Why to follow smart money concepts?

Speculative uninformed money VS Smart money

Who can move the market?

Smart money i.e, Banks, Huge fund houses etc.

We can’t move the market alone, smart money will move the market, so we need to follow their foot prints to take more informed decisions

Price only chase two things

1.Liquidity

2.Imbalance

What to be focused: Impulse price movement from swing high/low

·        No need to chase this quick price move up/down

·        We need to start our frame work from the point where the initial impulse price movement started

·        Wait for the institutional reference points i.e, Order blocks, Fair value gaps & Liquidity voids, Liquidity pools & Stop runs and Equilibrium

Why institutional reference points works?

·        As they are big players they can’t simply buy and sell randomly at any place or at any time due to lack of liquidity, they has to split their orders into smaller ones and has to execute in different timings

How to spot liquidity?

1.   Swing high/low

2.   Support/Resistance

3.   Trend lines

·        Big players/smart money will refer to higher time frames (I.e, Monthly, Weekly and Daily) to hunt liquidity and imbalance, if underlying is bullish once after smart money steps into it, the move will continue for next 2-3 days

How to identify the smart money involvement?

·        Price displacement: Children swimming pool and Elephant

As their order size is too big, at which price they would like execute their longs/shorts?

·        In discount/premium

How the market moves?

Accumulation: (Consolidation period of smart money)

Manipulation: (Stop raid of speculative uninformed money)

Distribution: (Explosive price movement to chase Liquidity and Imbalance)

Idea behind every breakout?

Every breakout there are so many willing buyers/sellers, they can provide sufficient liquidity to market makers. So they has to takeout swing high/low intentionally, to trap speculative uninformed money

We should not buy above swing high or sell below swing low

Why?

If they want to move the market lower, first they will manipulate the price and takeout any of the previous swing high, so it might be stop for some sort of sellers and it might be entry for some sort of buyers, so smart money will seek liquidity from these group of people and move the market lower and vice-versa for buy side