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  • Writer's pictureVasily Trader

What is Break of Structure in Smart Money Concepts Trading and How to Trade It (BoS)


what is break of structure in trading

Break of Structure is a crucial element in Smart Money Concepts structure mapping.

It is an essential element of many SMC strategies that is applied for making accurate predictions and spotting the best trading entries.


In this article, I will explain to you what is Break of Structure in trading (BoS), how to identify and trade it.


SMC Trend Analysis


In order to understand the idea of Break of Structure,

we will start our discussion with market trend analysis.


In order to identify the market trend with Smart Money Concepts, one should analyze the legs of the price movement and their highs and lows.


According to classic SMC rules, we say that the market trend is bullish if the price keeps setting new higher highs and new higher lows.


break of structure in smc

We consider the market trend to be bearish, if the price keeps updating lower lows and lower highs.


smart money concept break of structure

What is Break of Structure?


After the price sets a higher high in a bullish trend, at some moment it starts a correctional movement.

After a completion of a correction, the price sets a higher low, and a bullish trend continues.


what is break of structure in trading

The price level from where the market initiates a correction will be considered to be an important structure.


what is bos in smc

A bullish breakout of such a price level after a completion of a correction will be a Break of Structure BoS in Smart Money Concept trading.


break of structure in smc


After the price sets a lower low in a bearish trend, at some moment it starts a correctional movement.

After a completion of a correction, the price sets a lower high, and a bearish trend continues.


what is break of structure bos

The price level from where the market initiates a correction will be considered to be an important structure.


how to identify break of structure

A bearish breakout of such a price level after a completion of a correction will be a Break of Structure BoS in Smart Money Concept trading.


how to identify bos

What Break of Structure means?


Why Break of Structure BoS is so important event?


Break of Structure signifies the trend continuation.


In a bullish trend, it confirms the strength of the buyers

and indicates that with a high probability the trend will continue.


how to trade break of structure

In a bearish trend, it confirms the strength of the sellers

and indicates that with a high probability, bearish trend will continue.


how to trade break of structure bos

Confirmation


Always remember, that in order to confirm the break of structure in a bearish trend, the candle should strictly close below that.


break of structure trading strategy

In the example about, you can see that EURNZD is trading in a bearish trend. After a completion of a correctional movement, the price dropped and set a new low. But the candle did not manage to close below that. For us, such a Break of Structure is not valid.


how to trade break of structure

Only when the candle closed below the underlined structure, BoS is confirmed.



In a bullish trend, the same logic will be applied.


break of structure example

We will consider the Break of Structure to be valid only when a candle closes above that. How to Apply Break of Structure


Here is a very efficient way to apply Break of Structure in Smart Money Concept trading.


Once you spotted a Break of Structure in a bullish trend,

you can buy the market, expecting that a bullish trend will continue and that the price will go much higher.


what is break of structure and how to trade it

Above, you can see that GBPAUD is trading in a strong bullish trend and the price just set a new higher high with a Break of Structure.

For us, it is a signal that the market will go much higher.


break of structure trading strategy

You can see that the market went up, and a bullish trend continued.


Once you spotted a Break of Structure in a bearish trend,

you can sell the market, anticipating that a bearish trend will continue and that the price will go much lower.


break of structure bos trading strategy

In the example above, USDCHF is trading in a bearish trend and see a confirmed Break of Structure.


how to trade break of structure in forex smc

That was an important sign of strength of the sellers, and the market dropped lower then.


Break of Structure BoS is an essential element in Smart Money Concept structure mapping and trend analysis.

Its understanding will help you to predict coming bullish and bearish waves and feel the strength of a bullish or bearish momentum

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