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

Summary

The 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.

Outlines

00:00

😊 Why trading reversals as a beginner can be dangerous

The paragraph explains that trading reversals as a beginner trader is dangerous and problematic. It recommends trading continuations instead, which aligns with the overall market direction. Even experienced traders treat reversals as secondary strategies. Reversals ask the market to stop against its momentum, requiring precise timing. It compares reversal setups to continuations, advising entering trades that align with institutional buying.

05:00

😉 Using a dollar sign analogy to analyze market moves

The paragraph analyzes market moves using a hypothetical dollar sign analogy representing amounts traded. It tracks how money enters moves and gets used up, explaining why the initial supply may get overwhelmed by subsequent demand. This concept shows why continuations tend to follow the market momentum driven by greater buying power.

10:03

🤓 How to turn a reversal setup into a reliable continuation

The paragraph explains how to transform a reversal supply setup into a usable continuation trade instead. It covers confirmations like minor reactions and breakout failures that indicate more underlying buying power. These provide entry points aligned with the momentum, benefiting from institutional flows.

Keywords

💡reversal

A reversal refers to a change in the direction of a price trend in the market. The video advises against trading reversals as a beginner, since reversing an entire price move requires precise timing and experience. Reversals are considered the video creator's secondary trading strategy.

💡continuation

A continuation is when a price trend persists in its original direction without reversing. The video recommends trading continuations as a beginner trader since it means trading in the direction of the overall market momentum.

💡supply

Supply refers to a zone or area on a price chart where selling pressure previously overwhelmed buying pressure. It is considered an area where sellers are likely to enter the market again if price returns.

💡demand

Demand refers to an area on a price chart where buying pressure previously overwhelmed selling pressure. It represents an area where buyers are likely to enter the market again if price returns.

💡liquidity

Liquidity refers to the amount of buy and sell orders present in a market. When the video mentions "liquidity" in a supply or demand zone, it refers to the amount of orders that are likely to get filled if price revisits that area.

💡stop hunt

A stop hunt involves driving the price to areas of liquidity to trigger stop loss orders from traders before reversing the price movement. It is a manipulation strategy discussed in the video.

💡order block

An order block is a section of the price chart marking a significant change in market direction and momentum, indicating large orders were filled. It is essentially another term for a supply or demand zone.

💡bias

Bias refers to the overall directional tendency of a market during a certain time period, like an upwards or downwards bias. Checking higher timeframe biases is important context for validating reversal trades.

💡AKA turtle soup

This seems to refer to entries triggered by stop hunts and liquidations, related to the famous "turtle traders" system developed in the 1980s.

💡purge

A purge is an event where price moves sharply and rapidly in one direction as the market liquidates leverage. It provides opportunities to enter continuation moves.

Highlights

The best way to trade as a beginner is not reversal, you need to stop trading reversals

I still trade continuations, reversal reversals are mostly my second base strategy

Reversals are dangerous, you're asking a lot from the supply candle to stop the entire move

Institutions accumulate buy orders as price goes up, so there may be more buying power than selling

Don't stand in front of a moving truck, don't go against institutions, ride along with them

Continuations are better than stopping an entire move

We need a mild reaction from the supply zone to confirm it

If demand doesn't break, it means there's not enough money in the sellers to push down

The balance indicates there is way more buying power than selling power

Put your stop loss to the last swing and take it above last resistance for continuation

