Lecture 10: Entry Models In Smart Money Concepts (SMC) – Risk Entries Vs Confirmation Entries

Introduction

One of the most critical aspects of Smart Money Concepts (SMC) trading is knowing when and how to enter a trade. Many beginner traders struggle with this because they don’t know if they should enter immediately when the price reaches a key level or wait for further confirmation.

In SMC, there are two main entry models that traders use:

1. Risk Entries – Entering at a key level without waiting for additional confirmation.
2. Confirmation Entries – Waiting for price action to confirm a move before entering.

Each approach has its advantages and disadvantages, and traders need to understand when to use each one effectively. This lesson will break down both types of entries, explain their strengths and weaknesses, and help you decide which one suits your trading style.

1. What is an Entry Model in SMC?

An entry model is a method traders use to enter the market based on Smart Money behavior. Since Smart Money moves the market by filling large institutional orders, traders aim to enter the most strategic points where institutions are likely to buy or sell.

The key challenge is deciding: Should I enter immediately at a strong level, or should I wait for confirmation?

This is where the two main entry models—Risk Entry and Confirmation Entry—come into play.

2. Risk Entry – Entering Early with Higher Risk and Reward

What is a Risk Entry?

A Risk Entry means entering a trade as soon as the price reaches a key level without waiting for additional confirmation. This approach assumes that Smart Money has placed its orders at a specific level and that the price will react immediately.

How to Identify a Risk Entry

1. Find a strong Smart Money level – This could be an Order Block (OB), Fair Value Gap (FVG), or Liquidity Grab.
2. Check higher timeframe confluence – If a strong level is identified on a higher timeframe (e.g., 4H or 1D), it increases the likelihood of success.
3. Set a limit order – Instead of waiting for price action confirmation, traders set a limit order at the level, assuming the price will react.
4. Place a stop-loss wisely – Since no confirmation is used, stop-loss placement is crucial. It is usually placed just below (for buys) or above (for sells) the order block.

Example of a Risk Entry

Imagine the price is trending upwards and then retraces into a Bullish Order Block (OB).

• A trader identifies the OB on the 1-hour chart.
• Instead of waiting for confirmation, they place a buy limit order at the OB.
• When the price touches the OB, the order is activated.
• If the order block holds, the price will reverse, giving the trader an early and profitable entry.

Pros and Cons of Risk Entries

✅ Pros:

• High Risk-to-Reward Ratio (RRR) – Since entries happen early, traders can use a tight stop-loss and maximize profits.
• Catches the best entry price – If the price reacts strongly to the level, the trader is already in the trade before confirmation.
• Ideal for aggressive traders – Those who don’t mind occasional stop-outs in exchange for higher RRR prefer this approach.

❌ Cons:

• Higher chance of stop-outs – Price may fake out and stop the trade before reversing.
• Requires strong analysis – If the level is weak, the trade may fail quickly.
• Not beginner-friendly – Traders must understand the market structure and liquidity to use this effectively.

3. Confirmation Entry – Entering After Market Confirms Direction

What is a Confirmation Entry?

A Confirmation Entry means waiting for price action to show that Smart Money is in control before entering a trade. Instead of entering blindly at a key level, traders wait for a Break of Structure (BOS) or Market Structure Shift (MSS) to confirm that price is likely to move in the desired direction.

How to Identify a Confirmation Entry

1. Identify a Smart Money level – Look for an Order Block (OB), Fair Value Gap (FVG), or a Liquidity Grab on a higher timeframe.
2. Wait for a Break of Structure (BOS) – If the price touches the key level and then breaks a previous high (for buys) or low (for sells), this indicates Smart Money is in control.
3. Wait for the price to retest the level – After breaking the structure, the price often pulls back to the OB or FVG before continuing in the intended direction.
4. Enter on the retracement – Instead of entering immediately, traders enter when the price returns to the order block or FVG after the BOS.
5. Place a safe stop-loss – Stop-losses are placed below the recent low (for buys) or above the recent high (for sells) to avoid unnecessary stop-outs.

Example of a Confirmation Entry

Let’s say price approaches a Bullish Order Block (OB) in a downtrend:

• Instead of entering immediately, the trader waits to see if the price reacts.
• Price taps the OB and then breaks above a previous high (BOS).
• This BOS signals that bulls are in control.
• The trader waits for the price to retest the OB before entering.
• The entry is now safer because Smart Money has confirmed its presence.

Pros and Cons of Confirmation Entries

✅ Pros:

• Lower risk of stop-outs – By waiting for BOS, traders ensure Smart Money is active.
• More reliable trades – Structure shifts confirm that the price is likely to continue in the desired direction.
• Good for beginners – Provides a structured way to enter without guessing.

❌ Cons:

• Reduced Risk-to-Reward Ratio (RRR) – Since the entry is later, traders may miss the best price.
• Risk of missing the trade – Sometimes, the price does not retrace after BOS, leaving traders with no entry opportunity.
• Requires patience – Waiting for confirmation means fewer trade opportunities.

4. Comparing Risk Entries vs Confirmation Entries

Aspect	Risk Entry	Confirmation Entry
Entry Timing	Immediate at order block or FVG	After BOS/MSS confirmation
Risk Level	High	Lower
Reward Potential	High (better R)	Lower (less R)
Probability of Success	Lower (more stop-outs)	Higher (more confirmation)
Best for…	Aggressive traders	Conservative traders

5. When to Use Each Entry Type

🔹 Use Risk Entries When:

• You have high confidence in an Order Block or FVG.
• You want the best possible entry price.
• You are comfortable with occasional stop-outs.

🔹 Use Confirmation Entries When:

• You prefer safer trades with more confirmation.
• You want to avoid getting stopped out unnecessarily.
• You are still learning and want to develop a disciplined trading style.

6. Best Approach: Combining Both Methods

Experienced traders use both entry models together for maximum efficiency:

1. Primary Trade (Risk Entry): Place a limit order at a strong order block.
2. Backup Trade (Confirmation Entry): If stopped out, wait for BOS and enter on the retracement.

This hybrid approach ensures traders can catch early reversals while also having a backup plan if the market structure shifts.

Final Thoughts

Mastering entry models in SMC is essential for improving trade accuracy. While Risk Entries offer high rewards, they carry greater risk, whereas Confirmation Entries provide safer setups but may have lower returns.

By understanding both methods and applying them based on market conditions, traders can make better decisions and improve their trading performance.