Institutions require immense volume to fill their orders. They often "hunt" areas where retail traders place their stop-losses to create the necessary liquidity for their own positions.
Institutions need liquidity to fill their large orders without causing massive slippage. They often drive price into areas where retail traders place stop-losses, known as . Buy-side Liquidity (BSL): Stop losses above old highs. Sell-side Liquidity (SSL): Stop losses below old lows. C. Order Blocks (OB)
SSL sits below structural lows, equal lows (double bottoms), and ascending trendlines. Short sellers and panicking buyers place their sell stops here. Institutions drive price down to trigger these stops, allowing them to buy assets at wholesale prices. 4. Order Blocks and Mitigation
Highlight unmitigated Order Blocks and open Fair Value Gaps on the HTF chart. pdf smart money concept top
To successfully trade SMC, you must execute a strict top-down analysis workflow to ensure your lower-timeframe execution aligns with higher-timeframe institutional narrative. Step 1: Higher Timeframe (HTF) Narrative (Daily / 4-Hour) Identify the overall market structure (Bullish or Bearish).
Understanding market structure is non-negotiable. It tells you if the trend is bullish, bearish, or consolidating.
: Price moves toward "liquidity pools" (areas where many stop-loss orders are likely located) to provide the necessary volume for institutions to fill their large positions. Market Imbalance Institutions require immense volume to fill their orders
A: (In a real scenario, this would be a lead magnet link. For this article, please screenshot the checklist section above or recreate the rules in a document.)
Identify the overall market structure (Is it bullish or bearish?) and locate the main liquidity pools.
Intense buying volume creates a temporary top. They often drive price into areas where retail
Order Blocks (OB) are specific candle formations where institutional traders have placed massive buy or sell orders.
The last up-close candle before a strong impulsive move downward.