Forex Swing Profit

To achieve high accuracy in forex trading signals, Lewis Kelly emphasizes the importance of understanding and applying the Smart Money Concept (SMC) alongside effective market analysis techniques. Here’s a summary of how to leverage these strategies for better trading outcomes.

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Smart Money Concepts (SMC) is a trading strategy that focuses on understanding the behavior of institutional players, such as banks and hedge funds, and their impact on financial markets. It involves analyzing market structures with dynamics supply and demand, order blocks, breaker blocks, mitigation blocks, flip zones, fair value gaps, and liquidity grabs. SMC is an alternative approach to price action that employs classic Forex principles such as supply and demand, price patterns, and support and resistance, but presents them under new names and with distinct descriptions. The core concept of SMC is that retail traders should follow the trades of these institutions instead of relying on chart patterns and signals, as the price action trading strategy. SMC traders should base their strategies on the funds controlled by these aforementioned entities or banks and other market makers. Some key terms and concepts in SMC include:

1. Order Blocks: More refined versions of supply and demand, representing the accumulation or distribution of liquidity by market participants.
2. Breaker Blocks: Similar to order blocks but with a break in the middle, representing a potential price level of interest.
3. Mitigation Blocks: Order blocks mitigated or partially offset by other order blocks, indicating a balance between buying and selling pressure.
4. Flip Zones: Price levels where the market switches from a bullish to a bearish trend or vice versa.
5. Fair Value Gaps: Price gaps that occur when the market reopens after a holiday or weekend, often filled by order blocks.
6. Liquidity Grabs: Intense buying or selling periods are often associated with large institutional trades.

Key Components for High-Accuracy Trading Signals

1. Understanding Smart Money Manipulation

Smart money refers to the trading activities of large institutional players who can influence market movements. By recognizing their patterns and strategies, traders can align their trades with these influential players, thereby increasing the probability of successful trades. Kelly teaches that identifying areas where smart money is likely to operate—such as liquidity zones—can help traders anticipate price movements.

2. Key Liquidity Levels

Identifying key liquidity levels is crucial for executing trades with high accuracy. These levels often include:

• Stop-Loss and Take-Profit Zones: Areas where many traders place their stop-loss orders can create significant liquidity, leading to potential price reversals or continuations.
• Equal Highs and Lows: These levels serve as psychological barriers where many traders may enter or exit positions, creating liquidity pools that smart money can exploit.
• Previous Day Highs and Lows: These historical levels are often watched by traders and can act as strong support or resistance.

3. Market Structure Analysis

Understanding market structure is fundamental for determining the overall trend direction. Kelly emphasizes analyzing higher timeframes (H1, H4, Daily) to establish a clear trend before making trades on lower timeframes. This multi-timeframe analysis helps traders identify potential entry points aligned with the prevailing market sentiment.

4. Confirmation TechniquesBefore entering a trade, it’s essential to wait for confirmation signals that validate the trading setup. This may include:

• Break of Structure (BoS): A change in market direction that confirms a shift in trend.
• Change of Character (ChoCh): A signal indicating a potential reversal or continuation in price movement.
• Order Blocks and Points of Interest: Identifying areas where previous price action has shown significant movement can provide optimal entry points.

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SMC trading has gained popularity due to its focus on understanding market structure and the actions of influential entities such as banks and hedge funds. However, it is essential to note that SMC is a repackaged form of good old-fashioned price action trading, and retail traders should be aware of the potential risks and challenges associated with this approach.

How To Identify Order Block With High Probability Setup

As you can read you can find a good order block set up with these 3 criteria:

1.  Must have an imbalance or Fear Value Gap Area, is by looking at full body candle buyer or seller which can be seen from candlesticks reversal pattern like bullish engulfing, morning stars, evening stars, hammer and shooting stars that read from big time frame like h4 and looking FVG area in small time like m15 or m5 which is still on range high low of bullish engulfing or other candlesticks reversal patterns from the big time frame.
2. Must have a Break Of Structure or called a BOS-based price action.
3. Must be unmitigated, these mean that the order block candle is fresh.

By combining an understanding of smart money manipulation with precise identification of liquidity levels and thorough market structure analysis, traders can significantly enhance their chances of achieving up to 87% accuracy in their forex trading signals. Lewis Kelly’s approach focuses on waiting for clear confirmations before entering trades, which helps mitigate risks and capitalize on market movements effectively. This structured strategy not only aids in making informed decisions but also aligns trading actions with the underlying dynamics of the forex market.

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