Smart Money Concept Flaws
In today's retail trading circles you hear people talk about SMC and how they can use it to know how big banks and market makers are trading. There are so many SMC videos on YouTube that any new trader would be deceived into thinking they can trade like banks. But I would like to hear what you think, do you think SMC is real?
I always hear them talk about order block, FVG and other SMC jargon but when I studied it I discovered it was basic support/resistance they were trading, so I dont really understand why all the hype about SMC. maybe someone here will have a better explanation
SMC works for me bro, I have seen many traders use it and generate profit
SMC works for me bro, I have seen many traders use it and generate profit
Support & resistance also works bro! But my argument is could SMC just be another fancy name for support & resistance?
Support & resistance also works bro! But my argument is could SMC just be another fancy name for support & resistance?
From what I know about SMC strategy, it has to do with SMC advocates claiming that they can by looking at the charts, tell where instituitional traders (smart money) placed their orders. They say by looking out for imbalances, FVG, order blocks, it is possible to spot institutional moves on a chart. SMC faithfuls also beleive that instituitonal traders perform "liquidity grabs" to kick retail traders out of the market etc. But on this thread I want to pick out the flaws
Flaw 1: Market Makers Perform Liquidity Grabs Against Retail Traders
SMC advocates beleive that institutional players/market makers are looking for your money, so they perform manoeuvres and stunts to hit your stop loss and grab liquidity.
While it may look like your stops are being hunted, institutional traders have no need for your money because it is too small. These guys trade with millions of dollars so they do not need to grab liquidity from you. The reason you keeo getting stopped out is because the more experienced retail traders place their entries where they think you will place your stops.
Some traders do not know what it means to be a market maker, these market makers are indeed the liquidity so they dont need to grab any liquidity from you? Market makers are big firms with millions of dollars on their balance sheet so why would they need to grab a few dollars from you? So this is why I beleive liquidity grabs by market makers is simply not true
Flaw 2: You Cannot Spot An Order Block By Merely Looking At The Chart
It is true than institutional traders execute block trades, Privately Negotiated Trades (PNTs), dark pool trades etc. on various stock exchanges but they do it so quietly that if doesnt spike the charts. So SMC advocates falsely claim that by looking at charts they can spot order blocks but this is flawed logic. Attached is a report on PNT hedging trades executed in the dark pool by a market maker for EUR/USD, but if you go to the charts for that date, you will not see any noticeable price action.
SMC works for me bro, I have seen many traders use it and generate profit
yeah right, I bet youre not even profitable with it @josiah
Flaw 3: Too Much Jargon
When you listen to SMC traders talk about it you hear lots of jargon like Imbalance, mitigation, inducement, etc. These words are coined to make simple concepts sound complicated. These jargon words are meant to keep you confused and searching for more knowledge hence buying more courses from course vendors.
Flaw 3: Too Much Jargon
When you listen to SMC traders talk about it you hear lots of jargon like Imbalance, mitigation, inducement, etc. These words are coined to make simple concepts sound complicated. These jargon words are meant to keep you confused and searching for more knowledge hence buying more courses from course vendors.
This is so true. I once listened to one and I’m like what’s all this terms? Something simple , they make it look complex.