Introduction
Smart Money Concepts (SMC) Forex trading is a popular trading strategy that uses order blocks, breaker blocks, and other concepts to identify and trade alongside institutional traders. SMC traders believe that the market is manipulated by large institutions, such as banks and hedge funds, and that by identifying and following their trades, retail traders can increase their chances of success.What is SMC Forex trading?
SMC Forex trading is a form of price action trading that uses unique terminology to discuss supply and demand, support and resistance, and market structure. SMC traders believe that market makers manipulate the markets and that retail traders should follow their strategies.SMC theory
SMC theory is based on the idea that market makers, such as banks and hedge funds, have the most influence on the market. SMC traders believe that by identifying and following the trades of market makers, retail traders can increase their chances of success.Where did SMC Forex trading come from?
SMC Forex trading originated with The Inner Circle Trader (ICT), offered by Michael J. Huddleston. Huddleston developed SMC theory based on his years of experience trading as a market maker.SMC core concepts and terminology
Some of the key SMC concepts and terms include:- Order blocks: Areas of supply and demand where market makers place their orders.
- Breaker blocks: Areas where market makers break through order blocks to create liquidity.
- Mitigation blocks: Areas where market makers mitigate their risk after breaking through order blocks.
- Flip zones: Areas where market makers are likely to flip their positions from long to short or vice versa.
- Fair value gaps: Gaps in the price chart that are likely to be filled by market makers.
- Market structure: The overall trend and direction of the market.
Controversies about SMC Forex trading
SMC Forex trading is a controversial strategy, as some critics argue that its theory is speculative and unverifiable, and that its terminology can complicate learning and communication. Others argue that SMC is repackaged price action trading with unnecessary complexity.Pros and cons of SMC
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