Trading Hub 3.0 (Part 11): Trading with the CHoCH Entry Module – SMC
It is time for us to learn about the types of Entry modules. Now I will explain all of the high-probability entry types. That is how you can make decisions in LTF confirmation to reduce risk and maximise profit. There are Entry types such as ChoCH/BOS/Flip/Single Candle OB. In this article, let us learn about the CHoCH entry together.
We learned about the concept of CHoCH (Change of Character) in Part 2 of Trading Hub 3.0. In this part, we will go deeper into how to trade with CHoCH according to the correct Smart Money Concept mindset.
When price touches the POI zone, we will trade at the LTF. The timeframe selection is as in the table below:
| HTF (price touches POI) | LTF (Entry) |
|---|---|
| m15 | m1 |
| H1 | m5 |
| H4 | m15 |
| Timeframe selection table in the forex market |
We should choose HTF and LTF that are between x10 and x15 apart. Stay closely with the small timeframe to look for a CHoCH entry to enter a trade.
You can also use the m5 timeframe for HTF in the stock market and in trading according to session timing as mentioned in Part 9.
CHoCH entry module video for those who do not want to read:
The CHoCH entry has a very high R:R ratio
CHoCH with IDM
When the market is bullish
What is CHoCH with IDM: In a bullish market, when price touches the POI and reverses (closing above the old high), then passes the first major low or IDM (whether the candle closes above or below does not matter), we call that CHoCH with IDM, and we switch to the small timeframe and start looking for an entry.
What is CHoCH
Because price has created a CHoCH, we will look for a Sell trade. We need price to pass IDM and touch the POI on the small timeframe to enter a trade.
Bullish CHoCH with IDM
After passing the Pullback to create a CHoCH signalling a reversal, if price does not create an IDM after that but goes straight up past the HH, then reverses downwards past the new Pullback, at this point we move the CHoCH to the new position above. The old CHoCH position is no longer called a CHoCH.
Price does not create IDM so the CHoCH moves up
In this case, to enter a Sell trade we need price to pass IDM and touch the LTF POI.
Only enter a trade when price creates IDM and touches the LTF POI
In these cases, we place SL above the OB.
If price passes IDM but there is no unmitigated OB above, where will the POI be?
In this case, we will enter a trade after price passes IDM and creates a SCOB (Single Candle OB). Because all of the OBs above have been mitigated, price will not seek out the price areas above again, so we can sell after passing IDM and a SCOB appears.
Enter a trade at SCOB when there is no unmitigated OB
When the market is bearish
The same thing happens when the market is bearish. When price touches the POI at the HTF and turns back to create a CHoCH signalling a reversal, we need to switch to the LTF and then wait for price to return, pass IDM and touch an unmitigated OB to enter a Buy trade.
Enter a trade at a mitigated OB after breaking through IDM
In the case where, after creating a CHoCH, price breaks through IDM but all of the OBs below have been mitigated, we can place a Buy trade at the SCOB right after price passes IDM at the LTF.
Enter a trade at SCOB in a bearish CHoCH
Example of the CHoCH entry module with IDM:
Example of CHoCH with IDM
CHoCH without IDM
When the market is bullish
What is CHoCH without IDM: In a bullish market, when price sweeps through a minor high (closing below it) and touches the POI at the HTF, then returns to pass the first major low or IDM (whether the candle closes does not matter), we call that CHoCH without IDM. We switch to the LTF and look for a sell entry when price returns to the LTF POI area without needing IDM to appear.
In this case, whether IDM appears or not is no longer important because the Order Block has already swept the previous liquidity high.
What is Bullish CHoCH without IDM
If price has not yet touched the HTF POI, the CHoCH at this point only acts as IDM because price will still tend to continue the uptrend until it touches the POI.
When the market is bearish
When price sweeps through a minor low (closing above it) and returns to create a CHoCH signalling a reversal, we switch to the LTF and wait for price to return and touch the POI to enter a Buy trade without needing IDM.
Enter a Buy trade with CHoCH without IDM in a bearish market
How to enter a trade with CHoCH
To enter a trade with CHoCH, we switch the timeframe to the LTF, see the timeframe table above again.
In the chart below, when price touches and sweeps a minor low and the candle wick touches the HTF POI, we can enter a Buy trade without waiting for IDM.
Chart of entering a trade with CHoCH
If the market creates many OBs, we prioritise the extreme OB, which will have a higher win probability. If price touches the first OB, do not rush to Buy, but wait for a Single Candle OB to enter a trade.
And if price passes the first OB, skip the OB in the middle because this is highly likely to be SMT (see Part 8 - SMT again), and wait for price to return to the extreme OB (the last OB) to enter a Buy trade. We can Buy immediately or wait for SCOB confirmation.
Example of the CHoCH entry module without needing IDM:
Example of CHoCH without IDM
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