BoS and CHoCH Trading Strategy: Wait For This Entry Signal

You've probably had the situation before where you've drawn an area on your chart correctly, but then you drop to a lower timeframe thinking it's going to help you, and it actually hurts you because FOMO kicks in. You're not really sure exactly what to look for to get that entry confirmation, and it's all downhill from there. So, in this video, I'm going to give you a very, very simple but effective break of structure and change of character trading strategy that you can use across multiple timeframes to confirm your entries with incredible accuracy. >> [music] >> And the best part is there's only a few components to it, so it's very simple to understand, and also use this across any market. It doesn't matter if it's forex, crypto, commodities, it doesn't matter, this will work. So, my name is Justin Bennett, a full-time trader and founder of Daily Price Action. As always, all of this is my opinion only and not financial advice. So, let's get into this drawing, right? Because before we get into some examples, we need to understand uh fully what exactly it is that we're doing. So, before we talk about the the strategy, how to put all of this together, we need to understand a few components. And the very first two components I want to talk about here are going to be the break of structure and change of character. So, over here you can see that a break of structure is simply a trend continuation, okay? While a change of character is a trend reversal. Now, when you first hear change of character, right? The character we're referring to there are bulls and bears. So, if you think about it like this, a change of character, like over here, this tells us that bulls were in control, okay? And now, once we get the close below this low over here, we are changing character. We are changing character from bulls over here to bears over here. Okay? So, a change of character is simply changing from bulls to bears or vice versa. Now, the key here though is that this is the daily timeframe, okay? So, what what we have to have here happen for the BOS and the change of character is we have to have a close above the previous high, okay? Close above the previous high. Wicks do not count, okay? We have to close above here, same thing with the change of character. You get the low here, we have to change we have to close below here in order to confirm the change of character. If we wick below this low, that does not count. Okay? So, because this is a daily time frame, we're talking about daily closes above these highs and below this low. Now, the other key here, too, with a change of character is that this has to occur on the last low of the last BOS. So, the way you do this is very simple. You take the last BOS in the chart, okay? You track back to the last low, and you find that low there, and you say, "Okay, this is my low that now has to be taken out." You find the close below, that's your change of character. Okay? Really, really simple stuff. Now, the other thing we have to understand, um with this entire trading strategy that I'm going to show you today, a way to confirm your entries across multiple time frames, is that we have to long from discount and short from premium, okay? Because what I'm going to show you today as far as confirming those entries, it's going to come down to context. Because if you're just looking for this stuff on a random chart, random spot on the chart, it's not going to work. You have to look for the context, and the context I'm referring to is both this here on a higher time frame. Again, this is the daily on the higher time frame, and also we have to map out our fibs, okay? So, I've made videos on this before, but when we look at this high up here, down here to the low, remember, this is our change of character. What we need to do here is we need to short from premium, okay? We want to long from discount, we want to short from premium. What that means is shorting from above the 50%, okay? Now, before we get into too much detail, guys, if you're looking for the best broker around to trade forex, crypto, commodities, indices, check out IC Markets with my link. They are going to give you a 100% deposit bonus up to $1,000 and 50% deposit bonuses on future deposits up to $25,000. So, that's $26,000 in total that they are going to give you to trade with, and on top of that, if you deposit $10,000 or more, I will give you lifetime access to our trading group in Discord, also the full SMC course. And by the way, I am in Discord every single day posting trade setups. I post like five to 10 trade setups a day, and I'm also in there sharing my trades every day as well. [music] So, check out that link here in the description. I'll also pop it up here at the top, so you can click on that, head over there, fill out the application, and you're good to go. Okay, so when we think about this here, we need to long from discount down here, we need to short from premium. So, in this case here, because we have the market going from buyers in control to sellers in control, what we have to do is we have to short from premium. This right here, this line, is the 50%. So, everything up here in green is going to be premium. Now, this up here, this dark green area, we're not going to focus on this too much today, because this is OTE. I've made videos on this before, but the bottom line is if we are going to short, we need to short from premium. Now, you