5 Steps Smart Money Concept Model

5 STEPS SMART MONEY CONCEPT MODEL

Break of Structure (BOS):
Definition: A Break of Structure occurs when the market provides the initial indication that the price is likely to reverse. For example, a new lower low and lower high signal a disrupted market structure, indicating a forthcoming reversal to the downside.
Trading Approach: Traders typically align their trades with the Higher Time Frame (HTF) BOS, especially when the price closes above/below a swing high/low.

Change in Character (CHOCH):
Definition: A CHOCH represents an initial shift that can signal a short- or long-term price reversal. It is considered a reversal pattern, utilized by SMC traders on higher time frames for market direction and on lower time frames for trade opportunities.
Implementation: SMC traders use CHOCHs on various time frames to gauge market direction and identify intraday reversals or reactions to Points of Interest (POIs).

Fair Value Gap (FVG):
Definition: Fair Value Gaps highlight market inefficiencies or imbalances, where buying and selling are not equal. These gaps become magnets for price, resolving the inefficiency as resting orders are filled.
Utilization: Traders use FVG information to target these gaps, identifying potential entry points for long or short positions. Fair Value Gaps are considered valuable Points of Interest (POIs) in price action trading.