Simple SMC Strategy For Beginners (That Actually Works)

In the next 10 minutes, I'm going to show you a very simple beginner-friendly SMC strategy on GBP/USD. It requires just two time frames and very simple concepts. And the best part about this is that not only is this going to be a strategy that you can use over and over again for years to come, but this is also a real-time strategy, so you can watch how this plays out over the coming days. So, if you're new here, my name is Justin Bennett, Forex trader since 2007, full-time trader since 2011. As always, all of this is my opinion only and not financial advice. So, looking at GBP/USD, we're going to have two time frames in this strategy, okay? first one is actually going to be the 1-hour time frame. Now, you can see here that I am on the the 4-hour time frame, and that's just to show you the recent price action going back the last couple of months. So, the very first thing that we need to understand here is if you are at all familiar with SMC, you know about change of character and break of structure. So, what these two signal is that a change of character is in this case here, you can see we got the close below the low. This was a change of character from bulls back here to bears. So, the moment that we get this right here, we're looking for shorts. Now, a BOS, like in this case over here, we get the close below. This is acceptance below a significant low like this, also called an external low. The moment that we get this close below, this is acceptance showing us that sellers remain in control. So, all of this is telling us, guys, as soon as we get this change of character back here, this is telling us that instead of looking for buys like we were back here, this right here is signaling, okay, this close below, this acceptance below these lows, this is signaling that we're now looking for shorts. And you can see that we did get a lower high over here. Now, the very next thing here is if I zoom out. Okay, so again, on the hourly time frame, you can see that from that point, we do have lower highs and lower lows. Now, you can also see here on this chart that I have something called a parallel channel or what I call a distribution channel, because what this does here is it gives you more structure to your trading. So, you can see that we have these highs up here, we have these highs, we have this high, and now these current highs. So, this is more than just looking for, you know, random support and resistance in a market. Basically, what this means is that you get the market giving you a mean like this or average price within a trend and then you get the market essentially revolving around that mean and mean reverting every time, okay? So, that's why this is helpful because it shows you more structure in the market. The more structure you can add to your trading, the better off you are going to be. Okay, so again, you can see here on the 4-hour time frame, we have all of these break of structures here showing us that sellers remain in control including what we're looking at right now. So, this pullback that we're seeing here, the way that we can identify an area of interest or where we want to drop to that second time frame to look for an entry is going to come down to our fibs. So, for that, what we can do is from external high up here down here to the external low, draw out our fibs and what I have here is a modified fib showing you the 50%, the 62%, and 79% retracement. Now, everything above this 50% line in this green area up here is called premium. This is where we want to short from in a downtrend. Now, this darker green area is called OTE or optimal trade entry. This is the ideal location of a lower time frame trade setup. Now, furthermore on the pound too, you can see here we recently we did have a gap down over the weekend. So, you can see here that we gap down and in fact we closed all the way or I'm sorry, we opened all the way down here. And so, this was a significant gap back here for this market and you can see where we are filling that so far this week. So, all of this means that despite the fact that this market has been rallying here for the past few days, this right here is telling me that I want to be looking for shorts. Okay, so that brings us to the second step of this process and that is dropping to a lower time frame to watch for a change of character. So, I'm going to remove my fibs because we know that this right now is in premium. We also know that this is OTE up here in this area. So, we're good to go there. We know that we're in a significant area here for the pound. We also know that again, this market has been trending lower for some time now. Okay, so let's talk about this. And again guys, this is real time. This is not bar replay. This is happening right now and I do think that that's what differentiates me from a lot of creators out there is that I'm showing you guys this stuff in real time because I have nothing to hide. I'm not going back weeks and showing you a setup that worked out and saying, "Look how smart I am." I'm showing you stuff that's happening right now because I know that this works and I know that if this confirms here today that the likely scenario is that it will work out. Now, there's no guarantee of this and this is not financial advice, but in most cases if we get the setup I'm looking for, then, you know, it will work out more than half the time and that's all you need when you have a favorable risk reward, okay? So, let's look at this here. This price action through here. We have this high back here. We have the close above. Now, this is no different than the 1-hour time frame that we