Entry smc model back to basic
- Indicators
- Minh Truong Pham
- Version: 2.1
- Updated: 15 March 2024
- Activations: 5
This indicator provides the ability to recognize the SMC pattern, essentially a condensed version of the Wyckoff model. Once the pattern is confirmed by RTO, it represents a significant investment opportunity. There are numerous indicators related to SMC beyond the market, but this is the first indicator to leverage patterns to identify specific actions of BigBoy to navigate the market.
The SMC (Smart Money Concept) pattern is a market analysis method used to understand the behavior of "smart money" in stock trading. In this model, the main stages include Buy Climax, Automatic Reaction (AR), Test, Hunt/Purge, Re-Test Operation (RTO), and Secondary Weakness Operation (SWO). Here is an introduction to each stage:
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Buy Climax (BC):
- Key characteristics: This stage occurs when there is a sharp price increase and a large volume of stocks is bought. This is often a sign of increasedinvestor interest and may indicate the end of an upward cycle.
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Automatic Reaction (AR):
- Key characteristics: Following the Buy Climax, the market typically experiences an automatic price decline, where stock prices naturally decrease to alleviate buying pressure.
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Test:
- Key characteristics: This stage is often a retesting of important price levels (possibly previous highs or lows). If stock prices do not decline significantly after the test, it may signal stability in the market.
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Hunt/Purge:
- Key characteristics: This stage often involves moving stock prices to "hunt" and "cleanse" weaker, uncertain investors from their positions.
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Re-Test Operation (RTO):
- Key characteristics: This stage often involves a retesting of important price levels after the Hunt/Purge stage, and if stock prices maintain their position, it may be a sign of strength in the market.
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Secondary Weakness Operation (SWO):
- Key characteristics: This stage typically marks secondary weakness in the market, possibly indicating a transition from an uptrend to a downtrend.
The SMC pattern can help investors predict changes in market behavior and make intelligent trading decisions based on these signals and it help. In the various patterns, the SMC model helps investors identify signals most quickly when prices reverse after the Hunt/Purge point. This is the moment when the model is confirmed. The remaining step is to await the RTO signal.
*** Settings:
+ There is two importance setting is swing length and internal length. Both of them have left side and right side. Swing length is used to fix current intermadiate trend of market. BC/SC always live in top/bottom of swing trend. Meanwhile interanal lenght is used to defind characteristics of consolidation pharse. You free to change it to make most suitable patterm. I found for me and put it in default setting.
+ Confirm valid hunt: is option for confirm.
+++ If true, in buy model, after hunt, we need price go down to below of SC (vice versal with sell model)
+++ If false pattern confirm faster when price upper SC. This fast, but not reliable
+ Other setting are color, text ...
Detail instruction about SMC wickoff theory here
***Note at New Year 2024:
Happy New Year and hope you have profitable on market :D
Because of this indicator not run in history data (signal only show when confirm) so some client ask me about that. Let me explain more detail how it work:
***
The last picture will explain how the indicator looks for signals. Model identification is calculated through confirmation of signals as follows (let take Bearish scenarios for example):
- The indicator calculates the closest current swing high point. Swing high is the point where neither the left nor the right side is higher than it. We use swing left/right length to define the length (in bars) for the swing high point . As in the example above, if the price is between points B and C, then A is confirmed to be a swing high.
- After determining the swing high, the indicator will look for the Stop hunting point. As in the example above, D is the Stop hunting point.
- After the stop hunt is confirmed, the highest candle that creates a swing point will be the area to look for RTO signs. RTO (return to origin) is the point where after creating StopHunt, the price goes below BC (buy climax) then goes up to retest the BC zone. In the example above, E is the point that confirms the price going below the zone created by candlestick C; G is the point that confirms the price going up to retest the Buy climax (at C)
When all 3 points above are confirmed, the indicator will draw the pattern on the chart. From here, if the price returns to test the BC zone, the indicator will notify the user of a sell signal
After the pattern is confirmed and plotted on the chart, if the price exceeds the BC zone, the indicator will consider the pattern invalid and will not continue to extend the BC zone.
Some note:
• When starting to use, the indicator will not draw any signs on the chart. Any signs at this point are meaningless. The signal is only displayed when the RTO (return to origin) is confirmed.
• Defining swing left/right length is important for determining the model. The development team has experimented and found that figures of 60 for swing left and 30 for swing length give the most reliable signals. However, users need to experiment to find the right set of parameters for themselves.
• In the market, it is not easy to find a quality signal that brings us profit. So patience is important. This indicator has great implications when it comes to automating calculation and search work.
• The basic pattern of SMC appears in all time frames. And it reflects a trend. So, don't be afraid to look for a selling pattern even if a sell signal appeared a few candles ago. You can wait for the structure to retracement and continue to enter a Sell order
• ICT MMxM models also follow the basic model of SMC so you can also apply this indicator to ICT theories of Market maker model
The word of this doc at here.
*** Note
This version of SMC back to basic need a highest/lowest point in swing (atlest 60 bar leftside and 30 bar at rightside) to confirm this is Buy/Sell climax. And then need confirm model ( test, stop hunt, rto) to make signal when price retest RTO. So this indicator not provide signal everytime . But signal is not buy/sell entry only , it also tell us trend also. Please watch this video to more detail
