In this Trading with Smart Money tutorial series, we will cover all the features of Trading and Smart Money. As we progress in this tutorial series, you will learn from the basic to advanced-level features of trading and smart money.
Trading with Smart Money
Trading with “Smart Money” is a concept often discussed in financial markets. Smart Money refers to institutional investors, professional traders, and other well-informed market participants who are believed to have a deep understanding of the market and the ability to make informed trading decisions. These entities typically have access to significant resources, research, and information that individual retail traders may not have.
How Does the Market Really Work?
All financial markets work on the universal law of Supply and Demand.
- Law of Demand– The higher the price of an item, the less the demand (buyers don’t want to buy at a higher price), and the lower the price, the higher the demand (buyers want to buy at a low price).
- Law of Supply– The higher the price of an item, the higher the supply (sellers want to sell at a higher price), and the lower the price, the lower the supply (sellers don’t want to supply at a lower price.
So prices go up to find sellers and then go down to find buyers
Let’s think from a big player/smart money(SM) perspective. Smart Money (SM), what they do is removes the floating supply of stock by buying. This process is called accumulation. Now, they have the power to move the stock up or down.
Smart Money can mark the stock’s price when general market conditions appear favorable. At some time in the future, a point will be reached when the SM will take advantage of the higher prices obtained in the rally to make profits by beginning to sell the stock back to the uninformed traders/investors. This is now called the distribution phase.
Why Does the Price Move?
What truly moves the price is AGGRESSION. If the price goes up, then the buyers are more aggressive. If it goes down, then sellers are more aggressive.
If you are aggressive, you want to buy or sell NOW. If you want something NOW and want to be 100 % sure you will get it, you must use MARKET ORDER. This type of order means that whatever the price is, your order will get filled. In other words, you place a MARKET ORDER to buy or sell immediately at the best available current price.
The aggressive market participants drive the price aggressively up or down with their market orders. This is the true reason why the price moves. After accumulation or distribution, the smart money AGGRESSIVELY moves the price higher or lower.
Who they are?
- They move the market, and they have the power.
- They have the ability to influence values and direction.
- They have the ability to pick against the trend or to pick top or bottom.
- They usually move the price at a very low volume.
How to Spot Smart Money (SM)?
Through analysing
- The Spread (i.e., the range of the price bar)
- The Close (i.e., the point where the price closes on the current bar)
- The Volume (i.e., activity),
How to Trade With Smart Money?
So, TRADING WITH Smart Money IS ABOUT TO GO WITH Smart Money. IF THEY BUY, WE WILL BUY. We will discuss all topics in greater detail in a step-by-step process.
Disclaimer:
Trading involves the risk of financial loss. The information provided here is for educational purposes only.
Note: If we missed any topics or if you want to learn any topics, then let us know by commenting in the comment box, and we will definitely make a video and publish an article on the same as soon as possible.
