This website uses cookies.

We use cookies to personalise content and ads, to provide social media features and to analyse our traffic. We also share information about your use of our site with our social media, advertising and analytics partners who may combine it with other information that you’ve provided to them or that they’ve collected from your use of their services.


For more details on how we handle cookies and personal data, please review our Privacy policy.


Cookies are small text files that can be used by websites to make a user's experience more efficient.

The law states that we can store cookies on your device if they are strictly necessary for the operation of this site. For all other types of cookies we need your permission.

This site uses different types of cookies. Some cookies are placed by third party services that appear on our pages.

You can at any time change or withdraw your consent from the Cookie Declaration on our website.

Learn more about who we are, how you can contact us and how we process personal data in our Privacy Policy.

Please state your consent ID and date when you contact us regarding your consent.

Your consent applies to the following domains: choosefxbroker.com

Your current state: Deny. 

Cookie declaration last updated on 12/24/24 by Cookiebot:

Necessary (1)

Necessary cookies help make a website usable by enabling basic functions like page navigation and access to secure areas of the website. The website cannot function properly without these cookies.

Name Provider Purpose Maximum Storage Duration Type
CookieConsent choosefxbroker.com Stores the user's cookie consent state for the current domain 1 year HTTP Cookie

Marketing (2)

Marketing cookies are used to track visitors across websites. The intention is to display ads that are relevant and engaging for the individual user and thereby more valuable for publishers and third party advertisers.

Name Provider Purpose Maximum Storage Duration Type
_ga Google Used to send data to Google Analytics about the visitor's device and behavior. Tracks the visitor across devices and marketing channels. 2 years HTTP Cookie
_ga_# Google Used to send data to Google Analytics about the visitor's device and behavior. Tracks the visitor across devices and marketing channels. 2 years HTTP Cookie

Unclassified (3)

Unclassified cookies are cookies that we are in the process of classifying, together with the providers of individual cookies.

Name Provider Purpose Maximum Storage Duration Type
brokersData choosefxbroker.com Pending Persistent HTML Local Storage
cached_articles choosefxbroker.com Pending Persistent HTML Local Storage
cached_articles_expiry choosefxbroker.com Pending Persistent HTML Local Storage

ChooseFxBroker

Smart Money Concepts (SMC) Dictionary

The Complete Smart Money Concepts (SMC) Trading Dictionary: Essential Terms and Techniques

12 min read
Beginner
Smart Money Concepts (SMC) has revolutionized how retail traders understand institutional order flow and market structure. This comprehensive dictionary serves as your guide to mastering the language and concepts of SMC trading.

Table of Contents

Basic Concepts

Market Structure

BOS (Break of Structure)

  • Definition: A violation of previous market structure
  • Types: Bullish BOS, Bearish BOS
  • Significance: Indicates potential trend change

CHoCH (Change of Character)

  • Definition: Shift in market behavior
  • Identification: Change in price action patterns
  • Importance: Early signal of trend reversal

Order Flow Concepts

Order Block (OB)

  • Definition: Strong candle preceding major move
  • Types: Bullish OB, Bearish OB
  • Characteristics: High volume, strong momentum

Fair Value Gap (FVG)

  • Definition: Price inefficiency between candles
  • Types: Bullish FVG, Bearish FVG
  • Properties: Tendency to fill over time

Advanced Terminology

Premium & Discount

Premium Zones

  • Definition: Areas above fair value
  • Characteristics:
    • Strong rejection
    • Institutional selling
    • Price inefficiency

Discount Zones

  • Definition: Areas below fair value
  • Characteristics:
    • Strong buying
    • Institutional accumulation
    • Value opportunity

Market Manipulation

Liquidity Sweep

  • Definition: Price movement targeting stop losses
  • Purpose: Accumulation/Distribution
  • Identification: Sharp moves with quick reversal

Stop Hunt

  • Definition: Price move to trigger stop losses
  • Characteristics: Violent price action
  • Recovery: Swift return to original level

Technical Concepts

Breaker Blocks

  • Definition: Order blocks that break structure
  • Significance: Strong reversal zones
  • Identification: Strong momentum candles

Mitigation

  • Definition: Process of filling inefficiencies
  • Types:
    • FVG mitigation
    • OB mitigation
    • Breaker mitigation

IPDA (Internal Price Delivery Algorithm)

  • Definition: Price delivery mechanism
  • Components:
    • Distribution phase
    • Accumulation phase
    • Delivery phase

Price Action Patterns

Inducement

  • Definition: Price move to attract orders
  • Purpose: Generate liquidity
  • Recognition: False breakouts

Equilibrium

  • Definition: Balance point in price
  • Characteristics:
    • Reduced volatility
    • Balanced order flow
    • Consolidation pattern

Advanced Concepts

Institutional Concepts

Smart Money Distribution

  • Definition: Institutional selling pattern
  • Identification:
    • Volume analysis
    • Price action study
    • Time analysis

Accumulation Schematic

  • Definition: Buying pattern of institutions
  • Phases:
    1. Initial accumulation
    2. Test of supply
    3. Final markup

Market Efficiency

Inefficient Moves

  • Definition: Rapid price movements leaving gaps
  • Characteristics:
    • Sharp moves
    • Low volume areas
    • Price imbalance

Market Balance

  • Definition: Price equilibrium state
  • Features:
    • Balanced volume
    • Reduced volatility
    • Clear support/resistance

Trading Applications

Entry Techniques

Entry Types

  1. Break of Structure entries
  2. Order Block entries
  3. Breaker Block entries
  4. Mitigation plays

Entry Confirmation

  • Volume analysis
  • Price action confirmation
  • Market structure alignment

Risk Management

Stop Loss Placement

  • Beyond manipulation points
  • Protected from sweeps
  • Based on market structure

Position Management

  • Partial profit taking
  • Runner management
  • Scale-in techniques

Advanced Trading Concepts

Market Structure Analysis

Higher Time Frame (HTF)

  • Definition: Broader market context
  • Importance: Primary trend direction
  • Application: Major support/resistance

Lower Time Frame (LTF)

  • Definition: Detailed price action
  • Usage: Entry timing
  • Application: Fine-tuning entries

Order Flow Reading

Volume Analysis

  • Real-time volume study
  • Institutional footprint
  • Order flow patterns

Price Action Study

  • Candle analysis
  • Pattern recognition
  • Momentum evaluation

Key Takeaways

  • Master essential SMC terminology
  • Understand institutional trading patterns
  • Learn key market structure concepts
  • Identify premium and discount zones
  • Grasp advanced order flow concepts

Ready to start trading?

Compare top brokers and choose the best one for you!

Compare all brokers
ChooseFXBroker (CFXB) is a third-party, independent review site. We may earn affiliate or revenue share commissions when you subscribe through links on our site, at no extra cost to you. Companies reviewed do not endorse or own this website unless explicitly stated.