just looked at, okay? The only difference here is that this is internal. So, I'm marking this as an internal BOS and this down here is our protected low. Now, the reason that this is our protected low is that if you look here from this high up here, okay? So, this high right here to this close above and we take our lowest point within this, okay? So, our lowest point within this box, it's this one back here. So, we know that right now this is going to be our protected low. In other words, as long as the pound is above this, okay? There is no short setup. Now, if we get acceptance below here on the 15-minute time frame, then this right here flips to a change of character and that right there signals that sellers now within this trend are starting to take over, okay? Now, again, it doesn't mean that it will happen. It doesn't mean that we will get continuation. There are never any guarantees in trading, but right now this is the setup that I'm watching. So, again, if we close below here, we have not closed below, guys. This is very important. If we close below here, this would be an internal change of character within this recent rally, okay? So, then from there, you know, once we get acceptance below, if we get acceptance below, of course, then this right here, you know, would become a potential short entry. Now, the stop loss in this case would have to go above the highs, okay? So, go up here somewhere, you know, give yourself a little bit of a buffer above the highs here and then as far as targets, it's pretty easy. If we look back here at the 1-hour time frame, you can see that within this downtrend we do have these lows back here. So, this low right here and then also this one, okay? So, this pocket down here would be the first target if we get this confirmed setup, but again, there is nothing confirmed as of right now. And this is also the exact same thing that I did earlier today with a dollar CAD long, okay? So, this was a long that I put on here on the dollar CAD. I also shared this in Discord in real time, which you can see right here. So, this was this morning, you know, several hours ago. I shared this with VIP members in real time with my entry, my target, my stop loss, all of that stuff down here 135.44. Now, if you want access to my trades in real time and also get my help in Discord every single day Monday through Friday, also full access to the course, then check out the link right here on the screen. So, that's going to give you access to a free SMC course. It's the exact strategy that I used to trade full-time. Beyond that though, you will have a chance to join us in Discord for lifetime access to my help with your trading. If you have questions, ask them. I'm in there every single day answering questions for members, posting trade setups, posting my trades in real time, and even VIP only videos, okay? So, be sure to check out that link. If you don't see it here, then check out the link in the description or the pin comment. All right, so again, this is the trade that I put on on the dollar CAD, and it's the same principles. So, when we look at this here, you can see on the 4-hour time frame, this is a little bit different because we do have a range here on the 4-hour chart. However, that on the higher time frames, we technically have an uptrend here, right? So, ever since these lows back here, you can see where this market has been trending higher, okay? So, within this context, what I was looking for was a change of character, which you can see that on the 15-minute time frame we did have back here. Okay, so we had a break of structure here. We had sellers in control, and then we got the close above giving us acceptance above this high back here that delivered the BOS, and then this right here is where buyers started to take over. Now, you might be asking, "How did I know to buy all the way down here, right, today versus buying up here, right? Why did I buy down here instead of buying up here?" And the reason comes down to this imbalance. So, when this happened, I was watching this here from this change of character, so from the low down here up here to this high. You can see where OTE came in right here at this imbalance. Notice that the displacement that occurred back here, and this was not mitigated. So, that's why I was looking for an entry back here. And again, guys, this is not hindsight stuff. Uh this is actually the third trade I've taken all month. It is the 10th of the month right now. I haven't really traded that much this month because there have hasn't been a lot happening. So, this was the first trade that I put on so far. You know, so far so good. We'll see if it plays out. Uh the other two trades were essentially break even. Okay, so not a lot happening this month. Um but I am managing my risk and that's my job. Okay, so we'll see what happens there. Now, back to the pound though, guys. All right, just to wrap up, just keep in mind that with this strategy, okay, we have sellers in control here on the higher time frames. When we drop to the 15-minute time frame, though, you really need to have that acceptance below this low back here because without this right here, if we don't get the close below here, then this trend, this uptrend here, stays intact and we could come up here and take out these highs. So, you have to stay disciplined here like any strategy and that is going to make the difference. Keep it locked in here. Subscribe to the channel. Also, check out the link right here on the screen for that free SMC course. Beyond that, you will have a chance to join us in Discord if you want. All right, so trade well there and I will talk to you again tomorrow.