GlossarySmart Money Concepts
Smart Money Concepts
Smart Money Concepts draws the market structure on the chart: swing highs and lows with their labels, breaks of structure (BOS) and changes of character (CHoCH), order blocks, fair value gaps and, if you wish, premium and discount of the current range. Everything is calculated from the chart's candles, by the fixed rules described below.
How to read it
- HH and HL in a row describe an uptrend, LH and LL a downtrend.
- A BOS confirms the current direction, a CHoCH is the first break against it and thus an early sign of a change.
- Open order blocks and open fair value gaps are seen in SMC as zones the price can return to, and as possible entry zones in the direction of the structure.
- Above the Equilibrium, the price trades in the upper part of the range, below it in the lower part. Anyone following SMC logic tends to buy in the lower part and sell in the upper part.
Limitations
- On the current candle, a BOS, CHoCH or order block can appear and disappear again until it closes.
- The fair value gap threshold depends on the average range of all loaded candles. If the chart loads more history or you change the timeframe, gaps can appear or vanish.
- The swing labels only appear once the candles are drawn wide enough.