Smart Money Concepts Made Easy (The Model I Actually Use)

0:00In this video, I'm sharing my exact SMC

0:01model that allowed me to profit on a short

0:03setup this week

0:04on the New Zealand dollar where my reward

0:06was three times my risk.

0:07And yes, this was also shared in real time

0:09with VIP members in Discord.

0:10So this is not some hindsight BS.

0:12This is a real time trade.

0:14Okay, so if you're new here and we haven't

0:15met yet, my name is Justin Bennett, Forest

0:16Trader since 2007, full time since 2011.

0:19As always, all of this is my opinion only

0:21and not financial advice.

0:23So looking at the New Zealand dollar one

0:24hour time frame, we are going to start with

0:26a clean chart.

0:27I'm going to show you exactly what I did

0:28here on the New Zealand dollar

0:29so you can You can literally copy and paste

0:31this into your own trading.

0:32And even if you take a part of this,

0:34it's going to make you a better trader.

0:35So the very first thing that we have to do,

0:36and I'm going to turn on bar replay here

0:38because

0:38it is one of the best features of

0:40TradingView in my opinion.

0:41If we go back here, we can clearly see that

0:43the New Zealand dollar was in an uptrend,

0:45making higher highs and higher lows.

0:47And we know that

0:48because we have here a BOS above the high,

0:51a breakout structure above the high.

0:52We never close below the low.

0:54We then have up here a new high

0:56and a new break.

0:57So you can see that right here off of this

0:58high as well.

0:59we have another BOS above the high.

1:02Okay, so clearly buyers were in control

1:04back here.

1:04Now, this is all important for what happens

1:06days later, because

1:07in order to understand the price action at

1:09any given time using SMC,

1:11you have to go back.

1:12You have to look left

1:13and identify things like this over here

1:15to know what to look for

1:17in the current moment.

1:19So with that in mind, we have this low back here,

1:22right? And we know that this is significant

1:23because

1:24this was the low

1:25right here before this BOS.

1:28So this was our external or protected low

1:30here on the New Zealand dollar,

1:32which you can see that we started to break

1:33over here.

1:34And if there was any doubt

1:35as to whether or not we really broke that,

1:37you can see that if I play this forward,

1:38you can see we certainly got a break in here.

1:40Okay, so this right here now becomes our

1:42change of character.

1:43Now, the moment that we get this,

1:45I am flipping from bullish back here

1:48to now bearish.

1:49I'm looking for shorts only, but here's the key.

1:51This right here, this change of character

1:53is not the entry.

1:54And this should feel late.

1:55It should feel late in this move because

1:57again, it's not where we're entering.

1:59Instead, what we want to do here is once I

2:01play this forward a little bit, you can see

2:02that we now kind of have confirmation that

2:04this down here is our potential short-term low.

2:06So what we can do is we can draw

2:09our fibs from the high up here

2:12down here to the low.

2:13I've made a video before

2:14talking about my settings here for my

2:16Fibonacci tool,

2:17but I'll put them up here again in case you

2:18want to copy them.

2:19So this is how I identify premium and

2:21discount

2:21and also OTE, which stands for Optimal

2:23Trade Entry.

2:25So the optimal trade entry is the area

2:26between the 62%

2:28and 79% retracement.

2:30So this area up here, once you get things

2:32like a change of character like this,

2:34markets tend to revisit areas like this.

2:36And this is especially important when it

2:38lines up with imbalances,

2:39because OTE on its own really means

2:41absolutely nothing.

2:43All it's telling us is that typically this

2:44is where markets tend to reverse, but we

2:46also want to see

2:47imbalances like this back here to give us

2:49justification

2:50to see this market come up here and revisit

2:52this area.

2:52Okay, so in this case, guys, let's go ahead

2:54and move this forward now and see what we get.

2:56Okay,

2:56so

2:57playing this forward now on the one hour

2:59timeframe still, we can see that the New

3:00Zealand dollar did come up here and tap

3:02this area.

3:03Now I want to show you something.

3:04As soon as we come up here and hit this

3:05area, I am dropping to a five minute

3:07timeframe.

3:08So those are my preferred timeframes, the

3:09one hour

3:10for structure and then the five minute for

3:13confirmation.

3:14Okay, now a couple of things I want to show you.

3:16So first of all, you can see that this back

3:17here, a lot of traders would have gotten

3:19tripped up here because we had this high,

3:20we had the low,

3:21we had the break above here, so BOS, and

3:23then we had a break of this.

3:25Now this right here,

3:27technically is internal because we never

3:29saw the market come down here and form this

3:31low and then do this and then give us the BOS

3:34like we had over here.

3:35Furthermore, and this is the real issue

3:37with using this,

3:38is that if we look back here on the five

3:40minute time frame.

3:40So go back here

3:42to our OTE.

3:43What do you notice on these three candles?

3:44Right? There is no retrace into these

3:47candles.

3:47Okay, so if I take another box and just

3:49drag it across from these candles up here.

3:52So let's move out here and do this.

3:54If we just take this box here

3:56and drag this across, right?

3:58Notice how we never came up here

4:01on this first high.