can immediately see what this is going to do for you, okay? Because if you're looking at the daily chart and you see this reversal happen, the question of do I short here, do I short here, or here, or here, this eliminates a large part part of that. So, this right here, this tool, this simple tool, is going to eliminate most of the FOMO you have, okay? It's going to eliminate like 70, 80% of the FOMO that you have. And so, for most of you guys, this is going to be a game-changer in and of itself, okay? Because what it does is tells you everything below this line here, you cannot short, okay? And you can only short this part. Now, here's where it becomes a little bit more difficult, because obviously this is just a drawing, it's not a real-life example. What happens if this high up here is like this, okay? Now, the question is, we know we still can't short below here, okay? But the question is, do you short here, or here, or here, or here? And what I'm going to show you right now is going to answer that. So, what I want you to imagine is that this portion up here, okay? This portion right here, we are going to now drop to a lower time frame. I know this is just a drawing, obviously, uh but imagine that this right here is the daily time frame, okay? And we're dropping now to a 1-hour. So, what you get here is this same pattern. Okay? And this is where you should start to have some light bulb moments, some aha moments hitting you right now because this pattern that we're looking at, the break of structure and the change of character, the highs and lows, all of this, guys, works across any timeframe. Okay? It's the same exact concept. It's the same rules across multiple timeframes, across any market. It does not matter. So, when you look at this high on a daily chart, if you were to drop to a 1-hour chart, you would see something like this. Okay? If you were then to drop from a 1-hour chart down to like a 5-minute and look at this part up here, you would see something similar like this. Okay? So, markets are fractal. What that means is that you're going to see the same type of structure, okay? The same type of swings swing highs and lows across multiple timeframes. It doesn't matter if it's the weekly, daily, 4-hour, 1-hour, 15-minute. It does not matter, guys. You're going to find the same exact thing. So, here's how we start to confirm our entries, and you can see exactly where I'm going with this. So, if this is our daily chart over here, and we know that this is where we want to short from. Okay? So, we want to short above the 50%. Then, what we can do is drop to a 1-hour timeframe, and we are not looking for shorts until we get this. Okay? And this is going to be much more granular because this is a 1-hour timeframe than this over here. So, the question of, you know, do we do we short from here or here or here or here? Well, guess what? We don't short any of this over here because we still have a BOS. We don't short any of this over here because we still have a BOS. Now, look what we have. We have a 1-hour change of character. So, now we're looking for shorts. Guess what we do again? The same exact thing with our fibs. Okay? So, from this high up here down here to the low, drag this down, what do we have? We have the market tapping into premium above the 50%. Now, remember, this is a 1-hour chart, okay? So, this right here, this portion of the move right here, could be just 20 pips, 30 pips, okay? And if you're getting in to a trade, you know, 20 30 pips like this with a stop loss above the high up here and you've got this happening on the daily, then you can imagine the opportunity that would be available here, okay? So, this right here is how you confirm your entry using a lower time frame, okay? So, you can see what we did. We're just doing the same exact thing across multiple time frames. Now, let's take this one step further, then we'll get into some examples. And if you guys do want to see exactly how I trade SMC full-time, too, check out the link right here on the screen. That's going to be a free SMC training. It is completely free. You will not find this content on YouTube and it shows you exactly how I'd use SMC to trade full-time. So, check that out. Click the link, head over there, enter your name and email address and you will get access completely free. Also, it will be in the description as well of this video. Okay, so this is the 1-hour time frame, guys. So, right now, what we can imagine is that again, we went from a daily, okay? And we looked at this portion up here on the 1-hour. We see this, okay? This is the 1-hour. Now, imagine we're going to do the same exact thing. We're going to look at this portion up here and we're going to move over and say, "Okay, well, what we can do is the same exact thing." And we can now, if we wanted to, okay, you don't have to, you could just keep it at this. You could just stick with the day the 1-hour time frame and you could basically swing trade the daily, okay? Using this right here. This is all you need, okay? Now, if you were to take this again and let's go one step further. Let's go to a 5-minute. Just like I said earlier, what you would have in this portion of the 1-hour time frame, if you were to drop to a 5-minute, you would see this, okay? Again, markets are fractal. You will see the same exact patterns forming across multiple time frames. So, again, if you wanted to get really, really granular, you could literally take