🔹 Break of Structure – Break of Structure
In the advanced trading world, a new school has emerged known as SMC (Smart Money Concepts), which represents a professional approach to reading market movements based on the actions of 'smart money' or major institutions, instead of the traditional indicators relied upon by most retail traders.
This school does not treat the market as random; rather, it sees that behind every price movement, there is an intention and a plan from those who have enough power to move the market. From here, a set of terms and strategies is born to help understand this intention. One of the most important of these terms is known as Break of Structure, which we will start this series of articles with, aimed at simplifying SMC concepts for anyone wishing to master trading.
🔸 What is Break of Structure?
Break of Structure is simply a moment when the market pattern changes in a way that confirms that the current trend is still ongoing. If the market is gradually rising and breaks a previous high, this is considered an upward Break of Structure. If it is falling and breaks a previous low, this indicates a downward BoS.
This break does not happen by chance; rather, it results from the actions of major financial institutions that create enough buying or selling pressure to break previous levels, giving clear signals to traders about the market's intention to continue.
🔸 Why is BoS important?
Because it provides traders with a powerful tool to confirm the trend. Instead of relying solely on weak or lagging signals, BoS allows for a smart entry into the market with the stronger current, which is the smart money flow.
It also helps differentiate between corrective and temporary movements, and between the fundamental movements that actually drive the market.
🔸 The difference between BoS and ChoCH
It is important here to distinguish between Break of Structure and Change of Character (ChoCH).
BoS indicates the continuation of the current trend, while ChoCH is considered an early signal of a potential trend reversal. A precise understanding of this difference is what makes the difference between a successful trader and one who gets lost in the noise of the market.
🧠 Summary
Break of Structure is one of the fundamental pillars for understanding market movements within the SMC framework. Through it, traders can identify pivotal moments in the market and capitalize on them for smart entries into strong trades.
In the upcoming articles, we will cover other terms from the same school such as Order Blocks, Liquidity Zones, Imbalances, Change of Character, and others, in a simplified manner based on understanding rather than memorization.
Stay tuned.
