Lecture 16: How To Build An SMC Trading Plan

Introduction

A trading plan is a structured rule-based approach that guides a trader’s decisions from market analysis to execution and review. Without a proper plan, traders often make emotional and impulsive decisions, leading to inconsistent results.

For Smart Money Concept (SMC) traders, a trading plan helps in:

1. Identifying high-probability trade setups.
   
2. Ensuring consistency in decision-making.
   
3. Managing risk and emotions effectively.
   
4. Tracking progress and improving over time.
   

In this lesson, we will cover:

1. Key elements of an SMC trading plan.
   
2. How to create a structured daily routine.
   
3. An example of a trading checklist.
   
4. How to maintain a trading journal.
   

---

1. Key Elements of an SMC Trading Plan

A good trading plan should include the following components:

1.1 Market Bias Identification

Before entering a trade, you must determine whether the market is in a bullish, bearish, or ranging condition. This is done by analyzing higher timeframe structure and identifying key liquidity zones.

✅ Steps to Determine Market Bias:

• Check Daily and 4H structure for higher timeframe trends.
• Identify if the price is in a premium (sell) or discount (buy) zone.
• Look for major liquidity pools and order blocks that institutions may target.

1.2 Entry Criteria

Your trading plan should specify exactly what conditions must be met before entering a trade.

✅ SMC Entry Confirmation Rules:

• Price must react to a valid order block, Fair Value Gap, or liquidity sweep.
• Wait for a Break of Structure (BOS) on the lower timeframe (e.g., 15M or 5M).
• Only enter after confirmation (e.g., market leaving an imbalance or a clear rejection).

1.3 Risk Management Rules

Many traders fail because they risk too much on a single trade. A proper risk management plan protects your capital and ensures long-term success.

✅ Risk Management Guidelines:

• Risk 1-2% per trade.
• Always use a minimum Risk-to-Reward (R: R) of 1:3.
• Stop-loss must be placed beyond the liquidity sweep or invalidation level.
• Avoid overtrading—limit to 2-3 quality trades per session.

1.4 Trade Management Rules

Once in a trade, having a clear exit strategy helps lock in profits and reduce emotional decisions.

✅ How to Manage Trades:

• Move SL to break even after a significant market move.
• Scale-out profits at key liquidity zones or Fair Value Gaps.
• Let runners continue only if the price follows a higher timeframe bias.

1.5 When NOT to Trade

A good plan also specifies conditions to avoid trading, such as:

• Low-volume sessions (Asian session, unless trading JPY pairs).
  
• Major news events can create unpredictable volatility.
  
• If the market structure is unclear or in consolidation.
  

---

2. How to Create a Structured Daily Routine

A structured routine ensures discipline and consistency. Here’s an ideal trading routine for an SMC trader:

Pre-Market Preparation (Before London or NY Session)

✅ Check the Daily and 4H trends to determine overall bias.
✅ Mark key liquidity areas, order blocks, and imbalance zones.
✅ Identify any high-impact news events that could impact the session.

Trading Session (London or New York Open)

✅ Monitor how price reacts to marked areas.
✅ Wait for confirmation (BOS, liquidity sweep, strong rejection).
✅ Enter a trade ONLY IF all criteria align.

Post-Trade Analysis (End of Trading Day)

✅ Record the trade in your trading journal.
✅ Review whether the trade followed the plan or was based on emotion.
✅ Analyze mistakes and improvements for future trades.

---

3. Example of an SMC Trading Checklist

Before entering a trade, always go through a checklist to ensure it meets all criteria.

SMC Trading Checklist:

✅ Market Bias Check

• Is the price trending bullish, bearish, or consolidating?
• Are we in a premium (sell) or discount (buy) zone?

✅ Trade Setup Validation

• Is the price reacting to a valid order block, Fair Value Gap, or liquidity level?
• Has a Break of Structure (BOS) on a lower timeframe confirmed entry?
• Is liquidity being grabbed before entry?

✅ Risk & Trade Management

• Is the stop-loss placed beyond invalidation levels?
• Does the trade have a minimum of 1:3 R: R?
• Are there any upcoming news events that could impact the trade?

✅ Post-Trade Review

• Did the trade follow the plan?
• What could have been done better?
• Update the trading journal with trade details.

---

4. How to Maintain a Trading Journal

A trading journal tracks your progress and helps refine your strategy over time.

What to Include in a Trading Journal:

1. Trade Details:

• Entry & Exit: Entry price, SL, TP.
• Setup Type: Order Block, Liquidity Grab, FVG, etc.
• Timeframe Used: Higher timeframe bias + execution timeframe.

2. Trade Outcome:

• Win/Loss: Did the trade follow the expected direction?
• Mistakes: Any errors in execution, SL placement, or emotional mistakes?

3. Screenshots & Annotations:

• Screenshot before entering, during trade, and after exit.
• Annotate what went right or wrong.

✅ Review journal entries weekly to identify strengths and weaknesses.

---

Conclusion

A well-structured SMC trading plan provides clarity, discipline, and consistency. By following a clear checklist, structured routine, and journaling process, traders can improve their decision-making and profitability.

Key Takeaways:

1. Stick to a structured approach—trade only when all criteria align.
2. Manage risk effectively—never risk more than 1-2% per trade.
3. Maintain a trading journal to track progress and refine strategy.

By implementing these principles, you will develop a professional trading mindset and achieve long-term success in SMC trading.