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“institutional Trading Strategies: Adapting Pro Approaches For Profit In Australia” – In this article, I will discuss the smart money market structure trading strategy i.e. the basic concept of smart money trading method with examples. This concept is divided into 3 parts. They are as follows: The concept of smart money
In this article, we are going to discuss the second part i.e. smart money market structure trading strategy.
“institutional Trading Strategies: Adapting Pro Approaches For Profit In Australia”
It is the map that will help you understand and predict the next move and will make you understand where you are, whether you are in a correction or a continuation. Now, we will discuss the market structure. Market structure generally decides who is in control because we want to get in on the dominant side. Essentially the smart money method is the backbone of the market structure and liquidity.
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When a large trader or institution takes a large position in a particular asset or market, their actions can have a significant impact on the supply and demand dynamics, leading to changes in price and market direction. For example, if a large institutional investor decides to buy a large number of shares in a particular company, this can lead to an increase in demand for the shares, causing the price to rise. Likewise, if a large trader takes a short position in a particular market, it can cause demand to drop and push the price lower. We also analyze trends.
The first step in creating a trading strategy based on the order block is to decide which market direction you want to trade. Look at the overall structure of the market (higher highs and higher lows or lower tops and lower lows. Bearish or bullish). Market structure gives us a bias for trading opportunities. In a bull market, we always look to buy. Step 2: Identify key order block areas
Once the market trend is determined, the next step is to identify bullish or bearish major order block areas. These areas are the areas where there is a large imbalance between supply and demand. Find bullish or bearish order blocks according to the higher timeframe trend. So, if the higher time frame trend is a downtrend, then you will look for a bearish order block and if you are in a bullish market, you will look for a bullish order block Step 3: Entry and manage the trade
As you can see, the market is in a downtrend making a lower low and a lower high. A valid down order is blocked. Wait for any bearish guard in the OB area. OW check below updated chart.
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Before you start first clear some basic components of trends or market structure – Smart Money Market Structure Principles in Order Block Trading
The price is moving within a structure of support and resistance. A break of the support or resistance structure will cause the price to move into the next area of support or resistance.
When the price broke the market structure was up. The low point becomes a strong bottom. A strong bottom is a bottom that has caused gouging and structure (resistance) breaking.
A new high in an uptrend and a new low in a downtrend. A weak low/high is the bottom that fails to break the structure (a weak high or low always yields from a strong high or low).
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After testing the area a few times or during a strong move, supply and demand levels eventually break. Because of the remaining commands being gradually triggered and removed, or because there are too many commands in the opposite direction the level is broken.
In any timeframe, once we see a break and close of a candlestick beyond the structure (swing up in an uptrend and swing low in a downtrend) this is called a breakout of the structure, and it is very simple we break the old structure and create a new structure. A broken structure formed in the continuation of the trend.
The first step is to determine the market structure by analyzing the highs and lows in price. The first step in creating a trading strategy based on the order block is to decide which market you want to trade. Look at the overall structure of the market (higher highs and higher lows or lower tops and lower lows. Bearish or bullish). Market structure gives us a bias for trading opportunities. In a bull market, we always look to buy
Traders should then watch for a market structure breakout. This can happen when the price of an asset breaks out of a major support or resistance level, or when the price forms a new high or low outside of the current market structure. Confirmation of a breakout with volume To confirm a market structure breakout, traders should also look for an increase in volume. This can provide additional confirmation of a shift in market sentiment and increase the likelihood of a successful trade. Step 2: Identify possible command blocks
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Once the market structure is broken, traders can search for potential order blocks. Order blocks are the footprints left by the market when an impulsive move occurs. The order block (OB) is the last opposite candle before the strong move that creates an imbalance in the market. Once the market is identified, the next step is to identify bullish or bearish major order block areas. These areas are the areas where there is a large imbalance between supply and demand. Look for a bullish or bearish order block according to the higher timeframe trend (So, if the trend of the higher timeframe is a downtrend, then you will look for a bearish order block and if you are in a bull market, you will do a bullish order block
Look at lower timeframes and look for lower timeframe confirmations. One order block is determined after the market structure is broken. Enter the trade: Once the order block level is confirmed, enter the trade in the direction of the order block, placing a stop loss order at the appropriate level to limit possible losses in the event of a market reversal. Deal management: Once you open a trade, keep a close eye on it and be ready to adjust your stop-loss order and exit the trade if necessary. For additional confirmation the confluence factor of any indicator can be used
As you can see, the market is in a downtrend making a lower low and a lower high. A valid down order is blocked. Wait for any bearish guard in the OB area. OW check below updated chart.
It involves identifying key supply and demand areas on a price chart and waiting for a price reversal or trend change in those areas, which would indicate a potential reversal. When this structure is broken, it can signal a shift in market sentiment and provide opportunities for traders to enter or exit positions.
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Traders should then watch for a break in the market structure. This can happen when the price of an asset breaks out of a major support or resistance level, or when the price forms a new high or low outside of the current market structure. Confirmation of a breakout with volume To confirm a market structure breakout, traders should also look for an increase in volume. This can provide additional confirmation of a shift in market sentiment and increase the likelihood of a successful trade. Step 2: Identify possible command blocks
Confirmation of the blocking order level: Once a price reversal has occurred, look for confirmation of the blocking order level by waiting for the price to return to the level and bounce. Once the market structure is broken, traders can search for potential order blocks. Order blocks are the footprints left by the market when an impulsive move occurs. The order block (OB) is the last opposite candle before the strong move that creates an imbalance in the market. Once the market is identified, the next step is to identify bullish or bearish major order block areas. These areas are the areas where there is a large imbalance between supply and demand. Find bullish or bearish order blocks according to the higher timeframe trend. So, if the higher time frame trend is a downtrend, you will look for a bearish order block and if you are in a bull market, you will look for a bullish order block
Look at lower timeframes and look for lower timeframe confirmations. One order block is determined after the market structure is broken. Enter the trade: Once the order block level is confirmed, enter the trade in the direction of the order block, placing a stop loss order at the appropriate level to limit possible losses in the event of a market reversal. Deal management: Once you open a trade, keep a close eye on it and be ready to adjust your stop-loss order and exit the trade if necessary. For additional confirmation the confluence factor can be used as an indicator.
This pattern forms near a higher time frame supply/ask area, as the name suggests it involves shifts in market sentiment and momentum by looking for changes in the price action structure on the price chart.
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Here, in this article, I try to explain the smart money market structure trading strategy i.e. the basic concept of smart money trading
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