Smart Money Concepts 2.4

Smart Money Concepts 2.4

The “Smart Money Concept” is a trading/analysis framework centered on the idea that markets are often driven by those large players’ order flow, liquidity needs, and structural manipulation — i.e. the visible price action on a chart is the result of their activity. Instead of relying on lagging technical indicators (like oscillators), SMC tries to infer where smart money has acted (or is preparing to act), and trade accordingly.

Market Structure & Structure Breaks: Watching swing highs/lows to detect trend direction — e.g. sequences of Higher Highs & Higher Lows (bullish) or Lower Highs & Lower Lows (bearish). A “break of structure” or a “change of character” may signal when institutional bias shifts.
EBC Financial Group

Liquidity Zones / Liquidity Pools: Areas where many stop-loss orders or pending orders from retail traders tend to concentrate (e.g. above recent highs, below recent lows, around consolidation zones). Smart money often hunts liquidity — those zones become interesting for entries/exits.

Order Blocks (OB): Zones where large institutional orders are believed to have been placed. For example, the last bearish candle before a strong bullish move may mark a bullish order block; vice versa for bearish blocks. These zones may act as supply/demand zones for future trade entries when price returns.

Fair Value Gaps (FVG) / Imbalances: Price inefficiencies or “gaps” where one side dominated — believed to be zones likely to be retested later. Many SMC traders watch for such gaps to align with order blocks or liquidity zones before entering.

Liquidity Sweeps / Stop-Hunting Moves: The idea that before a big move, price may first “sweep” liquidity (trigger stop-losses around obvious levels) — typically trapping retail traders — then reverse in the “real” direction intended by big players.