In Smart Money Concepts (SMC) trading, inefficiency, efficiency, and imbalance describe how and why price moves across a chart, particularly through Fair Value Gaps (FVGs). [1]
Terminology Comparison & Chinese Translations
| English SMC Term | Chinese Translation (Simplified) | Chinese Translation (Traditional) | What It Means in Trading |
|---|---|---|---|
| Inefficiency | 低效 / 市场低效 | 低效 / 市場低效 | Price moves too fast with one-sided orders, leaving a gap. |
| Efficiency | 高效 / 价格平衡 | 高效 / 價格平衡 | Price has traded back and forth, filling orders for both buyers and sellers. |
| Imbalance | 失衡 / 不平衡 | 失衡 / 不平衡 | An unequal volume of buy vs. sell orders causing a sharp gap (often an FVG). |
| Fair Value Gap (FVG) | 公允价值缺口 | 公允價值缺口 | The visible physical gap on the chart representing that inefficiency/imbalance. |
Core Concepts Explained
- Inefficiency / Imbalance (低效 / 失衡):
- What it is: When institutional smart money injects heavy, one-sided volume (buying or selling) with extreme momentum, price displaces rapidly.
- The result: Not enough opposing orders get filled at those specific price levels. This creates a gap (like a Fair Value Gap) on the candlestick chart where trade execution was one-sided. [1, 2, 3, 4]
- Efficiency (高效 / 回补平衡):
- What it is: The market acts like a magnet and hates leaving open gaps. Mitigation or rebalancing happens when price retraces back into that inefficient/imbalanced zone to fill the resting or opposite-side orders. Once filled and traded through properly, the area moves toward being efficient (fair value). [1, 2, 3, 4]
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