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.