Smart Money or Smart Marketing ? The Truth Behind Nepal’s Obsession with SMC and ICT Trading

Over the past few years, Nepal’s trading community has witnessed the rapid rise of new trading terminologies such as Smart Money Concept (SMC), ICT, Liquidity grabs, Order blocks, and Fair value gaps.

What was once limited to global Forex traders has now entered NEPSE-focused discussions, YouTube channels, and Telegram groups.

Many Nepalese traders now believe these concepts explain every sharp reversal in banking, hydropowe,r and many other sectors listed on NEPSE. But the key question remains. Do SMC and ICT genuinely explain price behavior in NEPSE or are they being force-fitted into a market with very different dynamics ?

What Is Smart Money Concept (SMC)?

The Smart Money Concept is a price-action framework that attempts to follow the actions of large market participants by analyzing:

· Market structure (higher highs, lower lows)
· Liquidity above highs and below lows
· Imbalance or inefficiency in price
· Key institutional entry zones

The basic assumption is that large players move prices first, and retail traders react later.

ICT: A Structured Interpretation of SMC
ICT (Inner Circle Trader) builds upon SMC by adding:
· Time-based execution models
· Premium and discount zones
· Session-based behavior

In Nepal, however, SMC and ICT are often used interchangeably, especially in NEPSE-related content, even though ICT is originally designed for highly liquid global markets.

Why Has SMC Become Popular Among NEPSE Traders?

1. Repeated Losses with Indicator-Based Trading
Many NEPSE traders began their journey using
· RSI overbought/oversold signals
· Moving average crossovers
· Buy-sell recommendations from brokers or social media

2. Sudden Reversals in Popular NEPSE Stocks
Nepalese traders frequently observe situations like:
· A stock breaking resistance
· Attracting heavy retail buying
· Then, suddenly reversing sharply

SMC educators label these moves as:
· Liquidity grabs
· Stop-hunts
· Smart money distribution

While the terminology sounds convincing, the underlying cause in NEPSE is often low liquidity and profit-booking by large individual investors, not institutional algorithms

3. Influence of Social Media Education
Short videos explaining:
· “Why banks reversed after liquidity sweep.”
· “SMC entry on hydropower stocks.”
· “Smart money trap in microfinance sector.”
have gained massive attention.

These explanations often look accurate after the move has already happened, creating hindsight bias among traders.

Does SMC Actually Work in NEPSE?

Understanding NEPSE’s Market Structure

NEPSE is characterized by:
· Retail-dominated participation
· Limited institutional trading
· Sector-driven momentum (banks, hydro, microfinance)
· Policy and political sensitivity

Unlike Forex or other global indices, true smart money in NEPSE is not centralized institutions, but
· Large individual investors
· Promoter-related holdings
· Fund managers with long-term horizons

Therefore, SMC concepts must be adapted, not copied.

Some SMC principles do align with NEPSE behavior:

1. Liquidity Around Previous Highs & Lows
Stocks often react near:
· Previous all-time highs or equal highs
· Major swing lows or equal lows

For example, when a banking stock revisits a previous resistance zone, selling pressure often increases due to:

· Profit booking
· Trapped traders exiting

Calling this a “liquidity zone” may help traders anticipate reaction, but not guarantee reversal.

2. Market Structure Breaks

NEPSE stocks frequently shift from:
· Higher highs → lower highs
· Strong trends → sideways consolidation

Identifying structure change early can help traders avoid holding stocks during prolonged corrections — something many investors ignore.

Where SMC Often Fails in NEPSE

· Fair Value Gaps are often filled randomly due to thin liquidity
· Order blocks are difficult to validate without volume transparency
· Time-based ICT models (kill zones) have no relevance in NEPSE
Applying these concepts mechanically often leads to false confidence.

The Biggest Misconception Among Nepalese Traders

The most dangerous belief spreading right now is:

“If I learn SMC or ICT, I will stop losing money.”

Losses in NEPSE usually occur due to:
· Overtrading
· Lack of stop-loss discipline
· Emotional attachment to stocks
· Ignoring broader market trend

SMC does not fix these problems.
SMC Is Not a Signal System

In NEPSE, many traders use SMC as:
· A justification tool after losses
· A label for normal demand-supply behavior

Two traders can mark completely different “order blocks” on the same stock, both believing they are correct. This highlights the subjective nature of SMC.

What Nepalese Traders Should Focus On Instead

Rather than chasing complex terminology, traders should prioritize:
· Understanding sector rotation
· Respecting the overall market trend
· Managing risk over prediction
· Studying historical price behavior of NEPSE stocks
SMC can be used as one layer of analysis, not the foundation.

The rise of SMC and ICT in Nepal reflects a healthy curiosity among traders to understand why markets move, not just when to buy or sell. However, NEPSE is not a fully institutional market.

Applying global trading models without adaptation often creates false expectations. SMC is neither magic nor meaningless. In Nepal’s context, it works best when simplified, grounded in reality, and combined with discipline and proper execution. Ultimately, there is no shortcut to consistency in NEPSE, only patience, learning, and risk control.

Article By: Aman Karki