# What Is Smart Money Concepts (SMC) in Trading

> Smart Money Concepts explained for retail traders. Learn what SMC is, how it differs from traditional TA, and why journaling SMC trades requires specific metrics.

**URL:** https://traderjournal.app/smc-ict/what-is-smart-money-concepts-smc-trading

---


# What Is Smart Money Concepts (SMC) in Trading

Smart Money Concepts (SMC) is a price action methodology built on the idea that institutional traders — banks, hedge funds, and large players — leave repeatable footprints in the market. Retail traders who learn to read these footprints can align their trades with institutional flow instead of trading against it.

## The Core Idea

Traditional technical analysis uses support/resistance, indicators, and chart patterns. SMC replaces or supplements these with concepts derived from how large orders are filled:

- **Liquidity** — where stop losses cluster (above highs, below lows)
- **Order blocks** — the last candle before a significant move (where institutions entered)
- **Fair Value Gaps (FVGs)** — imbalances in price that tend to get filled
- **Market structure** — higher highs/lows (uptrend) or lower highs/lows (downtrend)
- **Break of Structure (BOS)** — confirmation a move is continuing
- **Change of Character (ChoCH)** — early signal of a trend reversal

## SMC vs Traditional Technical Analysis

| Concept | Traditional TA | SMC |
|---|---|---|
| Support/Resistance | Horizontal lines | Order blocks and liquidity levels |
| Trend | Moving averages | Market structure (HH/HL or LH/LL) |
| Entry signal | Indicator crossover | Displacement into order block |
| Stop placement | Below support | Beyond the order block |

## Why SMC Traders Need Specific Journaling

SMC setups have several variables that standard journals miss:

1. **Which order block was used** — not just the entry price
2. **Was there a liquidity sweep before entry** — the setup quality changes significantly
3. **What timeframe confirmed the entry** — SMC is multi-timeframe by nature
4. **Was the FVG filled before entry** — affects entry precision
5. **BOS or ChoCH** — different setups have different statistical profiles

## Journaling SMC Trades in Trader Journal

Use the **Tags** field to label your setup type:
- `OB-long`, `OB-short` — order block entries
- `FVG-fill` — trades entering into a fair value gap
- `liquidity-sweep` — entries after a stop hunt
- `BOS-retest` — entries on a break of structure retest

Use the **Pre-trade plan** field to note: which order block, what timeframe, was there a sweep, what is your invalidation.

After 50+ trades, filter by tag in Trader Journal to compare win rates across setup types. Most SMC traders find some setups work for them and others do not — the journal reveals which.

## Getting Started

If you are new to SMC, start by journaling every trade with the tag that best describes why you entered. After one month, you will have data to identify your most reliable SMC setup.