2

Table of Contents
Introduction ........................................................................ 3
Liquidity .............................................................................. 6
Order Blocks ......................................................................10
Break of Structure (BOS) ...................................................14
Change of Character (CHoCH) .............................................16
Breaker Block ....................................................................18
Fair Value Gap (FVG) ............................................................21
Fibonacci Retracement (OTE) ..............................................23
Elliott Wave Cycle .............................................................26
Example trade walkthrough (Sniper Entries) ....................28
Conclusion ..........................................................................32
 3

INTRODUCTION
95% of retail traders lose money. Why? Banks and institutions
exploit retail traders who use traditional concepts like support and
resistance, trendlines, and indicators. The real key is understanding
how the banks and market makers are trading, since these are the
institutions which drive the market, not regular traders like you and
I. These institutions are known as ‘smart money’ and they trade on
concepts like Liquidity, Order Blocks, Fair Value Gaps etc. which are
very different to common retail strategies.

This guide will teach you how to trade with the smart money,
explaining the basic setups and entries to look for. It is written in a
very clear and easy to understand format with supporting diagrams
and examples. We have not overcomplicated it so your learning is in
small manageable sections.

Some of the concepts taught may seem too good to be true and
almost like a cheat code to trading. Despite these strategies being
profitable, it is important to remember, you cannot win every trade
and you must develop a strategy which you back-test thoroughly.
You cannot catch every move; it is important to wait for the right
trade opportunities and not chase a trade or have FOMO. The market
will always be there for the next trade.

Traditional retail trading strategies like support and resistance, use

of indicators, trendlines, double tops and bottoms etc. may still
work for some traders and will still be important to identify liquidity
levels. However, they are not covered in depth in this guide to avoid
the trap of following what the majority of traders are still doing that
banks capitalise on.
 4
Before we get into the ‘smart money concepts’ it is important
to understand a few basic principles to ensure you become a
consistently profitable trader:

⋙ Always have appropriate risk management: I would

suggest not risking more than 2% of your account per trade
especially considering the strategies we are about to cover
offer a large reward to risk ratio.
⋙ Always try to achieve a good reward to risk ratio: if the
setup doesn’t have a good enough reward to risk ratio, then
don’t trade it. I recommend at least a 2:1 reward to risk ratio
per trade using the strategies listed below. Use Trading
View to perform your analysis and calculate the reward to
risk ratio.
⋙ Try to have multiple take profit targets to maximise your
gains. These should be at different ‘liquidity levels’ (covered
later). You should partially take profits at each liquidity level
you are targeting.
⋙ Use top-down analysis: Always look at the higher time
frames (HTF) first (daily, weekly, monthly) since this is what
the banks trade on, then go down to the lower time frames
(LTF: 4h, 1h, 15m, 5m, 1m) to refine your trades and get
those sniper entries.
⋙ Look for high probability setups to increase your win rate.
These are setups where there may be multiple signals from
the different strategies mentioned that compound to give a
trade that is likely to win.
⋙ It’s ok to lose trades. It’s all about reacting to the market
not trying to predict it. When you identify the setup, place
the appropriate trade, and don’t try to chase losses. Stick
to your strategy.
 5

Note:
I suggest using Trading
View (free) to perform
your analysis. It has many
annotation tools to help
you analyse all your charts
easily.

The concepts in this guide are just the basics and there are many
more important concepts for you to learn to ensure you are
consistently profitable.

Please join our Premium Discord community through the link on our
Instagram or Tiktok if you wish to take your learning further and see
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 6

LIQUIDITY
This is a very important concept to understand when trading with
these ‘smart money’ setups. Liquidity gives us an indication of where
price will run through with strong impulsive candles. It allows us to
anticipate large moves into these areas and set take profit targets at
these levels.

What is liquidity?
The strict definition of liquidity is the ability to buy or sell an asset
quickly and easily without affecting its market price.

In simpler, more practical terms it is where there is likely to be a

large amount of buy or sell orders in the market e.g., where retail
traders have a lot of stop losses placed.

For example, if price is in a range, we expect retail traders to place

sells at the top of the range and buys and the bottom of the range.
Their stop losses will be just outside the range as shown below
which creates liquidity.

What most retail traders do:

 7
Banks and institutions have billions of very large orders that they
need to place and so they look for pockets of liquidity to fill these
orders. We can use this information to understand where the banks
will try to move the market next…

When there are areas of liquidity, price will move quickly in and out
of these areas to fill their orders meaning price will not stay there
very long. This is represented by large candle wicks and bodies
around these liquidity levels.

