Sign in Subscribe
3 min read

Lecture 15: Common Mistakes Beginners Make in Smart Money Concepts (SMC)

Smart Money Concepts (SMC) provide traders with a structured approach to understanding how institutions move the market. However, beginners often make critical mistakes that prevent them from fully capitalizing on these strategies. These mistakes typically stem from overcomplicating charts, ignoring higher timeframe bias, and allowing emotions to dictate trading decisions.

In this lecture, we will cover:

  1. Over-marking charts and cluttering analysis
  2. Ignoring the higher timeframe bias
  3. Emotional trading and lack of patience
  4. Poor stop-loss placement and risk management mistakes
  5. Chasing price instead of waiting for confirmation
  6. Misinterpreting liquidity and order blocks
  7. Not keeping a trading journal and failing to review trades.

1. Over-marking charts and Cluttering Analysis

Beginners often try to mark every structure, liquidity zone, and order block, making their charts look confusing and difficult to read. This leads to paralysis by analysis, where traders hesitate to execute trades due to conflicting signals.

How to Fix This:

  • Focus on only the most relevant market structure and key order blocks on the timeframe you are trading.
  • Identify one or two strong liquidity zones instead of marking every possible high and low.
  • Keep your chart clean and minimal, only marking essential areas where Smart Money is likely to react.

2. Ignoring Higher frame bias

Many beginners focus too much on lower timeframes without considering the overall market direction. This leads to taking trades against the dominant trend, resulting in frequent stop-outs.

How to Fix This:

  • Always start with the higher timeframe (HTF) analysis before dropping to lower timeframes.
  • Use the 4H or Daily timeframe to determine trend bias (bullish or bearish).
  • Only take trades that align with the dominant market structure and liquidity flow.

Example:

  • If the Daily chart is bullish, avoid taking sell trades on the 5M or 15M timeframe just because there is a small bearish move.

3. Emotional Trading and Lack of Patience

Beginners often let fear and greed control their decisions. This leads to:

  • Entering trades too early without confirmation.
  • Closing trades too soon out of fear of losing profits.
  • Revenge trading after a loss, trying to make back money quickly.

How to Fix This:

  • Follow a strict trading plan and execute only when conditions are met.
  • Wait for confirmations (Break of Structure, Liquidity Sweep, Order Block reaction) before entering.
  • Accept losses as part of trading and move on to the next setup without chasing the price.

4. Poor Stop-Loss Placement and Risk Management Mistakes

Many beginners place SLs too tight or at obvious liquidity levels, making them easy targets for Smart Money. Others risk too much on a single trade, leading to emotional stress.

How to Fix This:

  • Place SL beyond the liquidity grab or market structure invalidation point.
  • Risk only 1-2% of your account per trade to avoid emotional trading.
  • Use a minimum Risk-to-Reward (R: R) ratio of 3:1 to make losses recoverable.

Example:

  • Instead of placing an SL just below an Order Block, place it beyond the liquidity sweep to avoid getting stopped prematurely.

5. Chasing Price Instead of Waiting for Confirmation

A major mistake is entering trades too late because traders panic when price moves in their expected direction. This often results in bad entries and poor risk-reward setups.

How to Fix This:

  • Wait for the price to return to a valid entry zone (e.g., Order Block or Fair Value Gap) instead of jumping in late.
  • If a trade has already moved significantly, let it go and wait for the next opportunity.
  • Always enter based on a structured plan, not emotions.

Example:

  • If the price already reacted to an Order Block and moved 50 pips, do not enter late—wait for the next setup.

6. Misinterpreting Liquidity and Order Blocks

Beginners often mark random order blocks and liquidity levels without understanding their true purpose. This leads to:

  • Taking trades from weak order blocks that do not hold.
  • Entering trades at liquidity zones instead of waiting for liquidity sweeps.

How to Fix This:

  • Only use order blocks that cause a significant Break of Structure (BOS).
  • Identify liquidity zones but wait for Smart Money to grab liquidity before entering.
  • Watch for confirmation signs, such as a clear rejection or BOS on lower timeframes

7. Not Keeping a Trading Journal and Failing to Review Trades

Many beginners do not track their trades, which prevents them from learning from their mistakes and improving their strategies.

How to Fix This:

  • Keep a detailed trading journal with screenshots of each trade.
  • Write down:
    • Entry reason (Order Block, Liquidity Grab, etc.).
    • Stop-loss and take-profit placement.
    • Result and what could have been improved.
  • Review trades weekly to identify patterns and mistakes.

Conclusion

Beginners often struggle in SMC due to over-marking charts, ignoring the higher timeframe bias, emotional trading, and poor risk management. These mistakes can be avoided by following structured trading plans, focusing on confirmations, and keeping emotions in check.

By refining your approach and sticking to Smart Money principles, you can significantly improve your consistency and profitability in trading.

How useful was this article?

If you'd like more tips on how the "Smart Money" trades, learn one of the most powerful trading signals, download this Strategy Guide.

Until next time,
The Trading Strategies Team

Published by:

Casey stubbs