Swing Trading Strategy with Smart Money Concepts Explained. Learn to Swing Trade Forex Like Pro

I will share with you the essential basics of swing trading forex with Smart Money Concepts. You will learn how to do swing trading with the best SMC strategy.

I will teach you to combine order blocks, liquidity zones and imbalances to spot accurate entries and confirmation signals.

Trade with Trend

If you just started learning swing trading Forex with Smart Money Concepts, I strictly recommend trading with the trend only.

The cases and examples that we will discuss will be strictly trend-following ones.

Swing Trading with SMC in Uptrend

For swing buying any forex pair, we will look for the market that is trading in a bullish trend.

Trend Analysis

To confirm that the market is rising, you will need to execute structure mapping and find a forex pair that updates Higher Highs HH and Higher Lows HL.

Above is the example how I confirmed that GBPUSD is bullish with structure mapping. You can see that the pair consistently updates the highs.

Buy Zone

Once you identified a bullish pair, your next step will be to find the zone from where the next swing move will follow.

According to the rules, the market remains in uptrend till the price is staying above or on the level of the last Higher Low HL.

Here is such a zone on GBPUSD.

It is based on the last Higher Low and current price levels.

We will assume that buying orders will concentrate within that area and from that a bullish rally will follow.

The problem is that this area is extremely wide, and we can not just buy randomly within.

Demand Zones

Our next step will be to find liquidity zones within.

To buy, we need demand areas.

I found 4 price action based historic demand zones on GBPUSD.

Bullish Order Blocks

We will need to wait for the test of one of these zones and then wait for an order block - a place where smart money are placing their buy orders.

The problem is that we don't know in which of these areas the order block is, so we will need to wait for tests of these zones and a consequent imbalance to confirm it.

To confirm a bullish imbalance for swing trading Forex, I recommend analyzing a 4H time frame after a test of a demand zone.

According to Smart Money Concepts, a bullish imbalance can be any sign of strength of the buyers:

• bullish breakout of a vertical/horizontal resistance,

• change of character,

• high momentum bullish candle,

• bullish price action pattern,

• etc.

An order block on GBPUSD was confirmed with a breakout of a resistance line of a falling channel on a 4H time frame.

That was the signal that Smart Money are buying, and that is your signal to open a swing long trade.

Buy Signal

You place a buy position then with a stop loss below the order block and a target - at least a current high.

Swing Trading with SMC in Downtrend

For swing selling any forex pair, you will need to find a market that is trading in a bearish trend.

Trend Analysis

I suggest applying structure mapping to identify such a pair.

It simply should update Lower Lows LL and Lower Highs consistently.

USDCAD is trading in a bearish trend.

Structure mapping helps to easily confirm that.

Sell Zone

Then, we will need to identify the zone from where the next bearish wave will start.

According to Smart Money Concepts structure mapping rules, the market remains bearish till the price is staying below or on the level of the last Lower High LH.

That's such a zone on USDCAD.

It is based on current prices and the last Lower High.

We will assume that selling orders will be distributed along the entire length of our zone.

Supply Zones

Of course, we can not sell randomly within that zone because it is relatively extended.

Our next task will be to find liquidity supply zones within.

I found 2 price action based supply zones within our underlined area.

Bearish Order Block

Before we sell, we will need to find an order block.

A place from where smart money are selling big.

To spot that, I suggest waiting for a test of one of our supply zones and wait for a bearish imbalance on a 4H time frame.

Remember that there is no guarantee that the order block will be within a liquidity zone. You should learn to track the signs of smart money and their operations.

According to SMC, a bearish imbalance can be

• a bearish high momentum candle,

• a bearish CHoCH,

• a bearish price action pattern,

• a bearish breakout of a horizontal/vertical support,

• etc.

Sell Signal

You can see that a lower supply zone was tested on USDCAD.

Our bearish order block confirmation is a bearish Change of Character, a formation of a high momentum bearish candle and a breakout of a rising trend line.

Trading Position

After that we can open a swing sell position and expect a bearish movement at least to a current low.

• Stop loss should lie strictly above the order block.

• TP should be at least a current low.

  
  

That is how a trade should be executed on USDCAD pair.

Remember This

A proper combination of a trend analysis, liquidity zones and order blocks, imbalances is the essential basis of a profitable swing trading Forex with SMC.

Mastering that, practice recognizing the imbalances and confirmations for spotting the best swing trading entries.