There is liquidity all over the chart on any time frame:

Notice how when liquidity gets taken out (when price goes past the
liquidity level), the move has a lot of volume and large candlesticks.

Remember: When we look for liquidity, it is always above or below

the candlestick wicks, not the body.

Here are some good identifiers of liquidity:

⋙ Just above equal highs

⋙ Just below equal lows
⋙ Recent highs or lows in a trend (trendline liquidity)
⋙ Daily/Weekly highs and lows
 8
⋙ Just above and below areas of support and resistance
(when price is in a range)

The more equal highs or lows at the same level, the more liquidity
lies just above or below for banks to sweep.

Liquidity Sweep
A liquidity sweep is where banks quickly take out the stop losses
set by retail traders where the liquidity lies, and then they move the
market very impulsively in the opposite direction. We can think of
liquidity sweeps as fuel for the next move. This is seen all over the
markets every day.

To capitalise on a move like this, we wait for the sell-side liquidity

to be swept and once we see the first impulsive up candle, we
know there is a chance of a liquidity sweep of the buy-side liquidity
straight after.

We can take a buy position targeting above the buy-side liquidity.

However, this setup must be in confluence with a few other strategies
(order block, FVG, breaker block etc.) mentioned further on.
 9
We can also use liquidity levels to set our take profit targets:

For example, if we placed this buy trade, our take profit targets
would be placed at these 3 liquidity levels.
 10

ORDER BLOCKS
Understanding the key price levels at which banks prefer to buy and
sell is crucial for comprehending institutional order flow, and this is
where Order Blocks come into play.

What is an Order Block?

An Order Block is a price area where banks have placed large orders,
either to buy or sell a particular asset and their sheer size often
causes large swings in the market. If we are able to identify these
areas, we can catch the large swings and win high reward trades.
Banks and institutions have massive orders to fill and will want to
buy at the lowest possible price and sell at the highest possible
price.

When price taps into a previous order block we expect a large

volume move, however there should still be confluence with a few
other concepts such as Change of Character, Liquidity, Fair Value
Gaps etc. to confirm the setup.

Bullish Order Block

This is the entire last down candle before a strong impulsive move
to the upside.
 11

We look for price to re-test the bullish order block and we expect
to face a lot of buying pressure, causing a strong up move, similar
to the one previously. We can set our stop loss at the bottom of the
order block and take profit at liquidity levels.

Example:
 12
Bearish Order Block
This is the entire last up candle before a strong impulsive move to
the downside:

We look for price to re-test the bearish order block and we expect to
face a lot of selling pressure, causing a strong down move, similar to
the one previously. We can set our stop loss at the top of the order
block and take profit at liquidity levels.

Example:
 13
High Time Frame OB
Order Blocks are typically more significant on higher time frames.
Always perform a top-down analysis where you look at the higher
timeframes first, to identify the key order blocks, and then go down
to a lower timeframe when price enters the order block range to
refine your trade entry.

What makes a good order block?

⋙ The order block caused a large volume impulsive move

⋙ The order block cleared liquidity with its move
⋙ The order block caused a Break of Structure (explained in
the next concept)
⋙ The order block has Fair Value Gaps (explained later)
directly either side of it
⋙ There is liquidity that still needs to be cleared above a
bullish order block
⋙ There is liquidity that still needs to be cleared below a
bearish order block
⋙ The order block has not been tested before, so this is the
first time since the initial strong move that price has moved
back to this price area

Please note: The order block doesn’t need to have all of these
factors, but the more the better.

In-trade management
We usually expect price to react quickly off an order block. Once you
have placed your trade, if price takes a long time to move away from
the order block, it may be worth taking a closer look at the validity
of the order block and potentially closing the trade.
 14

BREAK OF STRUCTURE (BOS)

Break of Structure (BOS) is an important concept to understand
when identifying the current trend direction and understanding
market structure. We almost always want to trade in the direction
of the High Time Frame trend unless we see a Change of Character
(explained next). BOS is a great signal that the current trend is
continuing, and we should look to take trades in that direction.

If we are in an uptrend, there will be a break of structure every time

a higher high (HH) is formed. In between these highs there will be
higher lows (HL) each move upwards.
 15
If we are in a downtrend, there will be a break of structure every
time a lower low (LL) is formed. In between these lows there will be
lower highs (LH) each move downwards.
 16

CHANGE OF CHARACTER (CHOCH)

A Change of Character (CHoCH) is a good signal that there will be
a reversal in trend. CHoCH is a similar concept to BOS, however
BOS indicates a continuation of trend whereas CHoCH indicates a
reversal of trend.