4:01We never fully mitigated

4:03this imbalance.

4:04So anybody using this right here as your

4:06short-term change of character to get short

4:08wasn't paying attention to this imbalance

4:10back here.

4:11Which you can see that we did get it right

4:12here on this high.

4:13So the moment that we get that, what I'm

4:15doing is I'm looking at the five-minute

4:17timeframe and searching for

4:19another breakup structure change of

4:20character.

4:21Same exact pattern, guys, same exact thing.

4:23Markets are fractal,

4:24so you'll see this happen on every single

4:26timeframe.

4:27So looking up here at this high, we have

4:29this high right here giving us a

4:30BOS, okay?

4:32So breakup structure right here

4:33with the acceptance above that high.

4:36Now what this means,

4:37and this is a perfect example,

4:39what this means is that this low down here now

4:42is going to be my external low,

4:44okay, or protected low.

4:46And this is ideal because notice back here,

4:49this was our high, we came down, we formed

4:51these lows.

4:52Liquidity build up below these.

4:53We then had the market sweep this

4:55and then the BOS.

4:56So this is absolutely textbook.

4:58This is exactly what you wanna see

5:00when you are looking for a potential change

5:02of character.

5:02This low right here is textbook.

5:04So if we go over here now,

5:06what I'm looking for again, I'm looking for

5:08confirmation

5:09or acceptance below this low.

5:11Because I wanna get short here, but I want

5:13confirmation that sellers are really gonna

5:15take over here.

5:15So playing this forward again, still in the

5:17five minute timeframe.

5:18Okay, we're just kind of going sideways

5:19here, chopping around.

5:20Now right there we do get confirmation.

5:22So what I can do from here

5:24is I'm going to drag this back over to keep

5:26it nice and clean

5:27and label this my change of character.

5:29So again, what we're doing here is we have

5:31the BOS in the one hour, change of

5:33character on the one hour.

5:34We have our OTE imbalance mitigated back here.

5:37We now have a five minute

5:39break of structure, five minute change of

5:40character.

5:41Now one thing you'll notice too though, if

5:43I go back to the hourly timeframe,

5:44One thing you'll notice too, and this is

5:46why it doesn't matter.

5:47A lot of traders will try to chase this lower,

5:49thinking that they're going to miss this

5:50move and they start chasing down here.

5:52This doesn't matter, guys, because look at

5:54this candle on the one hour.

5:55Look at this imbalance now that we have

5:57back here.

5:57So again,

5:58this is not the entry signal.

5:59This is just confirmation that in this

6:01case, sellers are taking over once again.

6:03So within this short-term uptrend, sellers

6:05are taking over and giving us that

6:07confirmation of the rotation lower.

6:09This right here, though, is not the entry.

6:10The entry occurs up here on this imbalance.

6:13Okay, so if I play this forward now,

6:15Now, again, we're still in the one-hour

6:16time frame,

6:17just to make it nice and easy.

6:18So we have everything we need to take a trade.

6:20Now, I want to see the market come up here

6:21into this imbalance, which it does right here.

6:24And this right here brings me to my short entry.

6:27So I'm going to move this over here

6:29because this really only applies to this

6:31region.

6:31We only need to see the market come up here

6:33and tap OTE.

6:34From there, we're looking for that low time

6:35frame shift.

6:36Okay, so my short entry, guys, occurred

6:38from right here in this area once we

6:39mitigated this imbalance.

6:41And yes, I did share this in real time in

6:42Discord as I do with everything else.

6:44So you can see here, sharing this trade

6:46with members in real time.

6:47You can see

6:48that the exact same thing, guys.

6:49Change of character, BOS,

6:51mitigated this imbalance up here.

6:53Five minute BOS, five minute change of

6:55character, imbalance.

6:56This was my entry, okay?

6:57And this was shared with members in real time.

6:59And on top of that, and you can see my

7:00other trades here too,

7:01I've taken 3 trades this week, all

7:03profitable, S&P 500 short, Australian

7:05dollar short,

7:06New Zealand dollar short.

7:07And on top of that, guys, I even showed

7:08this idea to VIP members here.

7:11So even before we got this, I said that I

7:13had all the markings of a bearish reversal

7:14setting up.

7:15All we needed was follow through and that

7:16was that exact point right there where I

7:18was shorting the market.

7:18Okay, so I'm sharing this, not the flex,

7:20but to show you that this isn't some

7:21hindsight BS.

7:22This was a trade that I actually took in

7:24real time.

7:25And if you do want to join us in Discord

7:26too, check out the link somewhere on the

7:27screen.

7:28You're going to get a free SMC course too.

7:29This is my strategy that I use.

7:31It's nearly two hours of content that's

7:33completely free.

7:34And you can also join us in Discord through

7:35that link as well.

7:36So, looking here at again, New Zealand

7:38dollar one-hour time frame, this was my entry.

7:41Now, my stop loss in this case

7:42went above this high up here, and the

7:44reason for that is because, again, we had

7:46that five-minute change of character,

7:47so I knew that if this was going to play

7:49out, this high up here should hold.

7:50Now, what you're going to notice is that my

7:52target in this case...

