Introduction:
Trading, in general, requires a lot of techniques, experience, and expertise, as there are several factors that lead to successful trades, these factors range from technical analysis to the market fundamentals, to traders’ sentiments and economic conditions.

Most traders are therefore overwhelmed on many occasions while trading the market that they fail to cope with the market noise as they are unable to filter this noise out but rather get carried away by the endless buzzing sounds of charts, price movements, and so on that they end up losing themselves first before losing their equity.

This is one of the major reasons why we give in-depth articles here on Dipprofit to help guide traders on their journey and provide them with as much information and knowledge as they need, so as to make their trading journey easier, more focused, and more successful.

In this article, we will be looking at one of the best trading strategies every trader should know about and it is called the SMC trading strategy. The full meaning of SMC is Smart Money Concept, The SMC trading strategy is in a way similar to the supply and demand zones trading strategy we have also written about in one of our articles here because it helps the trader to easily determine the entry and exit positions of the big boys’ trades. By big boys, I mean institutional traders, hedge funds, and banks.

Understanding where these sets of traders take positions is one of the key factors to taking a successful trade and that is why the SMC trading strategy is revered amongst many other trading strategies.

So the questions that I guess should already be in your minds are: What really is SMC trading strategy? How can I apply the SMC trading strategy to my trade and how profitable would I become using the SMC trading strategy? All these questions will be answered in this article, so grab a cup of coffee, your notepad, and your mt4/mt5 interface, as we begin.

What is SMC Trading Strategy?
SMC trading strategy is a straightforward and traditional trading approach that relies on basic concepts like supply and demand, price action trading strategies, and support and resistance techniques to properly analyze entry and exit trade positions.

It is a process in which traders pay more attention to the actions of market makers (institutional traders, hedge funds, banks, etc) while analyzing the market structure. Through the use of the SMC trading strategy, traders can gain an edge in the Forex market.

While this trading strategy might seem unfamiliar at first, the Smart Money Concept strategy as it is mostly called is built upon traditional trading concepts such as supply and demand, price patterns, and support and resistance. The difference lies in its unique terminology which the SMC traders call them, SMC traders use concepts like “liquidity grabs” “market structure” and “mitigation blocks” while using the SMC trading strategy.

Despite this seemingly novel approach, SMC is, at its core, a more conventional trading method than you might expect. Rather than relying on complicated algorithms or advanced technical analysis, SMC’s trading strategy is founded upon a simple philosophy about how markets operate.

SMC asserts that market makers, entities such as banks, and hedge funds are manipulative by nature and that they actively work against retail traders, which seems to be true from my years of trading experience. As an SMC trader, you should therefore base your trading strategy on the actions of these “smart money” that is the money the market makers bring in and take from the market.

Essentially, the idea is to mirror the trades of market makers. By analyzing supply and demand zones, and market structure, you can gain insight into how these entities are trading and make informed decisions about your own trades.

In summary, while SMC may sound foreign due to its unique terminology, it is in fact a very simple and easy-to-understand strategy.

Now that we understand what SMC trading strategy is, we will be looking at how we can apply the SMC trading strategy to our trading, as I will be sharing valuable insights and techniques that will help you identify the best entry and exit points in the financial market using the SMC trading strategy and reducing risk exposure.

Before we learn how to trade using the SMC trading strategy, we would also need to understand some of the terms that SMC traders use, as we will be using them a lot in this article:

Basic Terms Used in SMC Trading Strategy
Change of Character (CHOCH): Change of character means, the market has changed its trend or order flow over a period of time.

Break of Structure (BOS): “break of structure” is used to describe a significant price movement that surpasses a crucial level of support or resistance on a chart. This level is usually predetermined by institutional traders or other significant investors, who establish it as a critical threshold for market movement.

Unmitigated Demand Zone: In the context of SMC trading strategy, “unmitigated demand zones” refer to price levels in a market where there is a high level of buying interest without significant selling pressure.

Unmitigated Supply Zone: Unmitigated supply zones are the opposite as they refer to price levels in a market where there is a high level of selling interest without any significant buying pressure. To further understand how to identify demand and supply zones, you can read my article on that.

Order Blocks: This is a trading block or a trading zone/point, that has massive buy or sell orders, they are what make up demand and supply zones. These order blocks are created by institutional traders and large investors and they form a significant point in the market.

Liquidity in SMC Trading: "What does liquidity mean in SMC Forex? Liquidity signifies the degree to which an asset can be rapidly bought and sold, maintaining stable prices and facilitating its conversion into cash. It essentially represents the speed and cost associated with selling an asset, whether it's a financial instrument like a stock or a tangible asset like a commercial property."

Which Time Frame is Best for SMC Trading
The most suitable timeframe for SMC trading strategy might vary due to several factors, but the general opinion from several SMC traders is that "The SMC trading strategy works better when employing a longer time frame (4 hours) for technical analysis and a shorter time frame (15 minutes) to get your entry points, this timeframe has the potential to enhance the precision of trading decisions."

How to Trade Using the SMC Trading Strategy:

We would learn Smart money entry patterns and methods such as:

SMC Reversal Entries
How to identify valid CHOCH.
Major and Minor change of character (CHOCH)
Aggressive Entry setup

Entry Methods:

Firstly let us examine the entry method we can use in the SMC trading strategy. Smc entry methods are divided into two major subcategories namely:

The reversal entry method
The continuation entry method

The reversal entry method can further be divided into two namely:

Change of character (CHOCH) or change of market structure.
Flip entry setup.

In this article, I will use the reversal entry method to illustrate how to use the SMC trading strategy, and under the reversal method, we will be using the change of character (CHOCH) method, as it is easier to understand and is the one I am most familiar with.

It is important to note before we continue that this entry method should only be used in the higher timeframes demand and supply zones because these areas are seen to have high probability due to the sponsorship of the higher timeframe anything outside these zones immediately increases risk exposure.

Now let’s look at the reversal entry method using the Change of character (CHOCH) or market structure shift as it is called in conventional trading.

To read more on using the SMC Trading Strategy for profitable trading with a step-by-step guide and illustration read the full article using the link here. https://www.dipprofit.com/how-to-trade-using-smc-trading-strategy/

What are the main types of trading accounts offered by FBS and what advantages do they offer traders?