1. What Are Smart Money Concepts?
SMC, Smart Money Concepts, is a method of analyzing institutional investors' trading patterns. It was popularized by ICT, Inner Circle Trader.
2. Core Concepts
Order Block
A price zone where institutions are interpreted as having bought or sold heavily. Price is considered likely to react when it returns.
FVG: Fair Value Gap
A gap created by the middle candle in a three-candle formation. Price is considered to have a tendency to return and fill it.
Liquidity Sweep
A pattern interpreted as institutions triggering retail stop orders to obtain liquidity before price reverses.
3. Precautions
⚠️ SMC Pitfalls
• Price does not react at every order block or fair value gap
• The higher-timeframe structure must also be considered
• There is considerable room for subjective interpretation