Follow these steps and you'll find success with smart money concepts

Comment which course you want first - liquidity or stop hunt entry methods

Liquidity course covers major liquidity concepts

Stop hunt course covers turtle soup entry method

I'll drop the most requested course first

Transcripts

so the reason you're failing as a smart

money Trader is mostly because of

inexperience and what's the best way to

show an experience is trade selection so

it's to my belief that the best way to

trade as a beginner is not reversal so

you need to stop trading reversals best

thing to do is continuations and even me

as a Trader that made over fourteen

thousand percent in the past two years I

still trade continuations reversal

reversals are mostly my second base

strategy I treat reversal secondary

mainly I trade continuations and let me

show you why

I'm going to show you why reversals are

dangerous again if you're a profitable

Trader you have nothing to worry about

and you should be already trading

reversals and like I said I trade

reversals too but as a secondary option

but if you're not profitable and you've

been trying to make sense out of smart

money concepts for years and still not

finding success this is probably one of

the main reasons why you're not

successful

so just to use common sense

you have your supply Candle supply order

block

You're Expecting price to sell off right

here

think about it

you're trying to stop this entire move

by this one candle

you're asking a lot from the Scandal to

stop this entire motion right here

so just just by thinking of it in that

matter you should already see why it

might be a little bit dangerous again if

if you have the daily to monthly the

weekly bias the session by is you have a

few confirmations on why that

institutional candle is verified and uh

I mean validated in uh the price

approachment is on point you could trade

it but if you've been struggling for

years now this is probably one of the

reasons

so another way to look at it for it to

make sense to you let's say there is

40

dollars in this Supply candle so it's 40

worth of sellovers again this is

hypothetical I know if we're talking

about uh the Forex Market we're speaking

in millions but just for Simplicity

reasons let's say this forty dollars in

the cell price comes up here there's

forty dollars worth of sell orders to

push price down but look at this entire

move

as price is going up prices accumulating

orders too

by buying up here buying up here buying

up here institutions could be also

buying up somewhere along the ride to

push price forward Etc so

knowing that

knowing that let's say they put in

uh fifteen dollars right here

hypothetical of course that forced this

move

now as you can see the second move is a

little bit longer so they probably put

twenty dollars over here

and let's say then you got five dollars

right here somewhere here because of the

small small amount of like increment

moves the

the moves this could be somewhere around

five dollars

and you can have five dollars over here

so so this amount is already more than

the forty dollars that you have to push

price down and as you can see price has

already been pushed down significantly

here and they use this exact sell order

to push this entire price all the way

down here but price found resistance

over here

this demand candle push price forward so

there's a lot there might be more buying

power here than the selling power over

here just by taking a deeper look so

again you're asking a lot from the price

to call out a reversals and even me as

an experienced Trader I only trade

reversals when they're at a high of the

day or low of the day areas

I don't trade them without any extra

contacts just because of all these

reasons you could be asking a lot from

price to reverse but what you can do is

you can get in a continuation and ride

along with the trend you can take

advantage of this trend let me show you

how you can turn this reversal setup

into a continuation setup

so I'm going to show you how to make

this Supply Candle supply Zone reversal

that you anticipate here and turn it

into a continuation so let's say

this candle has

three

uh dollar signs three cell dollar signs

so for price to push this this is these

three dollar signs is what this area

contains so for it to push price all the

way down here this entire move this

entire move is let's say it cost

to

to two dollar signs

it costs two dollar signs to push price

down

so as it came to push price down

obviously it took two dollar signs from

the initial three to push price down so

now you lost two dollar sign so now this

area has less money because he used that

money to push price lower so now when

price approached when price approached

the supply the demand Zone

what happened

the demand Zone had money so the demand

started pushing back so let's say

the man pushed back and by how much I

mean it stopped this entire move so

let's say it used two dollar signs to

push price up so as price continued

people kept buying people kept buying

this institute kept buying so

more

more buys

more Buys so by the time it got up to

here we can tell that this this uh

Supply zone is getting overpowered by

the demand Zone because the amount of

the fact that this demands on stock

price right here

at stock price complete right here you

use money to stop this price obviously

which would be our two dollar signs

right here and as price kept going up

order kept adding buys buys kept adding

to push price higher and higher so by

the time price got to our supply Zone it

reacted a little bit when it reacted for

that one last time it lost

it lost our last uh dollar sign right

here so the small reaction right here

was the final straw

this small reaction right here from our

Zone was the last straw and we lost all

our supply uh Supply candle liquidity

right here we lost all that liquidity

obviously we lost two dollar signs

throughout this move and then we lost

our last dollar sign with this last

bounce so what happened so when price

revisits this area there's no more money

left in this

uh Supply zone is zero so we expect

price to run through so this way you can

get in a buy right here or right here

and have your stop loss at the last

swing and get along with the trend get

in a buy with the trend with all the

money that's being ejected why because

you will get in with institutions the

institutions are buying buying buying

right here you might as well buy with

them why go against

uh why stand in front of a moving truck

basically that's what that's what it

really comes down to you don't want to

go against

the institutions you want to ride along

and the continuation is way better than

stopping an entire move

so here we have our supply candle

let's see like we said before we need a

mild reaction from that zone

and we got our reaction

so what is our next Clues

so here

we have

a micro demand candle

now what happens if price

breaks this candle so let's say price

breaks this candle and comes back it

might just want to revisit this area and

use the leftover liquidity here to push

price lower why would this break be

significant

this break would indicate that there's

so much money in this

Supply candle that even this demand

candle has no chance and it broke so

when price comes back again there's

still some money left over to push

probably slower but if it doesn't break

if it doesn't even approach it doesn't

even get near it because it doesn't have

enough power to get near it or let's say

he uses it but doesn't close or uses it

and bounces that means that there's not

enough money in this move right here and

like we go back to our dollar Theory

let's go back to our dollar sign Theory

let's say

there is

one sign one dollar sign over here the

fact the price wouldn't be able to break

this level that means

there is more green

dollar signs over here what does this

indicate that indicates that this area

this area has more money than that area

so just using common sense when price

comes back when price comes back from

using this money to come back up here

there's there is going to overpower this

area because price already used this

dollar sign to push price down so when

it comes back here this area this buyer

area is going to overpower and what was

the clue

and what was the Clue the clue would be

the balance

so you see price didn't close and came

right back into that area

so what does that balance indicate that

there is way more buying power than

selling power so all you need to do now

is put your stop loss to the last swing

and maybe take it right above the last

resistance point

and that's it this will be your

continuation it's that simple so follow

all these steps and you will find

success with smart money Concepts and

make sure you like share and subscribe

and comment comment what videos do you

guys want me to cover next I have two

courses ready to go so I have a

liquidity course and a stop on course

a liquidity course would cover all the

major concepts of liquidity and the

stophunt course we would cover how to

enter using the purge the AKA turtle

soup method so

yeah comment which one you guys won

first then I'll make sure I drop it

thank you