Smart Money Concept Entry

Entry Logic

• Entry trigger: After a market structure shift (MSS), price returns to a Fair Value Gap (FVG) or Order Block (OB) created during the shift. Entry is placed at the edge of the FVG/OB.
• Confirmation: A lower timeframe (1-minute) confirmation entry, such as a small-scale MSS in the direction of the trade within the FVG/OB.
• Timeframe: 15-minute for structure (MSS, FVG/OB), 1-minute for entry confirmation.
• Location context: The FVG or OB must be pristine (not yet mitigated).
• Market condition: A market that has just shown a clear change in directional bias.

Exit Logic

• Profit target: The opposing liquidity pool that was the target of the MSS.
• Scaling out: 50% at 3R.
• Trailing stop: Not typically used; it is a set-and-forget trade.
• Signal failure exit: Exit if price closes completely through the FVG/OB.
• Opposite signal exit: Exit if a new MSS occurs in the opposite direction.
• Time expiration: The trade should play out within a few hours.
• Momentum loss: Not a primary concern if the entry structure is valid.

Stop Loss Structure

• Hard stop: Just on the other side of the FVG or OB.
• Soft stop: Not used.
• Max dollar loss: $100 per trade.
• Max percent loss: 0.5% of account.
• Structural stop: Placed logically beyond the structure that created the FVG/OB.

Risk Management Framework

• Risk per trade: 0.25% - 0.5% of account.
• Daily limit: 3 losing trades.
• Weekly limit: 5% drawdown.
• Max drawdown: 15%.
• R:R requirement: Minimum 3:1.

Position Sizing Model

• Sizing approach: Position size is calculated based on the small distance between the entry and the stop loss.
• Volatility adjustment: The size of the FVG/OB dictates the stop, which in turn dictates the size.
• Conviction sizing: Full size on A+ setups (pristine FVG at a key level).
• Scaling in: Not recommended.
• Scaling out: At 3R.

Trade Filtering

• Market conditions to avoid: Choppy, non-trending markets with no clear MSS.
• Setups required: A clear MSS followed by a pullback to a clean FVG or OB.
• Instruments: Forex, indices, and crypto.
• Time restrictions: During high-volume sessions.
• Chop/news avoidance: Avoid trading around major news.

Context Framework

• Trend direction: The trade is taken in the direction of the new trend indicated by the MSS.
• VWAP relationship: The entry often aligns with a rejection of the VWAP.
• MA relationship: The MSS often involves a break of a key MA.
• Range location: The setup often occurs at the boundaries of a higher timeframe range.
• Higher TF alignment: The MSS on the 15-minute chart should be the start of a larger move on the 1-hour chart.

Trade Management Rules

• Breakeven: Move stop to breakeven after a 2R move.
• Scale out: At 3R.
• Add size: Not applicable.
• Fast vs slow moves: This is typically a fast-moving setup.

Time Rules

• Optimal window: New York and London session opens.
• Times to avoid: Low-liquidity periods.
• Session notes: This is a core pattern for many institutional-style traders.

Setup Classification

• A+ criteria: A textbook MSS followed by a pullback to a large, pristine FVG on the 15-minute chart.
• A criteria: A clear MSS and FVG/OB entry.
• B criteria: The MSS is unclear, or the FVG is small/messy.
• C criteria: No clear MSS.

Market Selection Criteria

• Instruments: EUR/USD, NASDAQ 100, BTC/USD.
• Volume: High volume on the MSS candle.
• Volatility: High.

Statistical Edge Metrics

• Win rate: 40%.
• Avg win: 5R+.
• Avg loss: 1R.
• Profit factor: 2.0+.
• Expectancy: High, due to the high R:R.

Failure Conditions

• The MSS is a false signal, and the original trend resumes.
• Price fails to respect the FVG/OB and trades right through it.

Psychological Rules

• Requires patience to wait for the pullback to the entry point.
• Requires trust in the setup, as the entry can feel like it is 'in the middle of nowhere'.

Advanced Components

• Regime detection: This pattern defines the new market regime.
• Filters: Only take trades from FVGs/OBs that were created with a displacement (a strong, energetic move).
• Correlation: Confirm the MSS with strength/weakness in correlated assets.
• MTF alignment: The higher timeframe narrative must support the reversal.

Location

• Strongest: After a sweep of major higher-timeframe liquidity.
• Weakest: In a low-volatility, choppy market.