from the daily chart up here where this portion of the move, you know, could be 100 pips. It could be 150 pips, right? It could be 200 pips. Now, you're taking it from the to to the 1-hour time frame where maybe this is like 20 or 30 pips. Now, you go to a 5-minute time frame and you're doing the same same thing. You're waiting for the change of character, you're drawing out your fibs, and now maybe this is like 10 pips, okay? And you can see how you can really narrow this down and just get incredibly precise entries. And this is Guys, this is the simplest but best way to confirm your entries, especially if you're using smart money concepts. Um and And the beautiful part is, again, this is the same exact concept over and over again. All you're doing is just changing time frames, okay? But the key here, though, really just commit this to memory before we move on to examples, is that context matters. Because if you're looking for this on the 1-hour right here, if you're looking for this over here on the the daily time frame, then it's not it's not going to work, guys. Like it's just not going to work because you might find cases where you see something like this down here in this area, okay? But if you're not waiting for premium up here, then this is going to be much less effective, okay? Because the market is not at an area where you have demand drying up and supply coming in like you do up here, okay? So, that's the key. I mean, context is going to be absolutely key here with this. That's the biggest uh factor with this entire strategy that I'm showing you today using just a break of structure and change of character. Okay, so let's head down here, guys. And by the way, if you are finding this helpful, be sure to smash that like button and also leave a comment. I do try to make it a point to respond to most comments. So, let's now look at an example, all right? And we should have a pretty good idea of exactly what we're doing now, and you can see exactly how we're applying this to an actual chart. So, this is the daily time frame here, the EUR/USD. And what you'll notice is that, just like we talked about before, you can see we have the close above the previous high, right? Close above the previous high. And now, what this means down here, remember, BOS up here, what we do is we track it back to the last low, okay? The lowest low here. This is going to be our external low. We close below, this gives us a change of character. All we're looking for now is the market to move into premium, okay? So, you can see that right here we are in premium. Now, I'm going to draw a level across here just to kind of give us a reference point so we can remove this just to keep the cart the chart kind of clean. Um so basically anything up here guys, we can now look for shorts, okay? So, just like the example that we looked at up here, right? We went from the daily over here to a 1-hour, we're going to do the same exact thing in real life, okay? And this guys, by the way, was actually a trade that I talked about um on YouTube and also we we took the trade uh took the setup in Discord as well. We talked about this the entire way. So, what we're going to do here now, remember this line is going to be our 50%, okay? So, we know that we're in an area now that we can short. Now, here's where most traders would struggle with this though because without this breakup structure and change of character strategy that I'm showing you, you'd see this up here and you'd be like, "Okay, well, maybe you know, maybe this is the short, right?" And you'd be shorting through there only to find that the market is not going to reverse from there because it's just a random entry, right? And you got stopped out there, you got stopped out again. So, with this strategy guys, what we're doing here, okay, is I'm going to go back here and we're just going to walk this forward, okay? And I say walk this forward, all that means is that we're taking off this high and we're going like this. Okay, now in this case here, you can see that with this structure, like this right here is not enough to call a swing low and draw a level off of here and look for a change of character because really your last swing low were these down here, okay? So, really ideally when we get above this 50% line, we want to see more structure here. We want to see the market actually take out this high because then we can start playing lows like this over here. So, let's play this forward now and see what we get, okay? So, right there we get the close above and that immediately puts me on notice about this low right here. I'm saying, "Okay, if we break below this low here, then that's a change of character, okay?" So, let's go ahead and map this out, draw this as a break of structure, okay? Now, let's play forward again, see what we get. We come down there, we test the low, we do not close below. Remember, we don't close below here, okay? So, off of this high up here, we have a new BOS. And this right here is basically the same low because again, it's these lows through here are the same as this. So, I would keep this intact and I would say, "Okay, now we have a change of character." Okay? So, remember this up here. If we go out here to a daily chart, you can see where we are on the daily. Okay? We are in premium up here, so we're good to go with shorts. We have the change of character down here, so the context, guys, is spot-on. We know exactly what we're looking for