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2026-01-05•Andreas

Smart Money Concepts (SMC) for Beginners

Decode the institutional footprint. Learn about Order Blocks, Liquidity Sweeps, and how to trade with the banks.

Follow the Footprint

Retail support and resistance works... until it doesn't. Why? Because Smart Money (Banks, Hedge Funds, Institutions) needs liquidity to fill their massive orders. And where is that liquidity? Right where you put your Stop Loss.

Smart Money Concepts (SMC) is the art of identifying where institutions are entering and exiting the market.

SMC Chart Analysis

1. Liquidity (The Fuel)

The market moves from liquidity to liquidity.

  • Equal Highs/Lows: Retail traders see "Double Tops" and sell. Banks see "Buy Stops" (Liquidity) sitting just above.
  • The Move: Price will spike ABOVE the highs (taking out the stops) before crashing down.
  • The Lesson: Do not place your stop loss at obvious visual levels.

2. Order Blocks (OB)

An Order Block is the specific candle where institutions placed their large positions before a massive move.

  • Bullish OB: The last down-candle before a strong explosive move up.
  • Bearish OB:The last up-candle before a strong explosive move down.

How to trade it: Wait for price to return to this candle (the "re-test"). Institutions often leave pending orders here to mitigate their positions.

3. Break of Structure (BOS)

We only look for trades when the trend is clear.

  • Uptrend: Price creates Higher Highs (HH) and Higher Lows (HL).
  • BOS: When price breaks the previous High and closes above it. This confirms the trend is continuing.

4. Change of Character (CHoCH)

This is the reversal signal.

  • If we are in an Uptrend (HH, HL), and price suddenly breaks the last Higher Low, the trend has changed. The character has shifted from Bullish to Bearish.
  • Entry: Wait for a CHoCH, then look for a Bearish Order Block to sell.

The SMC Cheat Sheet

  1. Identify Trend: Are we making BOS to the upside or downside?
  2. Spot Liquidity: Where are the retail stop losses?
  3. Find the OB: Locate the institutional candle that started the move.
  4. Wait: Let price come back to your OB.
  5. Execute: Enter with stops below the OB.

Want to master SMC? It takes time to retrain your eyes. In DAQ Capital, we mark up these zones live every morning so you can learn by watching.

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