Are you confused about the difference between Market Structure Shift (MSS) and Change of Character (CHOCH)? Don’t worry! In this post, we’ll break down MSS vs. CHOCH in Smart Money Trading. After reading, you’ll be able to understand these concepts like a pro.
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What is Market Structure Shift (MSS)?
To understand MSS in Smart Money Trading, you need to know about ICT Swing Low and ICT Swing High.
MSS happens when there’s a short-term change in price direction, shown by a break in the ICT Swing Point. This is often the first sign that the market trend might be changing in the long term. However, many traders mix up MSS with CHOCH, which can lead to mistakes.
Types of MSS:
- Bullish MSS: This occurs when the price breaks a Swing High Point, indicating a shift to a short-term buy-side price delivery. This might happen because the price is moving toward a higher time-frame PD Array or taking inducement. It can also lead to a Change of Character.
- Bearish MSS: This occurs when the price breaks a Swing Low Point, indicating a shift to a short-term sell-side price delivery. This might happen because the price is moving toward a higher time-frame PD Array or taking inducement. It can also lead to a Change of Character.
What is Change of Character (CHOCH)?
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CHOCH is a concept in Smart Money Trading that shows a long-term change in price direction, like a shift in the market trend. It happens when the previous market structure breaks in the opposite direction, either from bullish to bearish or from bearish to bullish.
Types of CHOCH:
- Bullish to Bearish CHOCH: This happens when the previous higher low breaks, leading to a new lower low. It signals that the trend is changing from bullish to bearish.
- Bearish to Bullish CHOCH: This happens when the previous lower high breaks, leading to a new higher high. It signals that the trend is changing from bearish to bullish.
Does CHOCH Always Mean a Trend Change?
Trading is all about probabilities, and nothing is guaranteed. While CHOCH often suggests a high chance of a trend change, it’s not always certain. But the success rate is usually higher than the failure rate, so it can lead to profits over time.
Final Thoughts
Trading is risky, so always trade within your limits and use stop-losses. Feel free to ask questions in the comments, and we welcome your suggestions.