here. Okay? So, again, going back here to the 1-hour, you can see where now we have our change of character. Okay? So, in this case here, what you could do is you could draw from this high up here down here to this low. Okay? Now, here is the tricky part with this. And And this is the only part now that you are going to have to come up with a rule for yourself to decide, are you going to wait for this up here? Now, now to be clear, this isn't an efficiency. These candles are inefficient, because you can see here that we have a very aggressive move, a lot of displacement back here. The market has not come up here to mitigate these. Um now, the upside with waiting for this right here is that you get an incredible risk reward, because you're basically entering here, you're putting your stop loss above the high, and then your target could be I mean, your first target could literally be these lows down here. Okay? These lows down here, possibly the ones way down here. The downside with that is that if you're waiting for this up here, you might not always get it. Okay? So, the upside is you get a better risk reward, the downside is you might not even see the market come up here, in which case you miss this entire move. Okay? So, that's where you have to decide. Now, personally, what I will sometimes do is if we see an aggressive move like this, and you can see where the market gap down, then what I might do is I might just enter a half-size position here, and I'll enter half up here if we get there, giving me an average entry right around here. If my stop loss is up here above the high, and my average entry is here, guys, and I'm targeting lows, you know, like these all the way back here, then I'm I'm perfectly fine with that. Okay? Even if I'm targeting these lows, I'm perfectly fine with my my entry, you know, being somewhere up here in this region and my stop loss above the high if I'm targeting these lows, okay? That's perfectly okay with me. So, that is one thing that you'll have to understand here and really decide for yourself. So, if we play this forward now, what you'll notice is that we come up to the 50% and then that's about it, okay? And that's why I'm saying this that you can see here that often times you will get the market moving at the premium. However, the 50% is also a key level. And so, when you get a lot of aggressive selling like this, you might only get the 50%. But, at the same time you can see where we did technically tap into premium. So, the same rules apply, guys. We're looking from the high down here to the low following that change of character over here and you can see where we tapped into premium. So, your short would be here, okay? Now, if we move out and I'm just going to mark this on the chart, okay? I'm going to mark off a level where we would have shorted this market, okay? Now, if we go to here to a daily chart, go back here toward this swing high. Okay, look at the context. Now, again, this goes back to, you know, you see this here and without what I'm showing you today, you would see this change of character and you'd say, "Okay, well, should I be shorting down here? Should I short here? What about here?" You wouldn't know. But, with this here you can see how the context matters so much in this case. We have the the change of character, we are in premium based on this high up here down here to the low, okay? We're in premium, so we're good there and you can see how we pinpointed this entry, okay? We confirmed this entry using the 1-hour time frame down to an entry right here, okay? Stop loss above the high, all right? Now, if on the daily time frame we go ahead and play this forward just to kind of see what we get from the Euro, okay? Now, this did take some time. Look at this here, okay? This took a few weeks to play out, but you can see where if you were entering up here, stop loss above the high, if you would just waited, I mean, this would have been an incredible trade, okay? So, that right there, guys, is how you confirm your entries using nothing but a break of structure and change of character and also how you can turn this into a complete trading strategy. This is the simplest way to use SMC, uh but it's also incredibly effective. And it's honestly what I use every single day. Okay, now let's wrap things up here talking about one more example. Okay, so if we take a look now at the 4-hour time frame. And here's an example of how you can also just take this from, you know, you can use a 4-hour time frame as kind of your baseline and then drop to something like a 15-minute chart. You can go do like what we just did with the daily time frame, the 1-hour time frame. There are multiple variations of what you can do. For me, guys, I use typically two time frames. Okay, that's enough for me. I know in the example above we talked about the daily to the 1-hour to the 5-minute. You don't have to do that though. You could just use something like a 4-hour and drop to a 15-minute. Okay, and that's what I do, you know, quite often. So, here is a downtrend, same, you know, chart, EURUSD, 4-hour time frame. You can see we have break of structures here occurring. So, what I want to take you back to is this portion, okay, right here. Because you can also play this. It doesn't have to be after a change of character. You can also trade within a trend like this because a break of structure is telling you that sellers remain in control. So, why not trade the trend, okay? Now, what