Bearish CHoCH
A bearish CHoCH is where we are initially in an uptrend formed
of higher highs (HH) and higher lows (HL), however after a HH, a
lower low (LL) is formed which is lower than the previous low. This
indicates a change of market structure to the downside, and we can
expect lower highs (LH) and lower lows (LL) to start forming a down
trend. The break past the last HL is the change of character:
 17
Bullish CHoCH
A bullish CHoCH is where we are initially in a downtrend formed of
lower highs (LH) and lower lows (LL), however after a LL, a lower low
(HH) is formed which is higher than the previous high. This indicates
a change of market structure to the upside, and we can expect
higher highs (HH) and higher lows (HL) to start forming an uptrend.
The break past the last LH is the change of character:

CHoCH as confirmation on LTF

CHoCH is particularly useful when refining your trade entries on
lower time frames as a confirmation for a trade setup on a higher
timeframe. For example, if we have a HTF order block we are
interested in, when price enters this range, we look for a CHoCH on
a LTF to add confirmation of the move in our direction. Refer to trade
example at the end, where this is demonstrated.
 18

BREAKER BLOCK
A breaker block can give us a good trade entry level and helps
us achieve a high reward to risk ratio. It signals an area to enter a
trade on the first retracement after a CHoCH. It should be used in
confluence with the other strategies mentioned in this guide to give
a high probability trade.

Bullish Breaker Block

This is the area we can expect price to retrace to after a bullish
CHoCH and we should look for buys in this region. The breaker was
previously a level of resistance but now acts as support after the
CHoCH. It is the last up candle before the recent down move as
demonstrated below:

We should place our stop loss at the bottom of the breaker block
and take profit at appropriate liquidity levels.
 19

Bearish Breaker Block

This is the area we can expect price to retrace to after a bearish
CHoCH and we should look for sells in this region. The breaker was
previously a level of support but now acts as resistance after the
CHoCH. It is the last down candle before the recent up move as
demonstrated below:
 20
We should place our stop loss at the top of the breaker block and
take profit at appropriate liquidity levels.
 21

FAIR VALUE GAP (FVG)

A fair value gap is where price has moved too quickly in one direction
due to a strong impulsive move. Fair value gaps are also called
imbalances. It is represented on a chart by a candlestick or multiple
that have large bodies in one direction and usually have small wicks.
Anywhere we see fair value gaps we can expect price to be attracted
back to that area at some point in time. Price can then react off this
FVG as a key price level to continue in the direction of the overall
HTF trend. It can be considered a secondary confirmation, so make
sure to use it alongside the other strategies mentioned.

Fair Value Gaps work particularly well when paired with Breaker
Blocks and the OTE zone (explained later).

We measure fair value gaps as the body of a candle, from the wick
of the candle directly before, to the wick of the candle directly after.
Here are some examples:
 22
FVGs act as a PD Array (explained in Discord videos) from which
price can react strongly away from:

Fair Value Gaps can be spotted all over the charts, so look out for
them.

What we have just explained is the basic fair value gap. There are
also other very useful types of fair value gaps such as IFVG (Inverse
fair value gap) and BPR (Balanced Price Range) which are a bit more
complex but just as effective. These concepts are explained with
videos in our Discord.

Once the FVG has been filled, it is no longer valid, and we look for
new FVG’s to see where price will want to move to next.

Also, when we see a FVG near an order block it makes the order
block more valid since it means the order block has high volatility/
price movement around it.
 23

FIBONACCI RETRACEMENT (OTE)

The Fibonacci Retracement tool is extremely useful as confirmation
when finding good entry levels. It has been tried and tested by
millions of traders and should be used as a key secondary indicator
for your trade entries. You should try to trade in the direction of the
high time frame trend and the Fib tool can help you enter on the
pullbacks/retracements.

The key area to focus your entries on should be between the 0.618
and 0.786 retracement levels. This zone is known as Optimal Trade
Entry (OTE). OTE is very helpful and should be used in conjunction
with the Premium and Discount concepts which are explained with
examples in our Premium Discord.

