5 things to know when using Smart Money Concept (SMC)
1. Identifying Market Trends: The first step to analyse the forex market is to identify the global trend. Smart money always moves with the trend, knowing that profits are always higher when market direction is known. Tools such as Simple Moving Averages or Trendlines can help to identify market trends.
2. Volume Analysis: Smart Money concept involves looking into the trading volume. When volume increases, it indicates that smart money is involved. Look for significant spikes in volume while the price is moving in a certain direction.
3. Price Action Analysis: This refers to the study of price movements in the market to determine the next move of smart money. It involves analysing patterns and price interactions with various areas of support and resistance.
4. Economic News and Events Analysis: Smart money often moves in anticipation of or in response to economic news and events. Keep track of the economic calendar to understand what news or event is coming up and anticipate the direction of smart money.
5. Sentiment Analysis: This involves understanding the sentiment of the forex market. It allows you to gauge how other traders are feeling about the market, giving you insights into potential market moves. Tools like the Commitment of Traders (COT) report can be used to understand the sentiment, revealing positions of large traders or "smart money".
Remember, analysing the forex market with the smart money concept requires practice and patience. It's not always exact, as the market can be influenced by different variables. Don't rely solely on this analysis, use additional tools and your judgement as well.
2. Volume Analysis: Smart Money concept involves looking into the trading volume. When volume increases, it indicates that smart money is involved. Look for significant spikes in volume while the price is moving in a certain direction.
3. Price Action Analysis: This refers to the study of price movements in the market to determine the next move of smart money. It involves analysing patterns and price interactions with various areas of support and resistance.
4. Economic News and Events Analysis: Smart money often moves in anticipation of or in response to economic news and events. Keep track of the economic calendar to understand what news or event is coming up and anticipate the direction of smart money.
5. Sentiment Analysis: This involves understanding the sentiment of the forex market. It allows you to gauge how other traders are feeling about the market, giving you insights into potential market moves. Tools like the Commitment of Traders (COT) report can be used to understand the sentiment, revealing positions of large traders or "smart money".
Remember, analysing the forex market with the smart money concept requires practice and patience. It's not always exact, as the market can be influenced by different variables. Don't rely solely on this analysis, use additional tools and your judgement as well.