Becoming a consistently profitable trader is a goal for many aspiring day traders, but the complexity and unpredictability of the markets often make this an elusive target. Most traders struggle with identifying effective strategies that lead to stable income generation, such as making $10,000 a month.
The SMC (Smart Money Concepts) strategy is one of the most powerful tools available for traders who wish to make huge profits, but most are unaware of how to utilize it correctly. The SMC strategy is built on the foundation of understanding market structure, locating critical liquidity points, and having proper timing when making entries. This approach will allow you to find profitable trades and reach your financial goals, including making $10,000 per month, by 2025.
Knowing and applying a clear three-stage SMC strategy will enable traders to maximize their market analysis and trade entries to achieve a high level of financial results. It is divided into three key parts: higher time frame bias, midterm market structure, and lower time frame entry models. In this article, we’ll break down each part of the strategy so you can be a consistently profitable and funded day trader in 2025.
Part 1: Know Your Higher Time Frame Bias
The first step in the SMC trading strategy is identifying your higher time frame bias. This is done typically on the H4 (4-hour) chart. This is essential to understand the broader trend of the market and what kind of price action you can expect.
On the H4 time frame, the goal is to determine whether the market is in an uptrend or downtrend. In an uptrend, the market will be characterized by higher highs and higher lows. For example, if the market has just made a new higher high after a pullback, your bias will likely lean toward a continuation of the uptrend.
However, there are various scenarios to consider:
Scenario 1:
If it is in the midst of an uptrend but showing a pullback, you are likely to look for a continuation and want to go long as the price enters a discount area.
Scenario 2:
If the market has recently marked a new high and is in an early stage of a pullback, you’d likely prefer selling short to make some money off the reversal.
These are the scenarios where you will better know what direction the market is going to take. This higher time frame bias is the compass for what to do in your trading strategy in the next step.
Part 2: Identifying the Midterm Market Structure
Now, with a higher time frame bias established, it is time to zoom in to the 15-minute chart for midterm market structure analysis. It can better fine-tune entry setups due to the added detail in understanding the market movements.
On the 15-minute chart, it is all about identifying key swing points, breakouts, and pullbacks. Look for signs of continuation or reversal based on market structure. For example, if the price is making higher highs and higher lows, this is a sign of an ongoing uptrend. If the market shows signs of reversing, such as failure to make new highs, then you should be prepared for potential short opportunities.
This is the stage at which you will begin to identify key liquidity zones—the areas where price is likely to react. Once you get a market structure change, such as a break of the previous swing high or low, you will have a more reliable indication of what the next market move is going to be.
Part 3: Lower Time Frame Entry Models
Having satisfied the higher and mid-term levels, traders then concentrate on the lower time frame entries, where the 1- and 5-minute periods are common for most traders to identify exact entry and exit points.
This stage will be waiting for a shift in market structure that supports the higher time frame bias and midterm market conditions. Once the market hits your point of interest (say, a key supply or demand zone), you need to find a price action setup that gives you a valid entry.
Some key things to watch for are:
Break of Structure:
It is a break of trend, for example a break of the previous swing high or low which may be considered to confirm a shift in market sentiment.
Market Structure Change:
Look for a new higher high or a lower low to continue or change the trend.
Volume and Liquidity:
Observe liquidity zones. These zones are usually creating large price reactions that can be used for good entries.
For instance, if the market has just entered a demand zone after a pullback, look for bullish confirmation on the 1-minute chart, such as the formation of higher highs and higher lows. This is your signal to enter a long trade. Similarly, if the market enters a supply zone after an uptrend, look for bearish confirmation on the 1-minute chart before taking a short position.
Targeting Profits and Risk Management
In the last stage of the SMC strategy, you must be setting your profit targets and then managing risk wisely. The better rule of thumb is to set the risk-to-reward ratio of at least 1:5. For example, if you use a stop loss of 5 pips, you can make a target for 25 or more pips. That will ensure that some losing trades won’t take out all your gains from winning trades.
Finally, you can add more positions if your initial entry is successful so that you may scale into a trade. You thus maximize profits with minimal increase in risk.
Conclusion: Rinse and Repeat for Consistent Profitability
The key to success with the SMC strategy lies in consistency and discipline. By following the three stages—higher time frame bias, midterm market structure, and lower time frame entry models—you will be able to pinpoint high-probability trading opportunities that can lead to consistent profits.
Repeat the process day in and day out, and with careful risk management, it’s possible to make $10,000 a month in 2025. The SMC strategy provides a framework that helps you stay disciplined, focused, and profitable in the markets. Stick to the system, trust your analysis, and you will see the results.
