There has been a debate concerning ICT trading strategy and SMC trading strategy. An upheaval about which trading strategy a trader should make use of. Some traders prefer to go with ICT while others SMC.

But you may be wondering why this deliberation exists and how it could be settled. The search is almost over.

As you read carefully through this article, you will realize the difference between these two strategies and why some traders prefer one over another.

During the course of reading this article, it is pertinent to read in-between the lines to avoid making assumptions and drawing conclusions on which strategy is suitable.

Knowing the difference between these two strategies will broaden your view on the perception traders have while using these two strategies, should in case you are part of those who deliberate on which should be used.

This article goes a long way identifying that two of the most commonly talked about strategies in the forex trading world are ICT (Inner Circle Trader) and SMC (Smart Money Concepts).

These methodologies are used commonly by traders in the market who want to compete in the market. Hence, what defines the two?

And how can a trader decide as to which of the strategies is more suitable for him or her?

Understanding the core difference between ICT and SMC is a vital part of your trading process as it gives you the right insights into how to go about with these talked about strategy.

What is ICT (Inner Circle Trader) in Forex Trading?

Inner Circle Trader or ICT for short is a methodology conceived by Michael J. Huddleston.

So, it deals with comprehending the activity of the markets from the point of view of the big trading institutions.

Liquidity, the manipulation of the market, and the flow of orders are the main points of the strategy that indicate which way the market will go.

Profiting from these large institutional investors is what traders using ICT intend to do by following where the ‘smart money’ is placed.

Key Concepts in ICT

1. Liquidity Pools: Locations where big trades are possibly to occur.

2. Market Manipulation: Awareness of settings where institutions may potentially engage in a process of influencing prices.

3. Order Flow: There is where knowledge of signals helps the trader particularly concerning the flow of orders to determine the direction of the market.

What is SMC (Smart Money Concepts) in Forex Trading?

The Smart MONEY CONCEPTS popularly known as SMC also aim at trading patterns that are affiliated with large players in the market.

Nevertheless, SMCs rely heavily on price action and market structure to find out where the ‘smart money’ flow might be heading.

The strategy is based on the fact that market structure and institutional order flow analysis can give a lot of information about probably price formation.

Key Concepts in SMC

1. Market Structure: Some of the tasks include; determining the key points such as support, resistance, and trendlines.

2. Order Blocks: Identifying the areas that contain institutional orders.

3. Imbalance: Identifying the prices in which there is a mismatch of supply and demand.

Key Differences Between ICT and SMC

While both ICT and SMC focus on following institutional traders, there are distinct differences between the two:

1. Approach to Liquidity

• ICT: Places a stronger emphasis on identifying liquidity pools and market manipulation.
• SMC: Focuses more on market structure and price action.

2. Market Structure

• ICT: Considers market structure but is more focused on the manipulation aspects.
• SMC: Heavily relies on market structure and uses it as a foundation for trading decisions.

3. Order Flow

• ICT: Detailed analysis of order flow to predict where large institutions are placing their orders.
• SMC: Uses order blocks and imbalance zones to gauge institutional activity.

Which Strategy is More Suitable for You?

The suitability of ICT or SMC depends largely on your trading style and experience:

1. For Beginners

SMC might be more accessible due to its clear focus on market structure and price action. It provides a solid foundation for understanding how the market moves.

2. For Experienced Traders

ICT offers a deeper dive into the mechanics of market manipulation and liquidity, which can be highly beneficial for traders with a good grasp of market basics.

Frequently Asked Questions

1. Can I combine ICT and SMC in my trading strategy?

Indeed a considerable number of traders employ some characteristics from both ICT and SMC to establish a more elaborate trading system.

When both methodologies are understood by traders they can then predict the market swings and as a result make the right choices.

2. Is ICT more difficult to learn than SMC?

Picking up ICT has some more difficulties inherent to it because of its orientation on operation with the help of liquidity pools and manipulations at the market. But this is not always a disadvantage because when done with a lot of practice and dedication, then it is a very good way of predicting the movement of the market.

3. Which strategy is better for long-term trading?

It is found that, if properly applied ICT and SMC can be useful for long-term trading.

Even though ICT has a disadvantage in analyzing general trends, it can be effective in assessing long-term trends, given that it focuses on the activities of institutions in the various markets .

SMC can be an advantage in some way when it comes to keeping a strategic position over time because it concentrates on the structure of the markets.

4. Do ICT and SMC work on all timeframes?

Yes, both strategies can be used on any timeframe, minute charts, daily and weekly. Nevertheless, their efficiency may be more or less depending on the trader’s capacity to analyze the data in the specified timeframe.

5. How do I start learning ICT and SMC?

If you want to get basic knowledge of ICT, start with Michael J. Huddleston’s videos and blogs. In SMCs, while many on-line courses and learning resources revolve around ‘price action’, none of these concern themselves with ‘market structure’.

Thus, the best approach is the practice and back-testing of either of these strategies.