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Smart Money Concepts (SMC): BOS, CHoCH and supply/demand

How to map market structure the SMC way: break of structure, change of character, order blocks, imbalance and inducement.

What SMC is

Smart Money Concepts is a catch-all name for ideas taken from ICT and Wyckoff and repackaged by the trading community: price is driven by "big money" hunting liquidity. The most useful part of SMC is its clear way of mapping structure.

HH / HLHigher highs, higher lows: bullish structure
LH / LLLower highs, lower lows: bearish structure
BOS (Break of Structure)A close above the latest high in an uptrend (or below the latest low in a downtrend): continuation
CHoCH (Change of Character)The first break of structure in the opposite direction: an early reversal sign
Inducement (IDM)A small high/low that lures traders in early before price reaches the real zone
ImbalanceAnother name for an FVG: a one-sided move with little two-way trade

Workflow

  1. Higher timeframe (H4/D1): mark HH/HL or LH/LL and the latest BOS to know the trend.
  2. Find a demand zone (an order block or unfilled imbalance) in the discount half of the up-leg.
  3. Lower timeframe: when price reaches that zone, wait for a CHoCH in the main trend direction.
  4. Enter at the small order block that created the CHoCH; stop below the zone; target the nearest high.
Watch outCount BOS/CHoCH only on candle closes beyond the level, not wicks, or you will see lots of false signals.

Try it on a chart

Educational content only, not investment advice. Practise on a demo account before using real money.