SMC: A Revolutionary Method?!
SMC — the concepts tied to Smart Money from ICT — are all the rage: they’re talked about everywhere on social media. Whether you lean more toward Price Action in the classic sense or toward SMC & ICT, solid technical analysis is always done on TradingView!
That’s probably why you’re also wondering what SMC actually is and whether it deserves all the fuss. I’ve already answered that question in an earlier full article on Smart Money Concepts. And if you’re looking for an SMC strategy you can put into practice quickly, I’d recommend taking a look at my Order Block trading course.
Smart Money Concepts: Definition
The simplest way to describe trading based on Smart Money concepts is to say that it’s the study of Price Action under another name — nothing more, nothing less. And I could end this article right here.
According to its proponents, Smart Money Trading — which uses Smart Money concepts — refers to using institutional trading strategies that are aligned with the outlook of the Smart Money. In their view, institutional Smart Money Trading is superior to any retail trading strategy in many respects. Its advocates are firmly convinced that institutional trading is more powerful and more precise than anything the retail market can offer. The Smart Money is supposed to have greater access to knowledge and resources than retail traders (small individual traders) or the “Dumb Money.”
In reality, SMC uses the classic concepts of traditional trading — such as supply and demand, price patterns, support and resistance — but all of it has been given new names and described in a different way.
So SMC-style traders refer to concepts like “liquidity grabs” and “mitigation blocks.” Although this terminology may seem obscure, once you study SMC you’ll realize it’s a far more traditional trading approach than it appears at first glance.
SMC: Definition and Theory of the System
The SMC system isn’t just a trading strategy; it’s also an entire philosophy about how the markets work.
Fundamentally, the SMC trading system claims that market makers (i.e., banks, hedge funds, and so on) are manipulative entities and that, on top of that, they actively make life hard for retail traders (small individual traders).
According to this SMC system, as a retail trader you must base your strategy on the “smart money” — that is, the money belonging to the market makers.
The idea is for you to trade the way the market makers do. Since they’re supposed to call the shots in the markets based on supply, demand, and market structure, under the SMC system you’ll aim to put yourself in the market makers’ shoes and anticipate their reactions whenever you have to take a trade.
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The Origins of the SMC Trading System
Smart Money concepts come from the trading school The Inner Circle Trader: ICT, founded by Michael J. Huddleston, a professional trader.
Core Concepts and Terminology: The Vocabulary
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