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How to Make Money Trading Using Smart Money Concepts (SMC)


If you're tired of trading strategies that fail to deliver consistent profits, it's time to dive into Smart Money Concepts (SMC) — an institutional approach to trading used by hedge funds and banks. SMC doesn't follow retail patterns like indicators or trendlines. Instead, it tracks what the “smart money” is doing — the big players who move the market.

Let’s break down how to actually make money trading with SMC — step by step.

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🧠 What is Smart Money?

Smart money refers to the big institutional investors — banks, hedge funds, and large financial entities. These players don't trade based on RSI or MACD. They manipulate price, trigger retail stop-losses, and then take the opposite side of the trade.

SMC is about understanding how smart money operates and trading in their footsteps.

🔑 Core SMC Concepts

  1. Liquidity

    • Price moves to grab liquidity (stop-losses or pending orders).

    • Liquidity zones are like fuel tanks for smart money to enter or exit positions.

  2. Market Structure

    • Identify Higher Highs / Higher Lows or Lower Highs / Lower Lows.

    • Break of structure (BOS) confirms trend shift.

  3. Order Blocks (OB)

    • These are last candles before a sharp move.

    • Institutions often enter trades from order blocks.

  4. Imbalance (Fair Value Gaps - FVG)

    • Price usually returns to fill imbalances before continuing.

    • Acts as magnets for price.

  5. Internal vs External Liquidity

    • Internal: Within a range (fakeouts).

    • External: True liquidity outside key highs/lows.

💰 How to Trade SMC for Profit

1. Mark the Daily Structure

  • Use higher timeframes (4H or Daily) to define the main trend.

  • Look for a Break of Structure (BOS) and a Change of Character (CHoCH).

2. Identify Liquidity Zones

  • Look for equal highs/lows, trendlines, and retail patterns.

  • These zones are where price is likely to reverse after liquidity sweep.

3. Mark Order Blocks and FVG

  • Use last up/down candle before a BOS.

  • Use FVG (gaps in price) as entry or mitigation points.

4. Entry Setup (Refinement on Lower Timeframes)

  • Go down to 5M or 1M to refine entries.

  • Wait for liquidity grab, followed by BOS on lower timeframe.

  • Enter on retest of OB or FVG.

5. Risk Management

  • Always risk 1–2% per trade.

  • Use Stop Loss below/above the order block.

  • Target external liquidity or major highs/lows.

✅ Example Strategy (Simplified)

  1. Daily Timeframe: BOS + CHoCH = Bearish bias

  2. 1H: Price retraces to Order Block

  3. 5M: Liquidity sweep + BOS

  4. Entry on retest of OB or FVG

  5. SL: Above OB

  6. TP: External liquidity level

📊 Why SMC Works

SMC mimics institutional behavior. Instead of predicting the market, you’re reacting to manipulations created by smart money. This gives you:

  • Higher R:R (1:3, 1:5, or more)

  • Fewer trades, more accuracy

  • Confidence to hold positions

🚨 Warning: Don't Just Copy Others

SMC isn’t about memorizing patterns. You must understand market logic and practice deeply. Backtest hundreds of setups before going live.

🧪 Tools to Use

  • TradingView for charting

  • Replay Mode for backtesting

  • Journals (Edgewonk, Notion, Excel) to track trades

  • Optional: ICT or SMC Discords for insights

💡 Final Thoughts

Making money with SMC is not about luck. It's about:

  • Reading price behavior

  • Tracking smart money

  • Practicing disciplined execution

Once you master it, SMC offers one of the most rewarding frameworks for consistent profitability.

📌 "Trade like the banks. Not against them."
— Every SMC trader, ever.


warning: this is not a financial suggestion but only a perceptiom everything is on your risk