TLDR;
This video explains the sequential SMT (Smart Money Technique) concept, detailing how to identify, use, and anticipate it for trading. It covers the basics of SMT and quarterly theory, defines sequential SMT as divergence between correlated assets in consecutive quarters, and explains how it indicates potential market reversals or expansions. The video also discusses the importance of true opens, stacked opens, and using sequential SMT to confirm market profiles and biases, and provides tips for incorporating this strategy into trading.
- Sequential SMT occurs between two consecutive quarters and indicates potential market reversals or expansions.
- True opens, the opening price of Q2 on every cycle, are crucial for spotting real vs. fake sequential SMT.
- Anticipating sequential SMT involves monitoring the news calendar for high-impact events that drive volatility.
Introduction to Sequential SMT [0:00]
The video introduces the concept of sequential SMT, a quarterly theory concept developed by Trader Day. By the end of the video, viewers will understand how to identify, utilize, and anticipate sequential SMT in their trading strategies. The video promises to cover various aspects, including spotting sequential SMT, its practical applications, and advanced techniques.
Recap of SMT and Quarterly Theory [0:22]
To understand sequential SMT, one must first grasp the basics of SMT and quarterly theory. SMT is defined as a divergence between two or more closely correlated assets, which are assets that move in sync. In a bullish scenario, one asset makes a lower low while the other makes a higher low, and vice versa for a bearish scenario. The video advises viewers to take note of quarterly theory quarters, mentioning the availability of indicators that mark these quarters. The presenter also mentions his own quarterly theory indicator, which is linked in the description.
What is Sequential SMT [1:43]
Sequential SMT is defined as SMT that occurs between two consecutive quarters, such as between Q1 and Q2, Q2 and Q3, Q3 and Q4, and Q4 and Q1. An exception to this rule is within the weekly cycle, specifically on Fridays, which often revert to the true week open. Sequential SMT must occur with the highest high or lowest low of the previous quarter. To identify it, mark the extreme high and low of the previous quarter across all three assets being viewed. It is important to see one asset run above or below its previous quarter's high or low, while another closely correlated asset fails to do so. The timing of the highs or lows within the quarter does not matter.
The Importance of True Opens [4:03]
True opens are crucial for spotting sequential SMT. The true open is the opening price of Q2 on every cycle. For shorts, price needs to run above the true open and form a bearish sequential SMT. For longs, price needs to drop below the true open and form a bullish sequential SMT. Sequential SMT is important because it indicates when price is ready to reverse or expand, often leading to reversals or distribution in the market.
Why Sequential SMT is Important [4:40]
Sequential SMT is important because it tells traders when the price is ready to reverse or expand. When a sequential SMT forms, it is very likely that a reversal or distribution will occur. For example, if a sequential SMT forms between Q1 and Q2, the following quarter (Q3) is expected to expand and provide distribution from the prior sequential SMT. Conversely, when a sequential SMT forms after an expansion quarter, the price is anticipated to reverse back into that range. Trading setups should primarily be considered when sequential SMT is present, as its absence suggests that the price will not expand or reverse as expected.
Confirmations with Sequential SMT [5:42]
Sequential SMT confirms market profiles, which are not limited to the common AMD or DX patterns. The market can exhibit various patterns, and sequential SMT formations confirm these. For example, accumulation over two quarters followed by manipulation in the third and distribution in the fourth (AAMD) is confirmed if all assets take out the previous quarter's high or low without forming opposing sequential SMT. Additionally, sequential SMT confirms bias. A bullish weekly bias, combined with a bullish weekly cycle sequential SMT between Monday and Tuesday, suggests Tuesday will be the low of the week, confirming the bullish bias and setting the stage for Wednesday's distribution.
True Opens in Depth [7:31]
True opens are the opening price of Q2 on every cycle and are very powerful in helping to spot real versus fake sequential SMT. When bullish, a sequential SMT below the true open is desired, and when bearish, a sequential SMT above the true open is desired. It is important to view and mark the true opens on specific time frames, such as the true yearly, quarterly, monthly, weekly, daily, session, and micro-session opens. These time frames must be used both when marking the opening price of the Q2 candle and when viewing the cycle.
Time-Based Premium and Discount [9:01]
True opens are essentially a way of spotting time-based premium and discount. Being above a true open indicates a premium, while being below a true open indicates a discount. Stacked opens occur when two true opens are aligned, indicating an extreme premium or discount. For example, in the daily cycle, an extreme premium means the true day open is above the true week open, while an extreme discount means the true day open is below the true week open. Sequential SMT forming in these conditions can lead to explosive moves.
How to Use Sequential SMT in Trading [10:45]
Sequential SMT should be the foundation of every trading setup. Once it occurs, traders can look for their entry model. Without sequential SMT, no action should be taken. For the highest probability setup, wait for a high time frame sequential SMT to occur, followed by a low time frame sequential SMT. Sequential SMT can also spot manipulation within any cycle, marking the manipulation quarter. Additionally, it marks the low or high of whatever cycle is being viewed.
Anticipating the Next Quarter [13:06]
Sequential SMT can be used to anticipate what the next quarter will do. When sequential SMT forms in a specific quarter, traders can look for price to distribute in the following quarter. For the highest probability sequential SMT, look for a closure and a wick, meaning a closure above the previous quarter's highest closure or lowest closure, and a wick above the previous quarter's highest wick or lowest wick.
Anticipating Sequential SMT [13:55]
Anticipating sequential SMT mainly involves monitoring the news calendar for red folder news events. These events can indicate potential volatility and the likelihood of sequential SMT forming on certain days. For example, if there is a red folder news event on Tuesday, it is more likely that Tuesday will form a sequential SMT, taking out either Monday's high or low. If a quarter manipulates, the following quarter is anticipated to distribute.
Sequential SMT Tips [16:29]
Several tips are provided for using sequential SMT effectively. First, look for sequential SMT in line with the higher time frame order flow, as any sequential SMT that opposes it will likely act as a retracement. To determine the higher time frame order flow, pay attention to the higher time frame cycles, such as the monthly cycle for weekly bias and the yearly cycle for monthly bias. Finally, if a sequential SMT occurs within a high time frame gap, it makes that sequential SMT a higher probability setup.
