Advanced Concepts
ICT SMT Divergence Explained: Correlated Markets and Confirmation
SMT divergence is an ICT concept that compares the price behavior of two markets considered related. Traders study differences in significant highs or lows as contextual information.
What SMT divergence means
A commonly described example is one correlated market making a new high while another fails to make a corresponding high, or the inverse at lows.
Why correlation matters
Correlation is not constant. Two markets can move together during one period and diverge during another, so the relationship should be tested rather than assumed.
SMT is not a complete trade
An SMT observation does not define entry, stop or target by itself. Traders may combine it with liquidity, structure and an execution model.
How to test SMT
Define the pair, timeframe, swing rule, maximum time difference and entry trigger. Record false signals as well as successful examples.
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