NAMI SMC User Manual
INTRO
Difficultly Level: Med-High
The NAMI SMC (Smart Money Concepts) indicator is a sophisticated trading tool for the TradingView platform. It is designed to identify and analyze key market structures: Order Blocks (OB) and Fair Value Gaps (FVG), both mitigated and unmitigated. The indicator uses dynamic color-coding to provide traders with clear visual cues about these important market elements.
Section 1.0 - Identifying Order Blocks with NAMI SMC
What are OBs?
OBs represent price levels where significant trading activity by institutional traders has occurred, leading to a notable market move. These can be bullish or bearish and are usually identified by a strong move away from a consolidated price area.
Using NAMI SMC for Detection:
The indicator highlights these OBs on your charts, making it easier to spot potential areas of interest. It uses distinct colors to differentiate between bullish and bearish OBs.
Types of OBs and Their Significance
Bullish OBs:
Identified by a bearish candle followed by a significant upward move. These are potential areas of support in uptrends or key reversal points in downtrends.
Bearish OBs:
Marked by a bullish candle followed by a significant downward move. They can act as resistance in downtrends or pivotal points for reversals in uptrends.
NAMI Trading Strategies Based on OBs
Entry Points:
Consider entries near the OB zones, especially when the price retraces back to these areas.
Consider entries where OB and FVG are stacked - read section 3.0 for more information.
Exit Points and Risk Management:
Set take-profit levels at previously established support or resistance areas or at fibonacci retracement levels.
Place stop-loss orders just beyond the OB to minimize potential losses.
Section 2.0 - Understanding and Utilizing Fair Value Gaps (FVGs)
Recognizing FVGs with NAMI SMC
Characteristics of FVGs:
FVGs occur when the price moves sharply, leaving a gap in the usual price flow. They are often indicative of strong buying or selling pressure.
Indicator Features:
NAMI SMC highlights FVGs, allowing traders to visualize these gaps easily. Similar to OBs, it uses color-coding to differentiate between bullish and bearish FVGs.
The Role of FVGs in Market Analysis
Market Reactions to FVGs:
FVGs can act as magnets for price action. Prices often return to these gaps, offering potential trade opportunities.
Types of FVGs:
Mitigated FVGs: These are gaps that have already been 'filled' or revisited by the price.
Unmitigated FVGs: These gaps remain 'open' and are areas where the price may potentially return.
EXHIBIT 2.1 - SOLANA 2 HR; NAMI SMC SHOWS ALL MITIGATED AND UNMITIGATED FAIR VALUE GAPS
NAMI Trading Approaches Involving FVGs
Strategies for FVGs:
Monitor unmitigated FVGs as potential areas for entry, especially in a retracement scenario.
Keep in mind that price is attracted to FVG - it is one of two price action objectives
In the case of mitigated FVGs, observe them for clues about market sentiment and possible resistance/support zones.
Incorporating FVGs in a Trading Plan:
Combine FVG analysis with NAMI, scan for divergences.
Look for combined FVGs and OBs for higher probability setups - more on this subject in Section 3.0.
Section 3.0 - Integrating OBs and FVGs in a High Probability Trade Setup
The Confluence of OBs and FVGs
Interplay of Market Structures:
OBs and FVGs are distinct yet complementary market structures. An OB indicates where significant buying or selling has occurred, while an FVG shows a rapid price movement, leaving behind a potential area of interest also known as an imbalance.
The proximity or alignment of an OB with an FVG can reinforce the significance of a particular price level, suggesting a strong area of interest for institutional traders.
Analyzing the Confluence for Trade Setups
Identifying High-Probability Areas:
When an OB is in close proximity to an FVG, it can indicate a higher probability of a price reaction when the market returns to this zone.
This confluence should be viewed as a potential 'hotspot' for trading opportunities, especially when aligned with other technical indicators or significant levels (like support/resistance, pivot points, etc.).
How to Approach These Areas:
Monitor price action as it approaches the confluence zone of an OB and an FVG.
Look for confirming signals on NAMI to validate entry points when approaching these levels.
EXHIBIT 3.1 - SOLANA 12 HR; RED BOX IS AN OB FVG STACKED AND THE GREEN BOX IS AN OB FVG STACKED
Timing and Contextual Considerations
Higher Timeframe Analysis:
Confirm these confluence zones on higher timeframes to enhance the reliability of the signals. (see exhibit 3.1; 12 hr stacked ob+fvg)
Higher timeframe confluences often carry more weight and can indicate longer-term market movements. (see exhibit 3.1)
Market Context:
In trending markets, look for OB and FVG confluences that align with the trend direction for higher success rates.
Exhibit 3.1 context: Solana is in larger time frame bullish trend; the limit entry on the bullish OB+FVG offered market participants an entry for a swing long.
Risk Management in Confluence Zones
EXHIBIT 3.2 - SOLANA H12 BULLISH OB+FVG STACKED
Setting Up Trades Using NAMI SMC OB+FVG:
When a trade setup is identified at an OB and FVG confluence zone, consider the use of limit orders for entry. However, be mindful of the potential for false breakouts or rapid price reversals. For larger range candles, rather than limit order, an alert could be used to find entry points.
Implement strict risk management rules. This includes setting stop-loss orders at reasonable levels, either just outside the confluence zone or based on your individual risk tolerance.
Position Sizing:
Adjust position sizes according to the strength of the confluence signal and your overall trading strategy. Stronger signals in higher timeframes might warrant larger position sizes, but always within the bounds of your risk management rules.
Section 4.0 - Conclusion
As we conclude this comprehensive guide on utilizing the NAMI SMC indicator, it's important to underscore the value of integrating these advanced trading tools into your market analysis and trading strategies.
Key Takeaways:
Order Blocks (OBs): These are crucial indicators of previous institutional trading activity, providing insights into potential areas of support and resistance.
Fair Value Gaps (FVGs): FVGs signal significant price movements and can be pivotal in understanding future price actions, especially in terms of potential retracements.
Confluence and Context: The real power of the NAMI SMC indicator lies in its ability to highlight the confluence of OBs and FVGs, offering a nuanced view of the market. However, it's crucial to interpret these signals within the broader market context.
Risk Management: Always prioritize risk management in your trading. The NAMI SMC indicator is a tool to aid decision-making, not a standalone solution.
Continual Learning: The financial markets are dynamic. Continuous learning, practice, and adaptation are key to maintaining an edge in trading.
Thank you for choosing the NAMI SMC indicator as your companion in navigating the complexities of the financial markets. We trust that this tool will enhance your trading strategy, providing you with deeper insights and a clearer understanding of market dynamics. Remember, success in trading is a journey of ongoing learning and adaptation. If you have any questions, comments or recommendation - please feel free to contact us at: info@nami-trading.com
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