Smart Money Concept

Overview:

The Smart Money Concept in ValorAlgo is designed to help traders visualize market structures, particularly focusing on swing structure and internal structure. By tracking these structures, traders can gain insights into potential shifts in market sentiment, identifying key areas where institutional or "smart money" may be influencing price action.

Key Parameters:

• Show Swing Structure: Enable this option to display the overall swing structure of the market, highlighting the broader price movements. This can help traders identify long-term trends and major turning points.
• Show Internal Structure: This option displays the internal structure, allowing traders to see the smaller, more intricate price movements within the broader swing structure. Useful for short-term traders who want to capitalize on smaller market fluctuations.

Additional Settings:

• Sensitivity: Adjusts the sensitivity of the structure detection. A lower value will capture more subtle movements, while a higher value will focus on more significant market swings. The default sensitivity is set to 6, which provides a balance between minor and major market shifts.
• Source: Choose between different parts of the candlestick (e.g., Body or Wick) to determine which part of the candle should be used for structure detection. By default, the Body is used.
• Line Style: Customize the appearance of the lines that represent the structures. You can select from various styles, such as Solid, Dashed or Dotted.
• Smart Money Concept Color: This allows you to customize the colors used for visualizing the Smart Money Concept, including the colors for bullish and bearish market structures.

Usage:

• Identifying Market Structure: The Smart Money Concept helps traders understand the flow of the market by identifying key structures. Use the Swing Structure to see the broader market movements and the Internal Structure to detect more detailed price action within those larger moves.
• Support and Resistance: These structures can act as dynamic support and resistance levels. By understanding how the market reacts around these levels, traders can make more informed decisions on entries and exits.
• Trend Confirmation: Combine the Smart Money Concept with other indicators to confirm market trends and identify potential reversals, enabling you to align your trades with institutional market movements.