Fibonacci Settings (Trading View)

You can find this tool on Trading View (free) and there are a few
settings you should apply to make it easier to use. Find it here and
adjust the settings to the ones shown below:
 24
How to Use
You should use the Fib tool on a clearly defined swing high and swing
low and measure from wick to wick. It can be used in an uptrend or
downtrend:
 25
Fibonacci Tool for take profit targets
The Fibonacci tool can also be modified on Trading View to have
extensions which are considered key take profit levels. Remember,
your take profit targets should primarily be liquidity levels, however
the Fibonacci extension levels provide good secondary confirmation.
These are the setting to use on Trading View, the key extension
levels are -0.236, -0.382 and -0.618.

You would see this on your chart to identify the take profit (TP)
targets:
 26

ELLIOTT WAVE CYCLE

The Elliott wave theory is a technical analysis approach that uses
a series of fractals to predict market trends. The theory suggests
that market trends move in 5 waves, with 3 waves moving in the
direction of the trend, and 2 pullback/retracement waves moving
against the trend. By analysing these waves, you can predict future
price movements and enter trades accordingly. This is a secondary
indicator, and your trade entries should be based on a combination
of the other strategies mentioned in this guide.

The key features of the Elliott wave cycle are:

⋙ 5 consecutive waves
⋙ 3 waves in trend direction (1,3,5)
⋙ 2 shorter correction/pullback waves (2,4)
⋙ The 3rd wave is the longest wave
⋙ Look to exit your position at the end of the 5th wave

To use the Elliott wave cycle to enter trades, you should first
identify the current wave cycle. You can do this by analysing price
movements and identifying the 5-wave pattern. Once the current
wave cycle has been identified, you can use the theory to predict
future price movements.

For example, if the current wave cycle is in a bullish trend, you can
enter long trades at the end of the 2nd wave to catch the 3rd wave
which is usually the longest and strongest in the trend. You can then
exit the trade on the 5th wave, which is the final wave in the trend.
Alternatively for a safer trade, you can enter at the end of the 4th
wave, to catch the 5th and final wave.
 27

Similarly, if the current wave cycle is in a bearish trend, you can

enter short trades to catch the 3rd wave or the 5th wave.
 28

EXAMPLE TRADE WALKTHROUGH

(SNIPER ENTRIES)
This is a walkthrough of how to take a trade using different time
frames. You always want to start on a high time frame (HTF) to
understand the overall trend and direction you want to trade in.

In this example we start on the daily chart. We can see the overall
trend direction is down and so we should be looking for SELLS only.
We wait for a pullback to the upside, so we enter a good level to
achieve a high reward to risk ratio. Price is about to enter the bearish
order block, and this is the area we want to look for entries.

We now go down to a lower time frame (15m) to look for confirmation

that price wants to move down. We look for a bearish CHoCH for sell
confirmation. Once we see this confirmation, we wait for price to
pullback to a potential entry level.
 29

In this case we can see a recent bearish order block on the 15m time
frame that caused the CHoCH. This would be a good level to enter,
since we know this is where banks will be accumulating sell orders
to drive price down. This allows us to get a much more precise entry
compared to if we had just used the daily order block and gives us a
much better reward to risk ratio.

Once price enters our 15m bearish order block we can place our
sell entry. Our stop loss could be at the top of the order block or at
 30
liquidity at the recent high. In this case we have chosen the safer
option at liquidity.

We can then go back to the HTF daily chart to set our take profit
targets. We would choose multiple targets at different liquidity
levels and take partial profits at each level:
 31
For this example trade, we have only used a few of the concepts
in this guide, however the more strategies that coincide with your
direction of trade, the higher probability you will have of winning the
trade. Remember to always look for high probability set ups.

Please refer to our social media accounts @skylinetradersclub for

many more daily examples of these trades and concepts.
 32

CONCLUSION
Now that you have learned the basics of entering trades using these
smart money concepts, you should be ready to start applying what
you have learnt. It may seem daunting, but with the right knowledge
and approach, you can turn the volatility of these markets into your
advantage and see big returns on your investments. So, get ready to
dive in, do your research, and develop your own trading strategy to
conquer the exciting world of trading! Who knows, you might just be
the next big success story in the world of finance.

And remember, while the world of trading can be thrilling, it’s

important to keep a level head and always prioritize proper risk
management. This means being mindful of the amount you are
willing to invest each trade, setting stop loss orders to limit your
losses, and avoiding making impulsive decisions based on emotions
or hype. By implementing these best practices, you can help ensure
that your trading journey is not only exciting but also sustainable
and profitable in the long run.

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 33
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