Structure
Last updated
Last updated
A smart money strategy involves opening trades with large capitals, (banks, funds, market makers)
Market structure - is a sequence of highs and lows that allows you to determine the trend and possible price movement in the future.
The trend - is the general direction of the price movement, the main goal is to determine the trend and trade in its direction.
Trend is your friend. When trading smart money, we trade only on the trend
In order to correctly identify the structure it is necessary to find the Lows and Highs on the chart. The market can be in three states:
The confirmation of the Higher Low (HL) will be the Break of structure (bos) of the previous Higher High (HH). To determine the structural elements, pay attention to the swing high and low.
Bullish structure (Uptrend) - each new High and Low is higher than the previous one. Higher High (HH) and Higher Low (HL)
After the formation of a higher high (HH), with a high probability will begin a correction, which forms a higher low (HL) - this is an opportunity to enter the long position in order to update the next (HH).
The structure should be used in combination with other tools - support and resistance zones (orderblocks, imbalance, liquidity, discount/premium zones), which we will talk about next.
The higher low (HL) should be formed from the support zone, then it will be relevant for opening a long position. As in the example above, the price tests the order block and fills the imbalance.
Bearish market structure - each new High and Low is lower than the previous Lower High (LH) and Lower Low (LL) Opening a short position is best considered on the formation (LH) in the premium zone.
