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SMC Smart Money Concepts [GPT-5] SRK

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What Smart Money Concepts (SMC) Means

Smart Money Concepts aim to analyze price action and market structure to identify where large players are likely entering or exiting trades.
It’s based on the idea that markets move because of liquidity and institutional order flow, not just technical indicators.

🔹 Core Principles of SMC

Market Structure – Identify trends, highs/lows, and shifts (BOS = Break of Structure, CHoCH = Change of Character).

Liquidity – Understand where stop losses accumulate (above highs or below lows) — these are zones institutions target.

Order Blocks (OBs) – Candles or zones where institutional buying or selling likely originated.

Fair Value Gaps (FVGs) – Imbalances in price where there was no trading activity; price often returns to fill these.

Premium & Discount Zones – Using Fibonacci or structural levels to determine optimal buy (discount) and sell (premium) areas.

Mitigation & Re-entry – Smart money often re-enters positions to “mitigate” previous orders.

🔹 Why Traders Use SMC

To align with institutional order flow instead of retail sentiment.

To improve precision in entries/exits (fewer trades, higher RR).

To understand why price moves, not just how.
🔹 Example

If EUR/USD is trending down, an SMC trader might:

Wait for liquidity sweep above a recent high (where retail traders put stop losses).

Spot a bearish order block.

Enter a sell trade once structure breaks lower (BOS), aiming for liquidity below a recent low.

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