7:54was below this low.

7:55So what's the deal with that?

7:57And the reason that I was targeting lower

7:59than this low

8:00is twofold. One,

8:02because if this is gonna be our lower high,

8:05chances are we're probably going to extend

8:08below this low.

8:09And I know that because when I think about,

8:12in terms of

8:13a trend in a market, I'm gonna get rid of

8:15this here to clean it up,

8:16in terms of a trend in a market, we've

8:17talked about this before, I made a video on

8:19these type of channels before, but in terms

8:21of a market, what they tend to do

8:23is you get the market essentially revolving

8:25around a midpoint, okay, or mean.

8:27So markets are mean reverting.

8:29So what happens is you get a move to the

8:30extreme up here, you have it snap back to

8:32the mean.

8:33You get the move down here, you have it

8:34snap back to the mean, the move up here,

8:36snap back to the mean. So

8:38this is what markets tend to do within a trend.

8:40So knowing this,

8:41and again, knowing that if this is going to

8:43be our lower high, we probably extend below

8:44these lows.

8:45And furthermore too,

8:47if you look back here,

8:48what do you notice about this price action?

8:50What do you notice about these candles back

8:51here? So if I draw some lines here from

8:53this low down here,

8:54up here to these lows back here,

8:57what do you notice about this pocket of

8:59price action?

9:00This is also an imbalance here for the New

9:02Zealand dollar.

9:03So we had the impulsive move out of here,

9:05and we never saw the market come back to

9:06mitigate this.

9:07So that alone right there was enough for me

9:10to target beyond these lows.

9:12and get my 3R meaning my reward was three

9:14times my risk which is my minimum so you

9:15can see here 3.08 was the

9:18reward to risk

9:19okay so if we play this for now and see

9:20what happens here with the new zealand

9:22dollar this was a pretty quick trade

9:24about 24 hours or so you can see right

9:26there was my target hit here

9:27today.

9:28So if I now hide this, let's take a look here.

9:31I'm going to turn off bar replay

9:32and give you guys a little bit of bonus

9:34content in terms of what we could see next. And

9:37look, my job is never to forecast.

9:38None of this was ever about forecasting.

9:40You can see that if we just recap this,

9:42all we did was identify breakup structure,

9:45breakup structure, external low down here,

9:46protected low,

9:47close below, change of character,

9:49imbalance, OTE,

9:51lower timeframe shift. And

9:53then from here, again, Again, all we're

9:54doing is the exact same thing.

9:55Imbalance through here, mitigate this,

9:57looking for shorts through here.

9:58Now, you could absolutely adopt this.

10:00If you're more of a high time frame swing

10:02trader,

10:03you could look at this back here

10:05in terms of this imbalance and this OTE

10:07and see this change of character and look

10:09to short here with a stop loss above the

10:10highs up here

10:11and then look to play it that way too.

10:13It just depends on your style, it depends

10:14on your time frames, your time horizon, etc.

10:16of what you're trying to do.

10:18But for me, this right here, this style of

10:20trading is super mechanical, I get enough

10:22trades per month, like I said, trades this

10:24week, all winners so far, it gives me

10:26plenty of trade setups.

10:27But in terms of where we could go from

10:28here, what I'm looking at next

10:30is obviously we don't know if this is going

10:31to be the low for the New Zealand dollar.

10:34And that's going to matter because it's

10:35going to determine if we get another

10:37rotation here.

10:38So in other words,

10:39if this is our low down here where we had

10:41now a BOS, okay, so this right here tells

10:43us the sellers remain in control.

10:45And

10:46if this right here, we don't know where

10:48we're going to potentially bottom out.

10:50But if we were to bottom out right where we

10:52are, then I'd be looking at this area up here.

10:54So you can see

10:54imbalance through this area, also an

10:56imbalance up here.

10:57Okay, so that could be one area to look for

10:59shorts again.

11:00But if we extend lower, then that of course

11:02is going to change things.

11:03Okay, so it could be down here toward these lows,

11:06back here in this area, or potentially even

11:08a little bit lower.

11:08But either way, guys, wherever that OT is

11:10lining up, like for example, if we come

11:12down here

11:13and our OTE is up here in this area,

11:15then this is perfect because now we have

11:17this imbalance.

11:18Basically above these highs,

11:19I'm looking for a sweep above the highs and

11:21the same exact thing, right?

11:22Some type of internal shift up here to then

11:25once again get short.

11:26Okay, and it's not saying that it will

11:27happen, guys.

11:27It's not saying that it will happen. Again,

11:29my job is not to forecast.

11:30My job is just to react to what's on the chart.

11:32And this back here was a perfect example of that.

11:35All I was doing here was just reacting to

11:38this one-hour change of character and also

11:40the lower timeframe shift.

11:41All right, so I hope that this video has

11:42helped explain my exact SMC strategy.

11:44And I really hope that it does help you in

11:46your trading.

11:47And be sure to check out this video right

11:48here too, where I talk about how to

11:49identify premium and discount and OTE.

11:52And don't forget to join us in Discord if

11:53you want.

11:54Check out that link in the description.

11:55Until next time, trade well.