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Smcgelo Ebook

This document discusses the key factors, or "confluences," that traders should consider when analyzing the market structure: market structure, supply and demand, imbalance, and liquidity. It emphasizes the importance of only taking trades that align with these factors, such as trading in the direction of the prevailing trend, entering positions at points of major structure breakouts that show imbalance, and ensuring there is sufficient liquidity before and after entry points. Following these confluences can help traders avoid losses and increase their win rate.

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siya
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485 views7 pages

Smcgelo Ebook

This document discusses the key factors, or "confluences," that traders should consider when analyzing the market structure: market structure, supply and demand, imbalance, and liquidity. It emphasizes the importance of only taking trades that align with these factors, such as trading in the direction of the prevailing trend, entering positions at points of major structure breakouts that show imbalance, and ensuring there is sufficient liquidity before and after entry points. Following these confluences can help traders avoid losses and increase their win rate.

Uploaded by

siya
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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SMC

BASICS
Table of Contents
Confluences 3
Market Structure 4
Supply and Demand 5
Imbalance 6
Liquidity 7
Confluences

WHEN IN THE MARKET, YOU WANT TO MAKE SURE THAT ALL OF YOUR
CONFLUENCES LINE UP.

THE CONFLUENCES THAT I PERSONALLY USE WITHIN MY TRADING PLAN ARE:

● MARKET STRUCTURE
○ YOU WANT TO MAKE SURE THAT YOU HAVE A MAJOR BREAK OF STRUCTURE
WHILE FOLLOWING THE TREND, ALWAYS.
○ YOU DO NOT WANT TO GO AGAINST WHAT THE MARKET IS SHOWING YOU. IF
WE ARE BULLISH, LOOK FOR BUYS.. VISE VERSA.
● SUPPLY & DEMAND
○ THESE ARE THE POINTS THAT WE WANT TO TRADE FROM
○ SUPPLY AND DEMAND IS A CANDLE THAT CAUSED A MAJOR IMPULSIVE MOVE,
BREAKING STRUCTURE.
● IMBALANCE
○ IMBALANCE ARE GAPS THAT MUST BE FILLED WITHIN THE MARKET.
(INEFFICIENT PRICE ACTION) WHERE PRICE PUSHED TOO QUICK.
○ THERE MUST BE NO CANDLES / WICKS ON EACH SIDE OF YOUR IMPULSIVE
CANDLE.
● LIQUIDITY
○ THIS WILL SAVE YOUR A** WHILE TRADING… LIQUIDITY IS BUILT UP ORDERS.
○ YOU DO NOT WANT A POINT OF INTEREST THAT HAS LIQUIDITY SITTING ON IT,
WE WANT LIQUIDITY SITTING BEFORE OUR POI MITIGATION.
Market Structure

ABOVE ARE THE MAJOR STRUCTURAL POINTS MARKED UP…


THINK TO YOURSELF.. WHY WOULD YOU WANT TO COUNTER TREND THE MARKET. YOU WILL
LOSE EVERY TIME. WE WANT TO MOVE WITH CURRENT PRICE ACTION. WHEN SCALPING AND
TRADING THE LOWER TIMEFRAME, WE DO NOT CARE ABOUT WHAT HAS HAPPENED LAST
WEEK… WE CARE ABOUT WHAT IS HAPPENING IN THE PRESENT TIME.

● WE DO NOT CARE ABOUT INTERNAL STRUCTURE


● WE ONLY WANT TO BE TRADING OFF POINTS THAT HAVE CREATED A MAJOR BREAK OF
STRUCTURE, NOT A MINOR BREAK.
● SITTING ON THE LOWER TIMEFRAME, YOU WILL GET CAUGHT UP IN A LOT OF NOISE..
WAITING FOR MAJOR BREAKS WILL SAVE YOU FROM 10x YOUR AVERAGE LOSSES AND
INCREASE YOUR WINRATE. (WHICH IN THE END, WILL HELP YOU MAKE MORE MONEY)
Supply and Demand

THIS IS OUR BREAD AND BUTTER… THIS IS HOW AND WHERE WE EXECUTE
OUR TRADES!

● SUPPLY AND DEMAND POINTS ARE THE CANDLES THAT HAVE CREATED A VOLUMIZED
AND IMPULSIVE MOVE TO THE DIRECTION IN WHICH THE MARKET IS TRENDING IN…
● PREVIOUSLY, WE WERE BEARISH (AND STILL ARE), SO WE ARE WAITING FOR A BREAK
OF STRUCTURE TO THE DOWNSIDE THAT LEAVES BEHIND IMBALANCE AND A CLEAN
CANDLE THAT CREATED THE MOVE. (AS SHOWN IN THE EXAMPLE)
● WE MUST SEE A MAJOR BREAK OF STRUCTURE FROM A PREVIOUS POINT IN THE
MARKET!
● WE DO NOT WANT TO BE TRADING SUPPORT AND RESISTANCE… (WE USE THOSE
TYPES OF STRATEGIES AS LIQUIDITY THAT WE TARGET. WHETHER IF IT’S THE
LIQUIDITY BEFORE OUR MITIGATION, OR OUR TAKE PROFIT AREA.)
Imbalance
THE FIRST EXAMPLE IS INEFFICIENT PRICE ACTION.. (READ BELOW)
THE SECOND EXAMPLE IS EFFICIENT PRICE ACTION

YOU SEE HOW THE SECOND EXAMPLE HAS NO GAP, THERE ARE CANDLE
STICKS ON BOTH SIDES OF THE IMPULSIVE BULLISH CANDLE.
Liquidity
THIS IS THE FINAL PIECE OF THE PUZZLE.

UNDERSTANDING LIQUIDITY ALONGSIDE MARKET STRUCTURE ARE THE ONLY THINGS THAT
YOU NEED TO BECOME PROFITABLE. WITHOUT THE PROPER KNOWLEDGE OF THESE 2
CONFLUENCES, YOU WILL NEVER SEE ANY MONEY FROM THE MARKET.

● THE LIQUIDITY POINTS WE NEED IN OUR PLAN ARE PRIOR TO OUR MITIGATION OUR
OUR POI THAT WE ARE TRADING OFF, AND TO THE OPPOSITE DIRECTION FOR OUR TP..
● WE DO NOT WANT TO TRADE OFF A POI / SUPPLY & DEMAND THAT HAS LIQUIDITY
(BUILT UP ORDERS) SITTING ON IT… EVER!

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