Core Concepts to Learn in SMC
Study these in roughly this order—they build on each other:
Market Structure
Identify higher highs/higher lows (bullish) or lower highs/lower lows (bearish). This is the "roadmap" of the market.
Break of Structure (BOS)
Price breaks a previous swing high (in uptrend) or low (in downtrend) → signals trend continuation.
Change of Character (CHoCH or CHOCH)
Price breaks the opposite way (e.g., breaks a prior low in an uptrend) → signals potential trend reversal. Often precedes a shift in bias.ee19f5
Liquidity
Pools of stop-loss orders or pending orders above equal highs (buy-side liquidity) or below equal lows (sell-side liquidity). Smart money often "sweeps" or raids these areas to grab liquidity before reversing or continuing. Liquidity is considered the fuel for moves—many call it the most important concept.
Order Blocks (OB)
Zones where institutions likely placed large orders (often the last opposing candle before a strong move). Bullish OB = demand zone for buys; Bearish OB = supply zone for sells. These act as support/resistance.
Fair Value Gap (FVG) or Imbalance
Gaps or inefficiencies created by rapid price moves (three-candle formation where the middle candle leaves a gap between wicks). Price often returns to "fill" these areas.
Other Key Elements (learn after the above):
Breaker Blocks and Mitigation Blocks
Premium/Discount arrays (price trading above/below equilibrium)
Inducement (fakeouts to trap retail traders)
Accumulation/Distribution phases
Once you know these, learn confluence: Combine them (e.g., BOS + FVG fill near an Order Block in the direction of higher-timeframe structure) for higher-probability setups.de1d59
Step-by-Step Learning Path
Theory Phase (1–2 weeks): Read/watch explanations of each concept. Take notes and draw them on blank charts.
Chart Practice Phase (Ongoing): Open historical charts (use TradingView replay feature). Mark structure, liquidity, OBs, FVGs, BOS/CHoCH on past data. Replay sessions to see how price reacted.
Backtesting: Test simple rules (e.g., "Buy at bullish OB after CHoCH confirmation with FVG confluence"). Track win rate, risk-reward.
Demo Trading: Apply on a demo account with strict rules. Focus on one pair (e.g., EUR/USD) and one timeframe setup initially.
Refine & Journal: Review trades weekly. Adjust based on what works in current market conditions.