Smart Money Concepts (SMC)

Trade with institutional flow. Follow “smart money” — not retail.

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Core Concepts

1. Order Blocks

Where institutions placed orders before a move.

         ┌─────┐
         │ Buy│
       ╱ │Block│
    ↘  ╱  └─────┘  Continuation
    Price

Trading: Buy at buy order block retest.

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2. Liquidity Runs

Where retail stops are.

• Above recent highs = liquidity
• Below recent lows = liquidity

Trading: Run into stops, then reverse.

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3. Mitigation

When price returns to break a level.

• Mitigated = Level fails
• Held = Level holds

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4. Fair Value Gap (FVG)

Gap between candles.

   ☓          FVG
  ╱  ╲    ──────
 ╱      ╲
Price

Trading: Enter in FVG.

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SMC Process

Step 1: Find Trend

• Structure higher highs/lows

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Step 2: Find Order Blocks

• Recent impulse move
• Find order block

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Step 3: Wait for Retest

• Price returns to order block
• Enter on confirmation

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Step 4: Manage

• Stop below order block
• Target: next structure

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Common Mistakes

1. Wrong Order Block

Fix: Use recent, obvious blocks

2. No Confirmation

Fix: Wait for price action

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Key Takeaways

1. Institution — Follow smart money
2. Order blocks — Where institutions buy
3. Liquidity — Runs into retail stops
4. Confirm — Price action confirmation

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Related

breakout-strategy.md >>>

price-action.md >>>

market-structure.md >>>

Follow the institutions.