SMC glossary
Quick definitions of every term in the course.
Smart Money Concepts (SMC)
GeneralA way of reading charts that follows how large institutions move price through structure, liquidity, and imbalance, rather than classic retail indicators.
Market structure
Market structureThe sequence of swing highs and lows that shows the current trend: making higher highs and higher lows is bullish, lower highs and lower lows is bearish.
Swing high
Market structureA candle whose high sticks up above the candles right before and right after it. A local peak in price.
Swing low
Market structureA candle whose low dips below the candles right before and right after it. A local bottom in price.
Higher high (HH)
Market structureA swing high that is higher than the previous swing high. A sign of bullish strength.
Higher low (HL)
Market structureA swing low that is higher than the previous swing low. Buyers stepping in earlier each time.
Lower high (LH)
Market structureA swing high that is lower than the previous swing high. A sign of bearish pressure.
Lower low (LL)
Market structureA swing low that is lower than the previous swing low. Sellers pushing price down further.
Break of structure (BOS)
Market structurePrice closing beyond the most recent swing in the direction of the trend. It confirms the trend is continuing.
Market structure shift (MSS)
Market structurePrice breaking structure against the current trend, for example closing below a higher low in an uptrend. An early warning the trend may be flipping.
Liquidity
LiquidityResting orders that price can fill, usually clustered above highs and below lows where stop losses and pending orders sit.
Buy-side liquidity (BSL)
LiquidityLiquidity resting above a high, made up of buy stops and breakout buy orders. Price often runs up into it before reversing.
Sell-side liquidity (SSL)
LiquidityLiquidity resting below a low, made up of sell stops and breakout sell orders. Price often dips down into it before reversing.
Liquidity pool
LiquidityAn area with two or more equal highs or equal lows, where many orders pile up and become an obvious target for price.
Liquidity sweep
LiquidityA quick push beyond a high or low that grabs the resting orders there, then reverses. It is how smart money fills large positions.
Inducement
LiquidityAn obvious-looking high or low that tempts traders to enter early, creating the liquidity that price then sweeps before the real move.
External range liquidity (ERL)
LiquidityLiquidity sitting at the edges of a range, that is the highs and lows themselves. Price tends to move between ERL and internal range liquidity.
Internal range liquidity (IRL)
LiquidityLiquidity inside a range, such as order blocks and fair value gaps, that price often taps into before heading to the external range.
Order block (OB)
Zones & imbalanceThe last opposite-color candle before a strong impulse move. Its body marks a zone price often returns to before continuing.
Fair value gap (FVG)
Zones & imbalanceA three-candle gap left by a fast move, where the first and third candles do not overlap. Price often returns to rebalance it.
Mitigation
Zones & imbalancePrice returning to an order block or imbalance to fill earlier orders before continuing in the original direction.
Premium and discount
Zones & imbalanceSplit a range in half at equilibrium (the 50% level). Above it is premium (better to sell), below it is discount (better to buy).
Displacement
Zones & imbalanceA strong, one-sided move that breaks structure and usually leaves a fair value gap. It shows aggressive intent from smart money.
OHLC
GeneralOpen, High, Low, Close: the four prices that build a single candle. The body is open to close, the wicks reach the high and low.
Accumulation, Manipulation, Distribution (AMD)
Models & entriesA three-phase pattern: price ranges to accumulate, sweeps liquidity to manipulate, then trends to distribute. Also called Power of Three.
Killzone
Models & entriesA specific time window in a trading session (such as London or New York) when volatility and clean moves are more likely.
SMT divergence
Models & entriesWhen two correlated markets disagree, for example one makes a higher high while the other makes a lower high. It can hint at a reversal.
Risk to reward (R:R)
GeneralHow much you stand to gain compared to what you risk. Risking 1 to make 2 is a 1:2 R:R. Always plan it before entering.