Smart Money Concepts (SMC) has a reputation for being intimidating — a wall of acronyms that seem to require years to decode. In practice, it's a small set of ideas about how large participants move price, and each idea builds on the last.
Break of Structure (BOS)
A break of structure is confirmation that the current trend is continuing. In an uptrend, a BOS happens when price closes above the most recent significant high. In a downtrend, it's a close below the most recent significant low.
BOS matters because it's objective. It doesn't rely on an indicator or an opinion — either price closed beyond the level or it didn't. This is usually the first concept traders learn because it anchors everything else to a specific, visible event on the chart.
Change of Character (CHoCH)
Where BOS confirms a trend is continuing, a change of character signals the trend might be ending. A CHoCH happens when price breaks structure in the opposite direction of the prevailing trend — the first higher low failing to hold in an uptrend, for example.
CHoCH is not proof of a reversal on its own. It's a warning that the balance of control may be shifting, and it's usually the trigger to start looking for reversal setups rather than continuation setups.
Fair Value Gaps (FVG)
A fair value gap is an imbalance left behind by an aggressive, fast move — a candle that leaves a visible gap between its wick and the wicks of the candles before and after it. The idea is that price moved so quickly that it didn't fully "trade" through that zone, and it often returns to fill that imbalance before continuing.
FVGs are used as one of several confluence points for an entry — not a standalone signal. A gap that lines up with an order block or a key level carries more weight than one sitting in the middle of nowhere.
Order Blocks (OB)
An order block is the last candle (or cluster of candles) before an aggressive, structure-breaking move. The theory is that this is where large orders were absorbed before price was pushed hard in one direction, making the zone likely to attract price again and react when it does.
Order blocks are usually the zone traders watch for an entry once a BOS has confirmed the trend and a CHoCH or pullback brings price back toward that origin.
Putting it in sequence
The concepts are more useful together than alone: identify structure (trending or ranging), wait for a BOS to confirm direction, mark the order block and any FVG left behind by the impulsive move, then look for price to return to that zone for an entry with a stop beyond the order block.
This is exactly the sequence Pivora's SMC Sequential Planner walks you through — you choose the order of concepts you want confirmed, and the AI checks each one against your chart step by step rather than dumping all of them on you at once.