ICT Forex - Market Maker Primer Course - The ICT Smart Money Technique or SMT

[Daniel]

Notes

• We monitor divergences (Smart Money Technique) between correlated assets or markets.
• This technique is useful for identifying significant price movements.
• In a symmetrical market, a lower low in the foreign currency (e.g., Aussie Dollar) should correspond with a higher high in the dollar index.
• If this correlation breaks (e.g., the dollar index fails to make a higher high while the Aussie Dollar makes a lower low), it indicates underlying distribution in the dollar index and accumulation in the foreign currency.
• Examples of bullish divergences (SMTs):
  • The dollar index fails to make a higher high while the Aussie Dollar makes a lower low.
  • The dollar index makes a higher high, but the Aussie Dollar fails to make a lower low.
• Examples of bearish divergences (SMTs):
  • The dollar index fails to make a lower low while the Aussie Dollar makes a higher high.
  • The dollar index makes a lower low, but the Aussie Dollar fails to make a higher high.
• Two basic approaches to SMT trading:
  • Turtle Soup
  • Optimal Trade Entry
• We look for divergence after the market has removed a significant liquidity pool.
• Michael also refers to the SMT as the institutional market structure.
• Smart Money Technique is also known as Smart Money Tool.

ICT Smart Money Technique

AUDUSD SMT Example - Weekly Chart

AUDUSD SMT Example - Daily Chart

AUDUSD SMT Example - Liquidity Pool

AUDUSD SMT Example - Accumulation And Distribution

AUDUSD SMT Example - Optimal Trade Entry Opportunity

GBPUSD SMT Example - OTE And Turtle Soup Opportunity

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[Goku]

I have a Doubt I am not able to clear the reason behind if dollar fails to make higher high while AUS makes Lower low it is underlying the dollar is in the Distribution and AUD in the accumulation

One more doubt The SMT actually form on the Major Key Level??

[Daniel]

Please structure your questions in shorter, more understandable sentences. It is very difficult for me to understand your text.

I also recommend using deepl.com for accurate translation.

Now to your questions:

1. Forget about distribution and accumulation. It only complicates the SMT concept. It doesn’t matter why one of the markets can’t make a higher high or lower low. What matters is that this phenomenon occurred and manipulation (turtle soup) took place.

2. If SMT appears around a key level, it is usually a strong sign that a reversal will occur.