Smart Money Concepts

Learn the Smart Money Concepts (SMC) strategy for Forex trading. Achieve high risk-reward trades (1:18) with tight 4-pip stop losses for precision entries.

Published · Updated · Methodology: SMC

Part of: Risk Management

  • Methodology: SMC
  • Content type: strategy
  • Markets: Forex (Inferred from title - not verified from video content)

Source video

Decoded from: COMO HACER UNA ENTRADA PERFECTA RR + 1:18 CON 4 PIPS DE STOP LOSS EN FOREX | SMART MONEY TRADING by It's Smart Money — watch the original

Strategy overview

Smart Money Concepts (SMC) reads price as a record of institutional order flow — where liquidity rests and how it gets taken — but the headline number in this video is not a chart structure at all: it is a quotient. "RR + 1:18 con 4 pips de stop loss" advertises the entry by the shape of its exit geometry, and the thing being sold is the ratio itself rather than the setup that produces it.

A risk-reward ratio is one of the few figures in trading that is fully known before the trade begins, because it is nothing more than the relationship between two placements the trader chooses: stop distance and target distance. That also makes it silent about the part that decides the outcome. A ratio does not report how often the target is reached, and it is scale-free — the same 1:18 can be written on any instrument, any session, any timeframe, which is why a claim like this one travels without the timeframe or indicator context a rule-based setup would need. It is worth noticing which side of the fraction carries the number: with a 4-pip denominator, the ratio is large mainly because the risk unit is small, and read literally the arithmetic implies a target roughly 72 pips away. The known half of the claim is the stop; the projected half is everything that makes the ratio worth advertising.

"Perfecta" is the creator's framing, not an assessment of the method, and the source is a Spanish-language video from the channel It's Smart Money. No rules were extracted for this entry: the title specifies exit geometry and says nothing about the conditions under which the entry is taken, so there is no setup to decode — this page covers the concept and the video's framing rather than a rule breakdown.

Topics

smart money concepts · smc strategy · forex strategy · trading strategy · high risk reward · tight stop loss · price action · swing trading · pine script · tradingview strategy · forex smc strategy · perfect entries

Frequently asked questions

What does a 1:18 risk-reward ratio mean?

It means the profit target is placed eighteen times further from entry than the stop loss — with a 4-pip stop, roughly 72 pips of travel. It is a planned relationship between two chosen distances, fixed at the moment of entry, not a measurement of what the trade achieved.

Does a high risk-reward ratio make a strategy profitable?

No. A ratio describes the size of a win relative to a loss; profitability also depends on how often the target is actually reached, which the ratio does not report. Wide targets are typically hit less often than near ones, so the two figures have to be read together.

What are Smart Money Concepts (SMC) in trading?

SMC is a framework that interprets price movement in terms of institutional order flow and liquidity — where stops accumulate, how price is drawn toward them, and what structural traces that leaves on the chart. It supplies the vocabulary most SMC-style entries are described in.

How should I evaluate an entry advertised by its risk-reward ratio?

Ask what conditions define the entry, not just where the stop and target sit, and then test the pairing on historical data to see how frequently the target is reached before the stop. Strategy Decoder catalogs strategies decoded from video sources so you can compare how different creators frame the same claim.

About this strategy page

This trading strategy was decoded by Strategy Decoder's AI from a public YouTube trading video and turned into a structured, reviewable specification. In the interactive app this page shows the full entry and exit logic, risk management settings, the indicators involved with their parameters, AlgoWizard-compatible logic and a Pine Script export ready for TradingView backtesting — plus an automated backtest verdict when one has been computed for this strategy.

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