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

ETM FX
10 Apr 202310:58

Summary

TLDRThe 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.

Mindmap

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

play00:00

so the reason you're failing as a smart

play00:01

money Trader is mostly because of

play00:03

inexperience and what's the best way to

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show an experience is trade selection so

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it's to my belief that the best way to

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trade as a beginner is not reversal so

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you need to stop trading reversals best

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thing to do is continuations and even me

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as a Trader that made over fourteen

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thousand percent in the past two years I

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still trade continuations reversal

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reversals are mostly my second base

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strategy I treat reversal secondary

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mainly I trade continuations and let me

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show you why

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I'm going to show you why reversals are

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dangerous again if you're a profitable

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Trader you have nothing to worry about

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and you should be already trading

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reversals and like I said I trade

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reversals too but as a secondary option

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but if you're not profitable and you've

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been trying to make sense out of smart

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money concepts for years and still not

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finding success this is probably one of

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the main reasons why you're not

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successful

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so just to use common sense

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you have your supply Candle supply order

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block

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You're Expecting price to sell off right

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here

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think about it

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you're trying to stop this entire move

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by this one candle

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you're asking a lot from the Scandal to

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stop this entire motion right here

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so just just by thinking of it in that

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matter you should already see why it

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might be a little bit dangerous again if

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if you have the daily to monthly the

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weekly bias the session by is you have a

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few confirmations on why that

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institutional candle is verified and uh

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I mean validated in uh the price

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approachment is on point you could trade

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it but if you've been struggling for

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years now this is probably one of the

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reasons

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so another way to look at it for it to

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make sense to you let's say there is

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40

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dollars in this Supply candle so it's 40

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worth of sellovers again this is

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hypothetical I know if we're talking

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about uh the Forex Market we're speaking

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in millions but just for Simplicity

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reasons let's say this forty dollars in

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the cell price comes up here there's

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forty dollars worth of sell orders to

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push price down but look at this entire

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move

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as price is going up prices accumulating

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orders too

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by buying up here buying up here buying

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up here institutions could be also

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buying up somewhere along the ride to

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push price forward Etc so

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knowing that

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knowing that let's say they put in

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uh fifteen dollars right here

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hypothetical of course that forced this

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move

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now as you can see the second move is a

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little bit longer so they probably put

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twenty dollars over here

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and let's say then you got five dollars

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right here somewhere here because of the

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small small amount of like increment

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moves the

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the moves this could be somewhere around

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five dollars

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and you can have five dollars over here

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so so this amount is already more than

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the forty dollars that you have to push

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price down and as you can see price has

play03:23

already been pushed down significantly

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here and they use this exact sell order

play03:29

to push this entire price all the way

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down here but price found resistance

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over here

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this demand candle push price forward so

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there's a lot there might be more buying

play03:42

power here than the selling power over

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here just by taking a deeper look so

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again you're asking a lot from the price

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to call out a reversals and even me as

play03:52

an experienced Trader I only trade

play03:54

reversals when they're at a high of the

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day or low of the day areas

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I don't trade them without any extra

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contacts just because of all these

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reasons you could be asking a lot from

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price to reverse but what you can do is

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you can get in a continuation and ride

play04:10

along with the trend you can take

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advantage of this trend let me show you

play04:13

how you can turn this reversal setup

play04:16

into a continuation setup

play04:22

so I'm going to show you how to make

play04:23

this Supply Candle supply Zone reversal

play04:27

that you anticipate here and turn it

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into a continuation so let's say

play04:32

this candle has

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three

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uh dollar signs three cell dollar signs

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so for price to push this this is these

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three dollar signs is what this area

play04:44

contains so for it to push price all the

play04:47

way down here this entire move this

play04:50

entire move is let's say it cost

play04:54

to

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to two dollar signs

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it costs two dollar signs to push price

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down

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so as it came to push price down

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obviously it took two dollar signs from

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the initial three to push price down so

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now you lost two dollar sign so now this

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area has less money because he used that

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money to push price lower so now when

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price approached when price approached

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the supply the demand Zone

play05:24

what happened

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the demand Zone had money so the demand

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started pushing back so let's say

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the man pushed back and by how much I

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mean it stopped this entire move so

