SMC Advanced Chartbook Course

Advanced Smart Money Concepts (SMC) Trading Guide: BOS, CHoCH, Order Flow, Liquidity & Entry Models

Smart Money Concepts (SMC) has become one of the most powerful frameworks for understanding institutional price behavior in forex, indices, crypto, and commodities. Unlike simple indicators, SMC focuses on market structure, liquidity, supply-demand zones, and how institutional traders manipulate price before major moves. If you want to trade like professionals instead of retail traders, mastering SMC is essential.

This 1200-word guide breaks down the major concepts shown in your images—BOS, CHoCH, liquidity sweeps, reversal vs continuation setups, S2D flips, order flow shifts, and institutional entry models.

1. S2D Flip Entry Model

The S2D (Supply-to-Demand) flip model occurs when a supply zone fails to hold and price breaks through it, flipping that zone into a demand zone. This shift usually signals a shift in market intention—moving from bearish pressure to bullish takeover.

How it works:

Price reacts from a supply zone but fails to maintain bearish momentum
A Break of Structure (BOS) confirms that demand has overcome supply
CHoCH (Change of Character) marks the first signal of reversal
The broken supply zone becomes the new demand zone
Traders enter on the retest of this flipped zone

This model is highly reliable when combined with liquidity sweeps and strong displacement.

2. Order Flow Shift

Order flow describes the sequence of higher highs (HH), higher lows (HL), lower highs (LH), and lower lows (LL). When the market transitions from an uptrend into a downtrend—or vice versa—the structure shifts.

What triggers an order flow shift?

HH/HL structure transitions into LH/LL
A CHoCH marks the first early signal
A BOS confirms the new direction
Liquidity is swept before a new trend begins

Recognizing order flow early allows traders to catch reversals before retail traders even notice the trend change.

3. BOS vs CHoCH

These two terms are often confused, but they serve different purposes.

Break of Structure (BOS):

Confirms trend continuation
Indicates that the current trend (bullish/bearish) remains in control
Usually occurs after displacement moves

Change of Character (CHoCH):

Signals early trend reversal
The first shift that hints at a possible direction change
Not confirmation—just early warning

Rule: CHoCH = early signal. BOS = confirmation.

Professional traders always wait for BOS after CHoCH before committing fully.

4. Bullish Reversal Patterns

SMC still respects classic price action. A bullish reversal is more likely when demand zones align with known reversal patterns.

Common bullish reversal patterns:

Double Bottom
Triple Bottom
Falling Wedge
Inverse Head & Shoulders

When these align with liquidity sweeps and CHoCH signals, the probability of reversal becomes extremely strong.

Example setup:

Price sweeps liquidity below a major low
Reversal pattern forms (e.g., double bottom)
CHoCH confirms demand stepping in
BOS confirms new bullish order flow
Entry at the refined demand zone

5. Continuation vs Reversal

Understanding whether price wants to continue or reverse is a major skill in SMC.

Continuation Pattern

Market pauses (base), then resumes trend
Demand holds in uptrend; supply holds in downtrend
BOS in trend direction provides confirmation

Reversal Pattern

Market pauses (base), then shifts direction
CHoCH appears first
BOS confirms reversal

The difference is subtle but critical. Wrong interpretation leads to early entries and losses. Always validate continuation with BOS and reversal with CHoCH + BOS combination.

6. Don’t Trade the Wrong Zone

A common retail mistake is trading from weak supply/demand zones. Weak zones lack liquidity and often fail instantly.

Weak zone characteristics:

No liquidity sweep before creation
No displacement move afterward
Already mitigated multiple times
Too close to opposite structure

Strong zones:

Created after a liquidity sweep
Have strong displacement candles
Have not been mitigated
Are positioned within HTF (higher timeframe) bias

Always choose zones backed by liquidity and clear institutional intent.

7. Order Flow Shift (Extended Version)

The extended order flow shift explains how price behaves during deeper liquidity hunts and mitigation phases.

Key elements:

Price sweeps multiple highs/lows before reversal
Major liquidity pools rest above/ below extremes
Zones only become valid after clear displacement
If you struggle to locate liquidity, you may be the liquidity

This means if your entries keep getting hunted, you are entering exactly where smart money triggers stop-losses.

8. CHoCH vs BOS in Higher Timeframe Zones

HTF zones guide market direction. LTF (lower timeframe) CHoCH or BOS only matter when aligned with the HTF bias.

CHoCH in HTF:

Early reversal signal inside HTF supply/demand
Works best when aligned with liquidity sweep

BOS in HTF:

Confirms trend shift across the larger market
Strong evidence of institutional takeover

Rule:
HTF decides the direction. LTF refines the entry.

9. Listen to the Market

The market continuously communicates through:

Strong highs / weak highs
Strong lows / weak lows
Failed breakouts
Liquidity resting zones
Mitigation behavior

Strong High:
A high that causes a BOS going downward. Indicates strong supply.

Weak High:
A high that fails to cause structure break. Likely to be taken out.

Strong Low:
A low that causes upward BOS. Indicates demand.

Weak Low:
A low that doesn’t break structure. Likely to be swept.

Reading these helps predict where price must go next to gather liquidity.

10. Range Sweep Entry Model

One of the most effective SMC setups.

How it works:

Price ranges and builds liquidity on both sides
Sweeps liquidity above or below the range
Confirms reversal with CHoCH
BOS follows to confirm power shift
Entry at POI (Point of Interest) refined zone

This model takes advantage of:

Liquidity grabs
Breaker blocks
Mitigation zones
Order flow confirmation

Range sweeps are extremely powerful because institutions accumulate orders inside consolidation before initiating strong moves.

11. Putting It All Together: How Institutions Move the Market

Every concept above ties into a single truth:

Institutions move price to collect liquidity before moving in the intended direction.

Their process:

Price builds liquidity (equal highs/lows, range)
They sweep liquidity
They create displacement
A new zone forms (supply/demand)
CHoCH signals early reversal
BOS confirms order flow
Price returns to POI for mitigation
Main move begins

Retail traders lose because they enter at step 1 or 2.
Smart traders enter at step 7.

Conclusion

Smart Money Concepts is not just another strategy—it’s a precise way of reading price action based on how institutions actually trade. By understanding CHoCH, BOS, order flow shifts, liquidity sweeps, and advanced entry models like S2D Flips and Range Sweeps, you gain the ability to identify high-probability setups with confidence.

The key is not memorizing patterns but learning to interpret price behavior with context—HTF zones, liquidity locations, and structural confirmation. When you combine all these elements, SMC provides some of the most accurate and powerful trading setups available.