orders. In a downtrend, a supply zone forms after a structural break, while in an uptrend, a demand zone appears. The video emphasizes trading with the controlling side of the market, whether it's supply or demand, to avoid unnecessary losses and take advantage of high-probability trade setups.

💡Liquidity

Liquidity in the market refers to areas where stop-loss orders are concentrated, often around significant swing highs or lows. The video explains that liquidity zones are key areas where institutional traders often push the price to trigger these stops, creating trading opportunities. Understanding where liquidity is located helps traders anticipate market moves and engage in more effective trades by predicting where the price is likely to move next.

💡Fair Value Gap (FVG)

A Fair Value Gap refers to an imbalance between buyers and sellers in the market, often represented by a gap between the wicks of three consecutive candlesticks. The video highlights that these gaps are created due to institutional buying or selling pressure and that price often retraces to these areas to fill the gap, providing potential trade entry opportunities.

💡Break of Structure

A break of structure (BOS) happens when price breaks a key level of support or resistance, indicating a potential change in trend direction. In the video, this concept is used to show how identifying BOS on a lower time frame and combining it with higher time frame analysis can help confirm a trade setup. BOS is an important signal for traders to recognize when the market may shift control between supply and demand.

💡Order Block

An order block is a zone where institutional traders have placed large buy or sell orders, causing significant price movements. In the video, the order block concept is used to explain how price often returns to these areas, creating ideal entry points for trades. These zones are key for smart money traders looking to align their trades with the movements of institutional players.

💡Mitigation

Mitigation refers to the process where price returns to a previous supply or demand zone to fill remaining orders before continuing in its current direction. The video uses this concept to explain how traders can identify whether supply or demand is in control of the market. Understanding mitigation helps traders avoid false signals and focus on setups where institutional orders are most likely influencing price movements.

💡Algorithmic Price Delivery

Algorithmic price delivery is the engineered behavior of the market driven by institutions and big banks. The video discusses how price movements often target liquidity zones and follow predictable patterns that are influenced by algorithms. Understanding this concept allows traders to anticipate where price is headed based on where liquidity is located and how institutions are likely to react.

💡Higher Time Frame Alignment

Higher time frame alignment refers to the process of ensuring that the trend or bias on a lower time frame matches the trend on a higher time frame. The video emphasizes that aligning trade entries on lower time frames with the direction of the daily or weekly charts can improve trade success rates. It encourages traders to analyze higher time frames to avoid false signals and improve the overall accuracy of their trades.

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

hope this video provided value to you if

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episode