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let's say it used two dollar signs to

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push price up so as price continued

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people kept buying people kept buying

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this institute kept buying so

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more

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more buys

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more Buys so by the time it got up to

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here we can tell that this this uh

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Supply zone is getting overpowered by

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the demand Zone because the amount of

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the fact that this demands on stock

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price right here

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at stock price complete right here you

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use money to stop this price obviously

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which would be our two dollar signs

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right here and as price kept going up

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order kept adding buys buys kept adding

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to push price higher and higher so by

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the time price got to our supply Zone it

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reacted a little bit when it reacted for

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that one last time it lost

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it lost our last uh dollar sign right

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here so the small reaction right here

play06:42

was the final straw

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this small reaction right here from our

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Zone was the last straw and we lost all

play06:54

our supply uh Supply candle liquidity

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right here we lost all that liquidity

play07:00

obviously we lost two dollar signs

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throughout this move and then we lost

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our last dollar sign with this last

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bounce so what happened so when price

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revisits this area there's no more money

play07:10

left in this

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uh Supply zone is zero so we expect

play07:16

price to run through so this way you can

play07:19

get in a buy right here or right here

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and have your stop loss at the last

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swing and get along with the trend get

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in a buy with the trend with all the

play07:30

money that's being ejected why because

play07:32

you will get in with institutions the

play07:34

institutions are buying buying buying

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right here you might as well buy with

play07:38

them why go against

play07:39

uh why stand in front of a moving truck

play07:41

basically that's what that's what it

play07:44

really comes down to you don't want to

play07:45

go against

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the institutions you want to ride along

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and the continuation is way better than

play07:51

stopping an entire move

play07:53

so here we have our supply candle

play07:56

let's see like we said before we need a

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mild reaction from that zone

play08:07

and we got our reaction

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so what is our next Clues

play08:11

so here

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we have

play08:15

a micro demand candle

play08:20

now what happens if price

play08:23

breaks this candle so let's say price

play08:25

breaks this candle and comes back it

play08:27

might just want to revisit this area and

play08:30

use the leftover liquidity here to push

play08:32

price lower why would this break be

play08:34

significant

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this break would indicate that there's

play08:38

so much money in this

play08:41

Supply candle that even this demand

play08:43

candle has no chance and it broke so

play08:45

when price comes back again there's

play08:46

still some money left over to push

play08:48

probably slower but if it doesn't break

play08:51

if it doesn't even approach it doesn't

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even get near it because it doesn't have

play08:54

enough power to get near it or let's say

play08:57

he uses it but doesn't close or uses it

play09:00

and bounces that means that there's not

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enough money in this move right here and

play09:04

like we go back to our dollar Theory

play09:06

let's go back to our dollar sign Theory

play09:09

let's say

play09:10

there is

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one sign one dollar sign over here the

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fact the price wouldn't be able to break

play09:17

this level that means

play09:19

there is more green

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dollar signs over here what does this

play09:24

indicate that indicates that this area

play09:29

this area has more money than that area

play09:31

so just using common sense when price

play09:34

comes back when price comes back from

play09:36

using this money to come back up here

play09:39

there's there is going to overpower this

play09:42

area because price already used this

play09:45

dollar sign to push price down so when

play09:48

it comes back here this area this buyer

play09:50

area is going to overpower and what was

play09:52

the clue

play09:58

and what was the Clue the clue would be

play09:59

the balance

play10:02

so you see price didn't close and came

play10:04

right back into that area

play10:06

so what does that balance indicate that

play10:08

there is way more buying power than

play10:10

selling power so all you need to do now

play10:12

is put your stop loss to the last swing

play10:15

and maybe take it right above the last

play10:19

resistance point

play10:24

and that's it this will be your

play10:25

continuation it's that simple so follow

play10:28

all these steps and you will find

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success with smart money Concepts and

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make sure you like share and subscribe

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and comment comment what videos do you

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guys want me to cover next I have two

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courses ready to go so I have a

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liquidity course and a stop on course

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a liquidity course would cover all the

play10:44

major concepts of liquidity and the

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stophunt course we would cover how to

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enter using the purge the AKA turtle

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soup method so

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yeah comment which one you guys won

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first then I'll make sure I drop it

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thank you