we have to understand though is that context is also key here, too. And that when you're looking from high to low down here, okay, this is what we're looking for. So, basically, if I mark this off, here is our 50% right through here. So, what this means is that, again, that that tool alone is going to keep you from trying to short anything through here. So, once you get this BOS, right? Without that tool, again, the question is, do you short here? You might chase here into the lows. You might short here. But with this here, what we're saying is this line, everything below here, we cannot short or I cannot short. So, now I'm looking to short up here, right? This refines my entry down to this small area. Now, we've refined it down, but how do we confirm this, okay? So, for that, what we're going to do is drop to a 15-minute chart. Okay, so let's head back here and find this specific price action. And by the way, too, so this right here, before I go on, I do want to point out that this was a trade that I took in Discord in real time. So, this isn't hindsight stuff here. Um this up here was my entry. So, this is what I posted in Discord in real time. So, you can see the entry right here. So, this is the same exact situation. Uh and again, this was in real time, okay? And And by the way, if you want to join us in Discord, too, that free course I mentioned, which you can find in the description of this video, opt in for the free course, then you will have an offer to join us in Discord if you want. So, here we have the Euro above our 50%. Remember, this is our 50% based on that 4-hour trend. So, now what we do is the same exact thing. We're dropping to a 15-minute chart. And you can see where we're getting much more granular, okay? So, now what we have is we have this high up here. And what do we have? A BOS. Okay, we close above here. So, this was our BOS, making this down here the protected low. This is the low that we're watching because all you do is take from this high over here over here to this high, and you find the lowest point, which is this low, okay? Very, very simple. So, now what we can do is if I snap a level right here toward this low, okay, the lowest point, and move this over, what you can see is we had the change of character. And again, this is exactly what I was shorting. Now, I will tell you I got in a little bit early on this. I got in a little bit early here. In hindsight, obviously, everything is 20/20 in hindsight. You know, you would have entered somewhere over here, okay? But I decided in this case, because I wasn't confident that we were going to see up here, simply because there weren't really a lot of inefficiencies back here in this area. So, I went ahead and I got short right here on the close below on that confirmed change of character. Now, it was okay because my stop loss was up here above the highs, okay? And what you'll notice is that if you're putting a stop loss up here above the highs with the strategy, you know, we never even came close to this. We never even took out this high, okay? So, even though we did see the market kind of chop around and come back here, and the trade was underwater for a bit, it doesn't matter because rules are rules, right? And I stuck to my rule, and you can see that here with me taking uh profit down here. Okay? So, this is where I booked profit. You can see that the group loved this one. This right here, this aggressive move lower, spoiler alert, this is about to happen on the Euro chart. But this right here was the entry, you know, there's the profit, and that actually ended up being the low there for for about a day. So, again, you can see here this did take some heat, right? And it took some time to play out. But if you're swing trading, guys, and you have rules that you're confident in, you have that conviction, it doesn't matter. If you're entering down here, stop loss above the highs, it doesn't matter that you're getting this here, okay? Because ultimately, you're saying, "Hey, if I'm wrong here, you've got to take out this high. You've got to take me out of this trade." And the market never did that, okay? So, this trade was always in play, the idea was always in play, and what you can see here is that we got an incredible drop from the Euro down here. I was taking profit down here at this low. So, again, that's just a way there that you can go from a 4-hour to a 15. Before we went from a daily time frame down to a 1-hour, but all of this is incredibly effective. It doesn't matter what you use. Now, I will tell you this, okay? The lower the time frame, the more noise you are going to get. So, if you're starting out with this, my suggestion to you would be to start with a daily or 4-hour as kind of your higher time frame baseline, and then drop to something like a 15-minute or a 1-hour time frame, like we did before, to really kind of pinpoint those those entries, okay? Because that's going to help to kind of weed out all of the noise that you're going to get on something like a 1-minute chart or a 5-minute chart. So, I truly hope this video is helpful. If it has, then be sure to keep it locked in here. Subscribe to the channel. Also, check out the free SMC training right here on the screen. That's going to provide you with the complete strategy that I use. It's completely free. Click on the link, enter your name and email address, and you will have access. So, trade well. I will talk to you again in the next video.