Internal vs swing structure

What it is

Smart money concepts split structure in two. Swing structure is the main highs and lows: the ones that set the trend and the bias. Internal structure is the smaller sequence of breaks and changes of character inside one leg of that swing structure. Indicators such as LuxAlgo's Smart Money Concepts draw the two differently, often solid for swing and dashed for internal.

Mixing them up is one of the most common errors: a 'change of character' that is only an internal break, inside a pullback of a healthy trend, is read as the trend turning. Some tools add a 'CHoCH+' label for a change of character that comes after a failed attempt to extend the trend, to filter out weaker ones.

How to spot it

• Mark the obvious swing highs and lows first: those are swing structure.
• Inside one leg, the smaller pullbacks and breaks are internal structure.

How to use it

• Take your bias from swing structure, and use internal structure to time entries in that direction.
• An internal CHoCH against the swing trend is a pullback ending, not a reversal, until swing structure breaks too.

Common mistakes

• Reading an internal break as a swing break.
• Using a lower timeframe's swing structure as if it were the higher timeframe's.

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