The Trading Industry Will Hate Me For Uploading This Smart Money Course

01:05:24
https://www.youtube.com/watch?v=m9DfD5mYEKU

Zusammenfassung

TLDRThis video offers an in-depth analysis of smart money trading strategies, focusing on engaging with market dynamics used by major players. It covers various principles such as the Law of Supply and Demand, and techniques including supply and demand zone trading, Volume Spread Analysis, and key psychological tactics used by large market participants. The content explains how aggressive and passive trading influences price movements and describes how smart money manipulates markets through fakeouts and liquidity clear-outs. Specific strategies, such as entering trades at demand and supply zones after liquidity runs, are detailed to help traders align with these major market forces. The video serves as both an educational resource for understanding these market mechanics and a guide on specific tactics to enhance trading effectiveness by anticipating market moves fostered by large institutions.

Mitbringsel

  • 📈 Understand the Law of Supply and Demand.
  • 💡 Learn about aggressive and passive market orders.
  • 📊 Focus on Volume Spread Analysis for insights.
  • 🔍 Identify market manipulation by smart money.
  • 🏷️ Use supply and demand zones for trades.
  • 🧠 Think like a smart money trader for success.
  • 🎯 Align trades with big market players.
  • 🔄 Recognize liquidity clear-outs for entry points.
  • 💰 Follow the Composite Man's strategies.
  • 📊 Psychological numbers impact market behavior.

Zeitleiste

  • 00:00:00 - 00:05:00

    This video is a comprehensive guide to smart money trading, aiming to align individual traders with big market players through various strategies. It opens by discussing the Law of Supply and Demand, emphasizing the importance of understanding supply and demand zones over traditional support and resistance. Traders are advised to learn Wyckoff theory principles, which explain how aggressive and passive market participants interact to influence price movements.

  • 00:05:00 - 00:10:00

    The video elaborates on trading strategies based on supply and demand zones, which are critical in identifying potential market reversals. Traders are guided on how to identify these zones by observing sharp price changes indicating smart money influence. The explanation includes rules for trading within these zones, emphasizing the trade of fresh zones and recent formations for effectiveness.

  • 00:10:00 - 00:15:00

    The Law of Effort and Result is introduced, highlighting its significance in understanding smart money moves. This concept is essential in analysing the relationship between market volume and price action, as high volume signifies strength in price movement while low volume suggests weakness. This principle leads to Volume Spread Analysis, which is crucial for identifying market manipulation and understanding market sentiment.

  • 00:15:00 - 00:20:00

    Volume Spread Analysis (VSA) is detailed as a method to discern supply and demand imbalances. VSA examines the harmony between price and volume to predict market trends and reversals. The video explains the relationship between volume and price movements and highlights the importance of identifying divergences, thus offering traders an edge in understanding manipulations by smart money.

  • 00:20:00 - 00:25:00

    The Law of Cause and Effect, which explains that price movements are outcomes of prior accumulation or distribution phases, is crucial for traders to understand market trends. It underscores the importance of recognising these phases before major trend changes occur, providing traders with insights into potential future market directions.

  • 00:25:00 - 00:30:00

    The concept of the Composite Man is introduced, describing an entity representing smart money’s market influence. The video explains how the Composite Man operates in his interest, which often contrasts retail traders’ actions. Understanding his tactics helps traders adapt and avoid falling into common traps set by large players.

  • 00:30:00 - 00:35:00

    Liquidity clear-outs are discussed, illustrating how smart money manipulates price levels to trigger stop-loss orders of retail traders. This practice involves exploiting market liquidity and is a common tactic used by institutional players to their advantage. The discussion includes explanations of how these clear-outs are set up and executed.

  • 00:35:00 - 00:40:00

    The video advises retail traders on how to adopt the mindset of smart money, encouraging a strategic and disciplined approach to trading. It stresses the importance of using various tactics to manipulate and deceive other players to achieve trading goals. This mindset shift is essential for success in the competitive trading environment.

  • 00:40:00 - 00:45:00

    Smart money's psychological and deceptive tactics in the market are highlighted, including strategies like stop hunting, fakeouts, and whipsaws. These tactics aim to create false signals and emotions like fear and greed among retail traders, leading them to make detrimental trading decisions.

  • 00:45:00 - 00:50:00

    The video discusses market open manipulation, where smart money creates false price movements and impressions at market open to mislead traders. Tactics like fake breakouts and stop-loss hunting are employed to trap retail traders. The discussion highlights the increased volatility during market openings and emphasizes caution for novice traders.

  • 00:50:00 - 00:55:00

    Accumulation and distribution strategies employed by smart money to manipulate market signals and trap retail traders are explained. These phases involve smart money buying at low prices and selling at high prices, inducing retail traders to act against their interests. Volume analysis is suggested as a tool to confirm these strategies.

  • 00:55:00 - 01:00:00

    Guidance on aligning with smart money through identifying liquidity zones and market traps suggests reevaluating trading strategies to follow big players' footprints. Traders are encouraged to identify liquidity clear-outs before entering positions to avoid being targeted. This section stresses the significance of observing market structures for successful trading.

  • 01:00:00 - 01:05:24

    The video concludes with strategic advice on trading specific patterns, such as demand and supply zone entries after liquidity clear-outs, and using psychological numbers as indicators. These strategies aim to align trades with smart money movements, enhancing trading effectiveness. The session ends with a call to understand these principles for long-term trading success.

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Mind Map

Mind Map

Häufig gestellte Fragen

  • What is the Law of Supply and Demand?

    It refers to how supply and demand determine price direction on charts.

  • What are supply and demand zones?

    They identify where large market players have placed their orders.

  • How does smart money influence the market?

    Smart money manipulates market prices to trap and release liquidity.

  • What is Volume Spread Analysis (VSA)?

    VSA analyzes volume and price spread to assess market manipulation.

  • How do smart money traders execute trades?

    It emphasizes using high liquidity zones to execute large orders efficiently.

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Automatisches Blättern:
  • 00:00:00
    This is one of the most important trading videos you’ll ever watch: a smart money
  • 00:00:05
    trading course, with lots of strategies and tactics to align yourself with the big players
  • 00:00:10
    in the market.
  • 00:00:11
    This is game changing!
  • 00:00:13
    Like, subscribe, and let’s get started!
  • 00:00:14
    1.
  • 00:00:15
    The Law of Supply and Demand
  • 00:00:21
    Any chart is a sequence of supply and demand zones.
  • 00:00:24
    If you’re a beginner, I bet that trading using classic support and resistance levels.
  • 00:00:29
    And there’s nothing wrong with that.
  • 00:00:31
    But I advise you to forget about them for a second, and focus on supply and demand.
  • 00:00:36
    If you want to become a smart money trader, you first need to learn the law of supply
  • 00:00:41
    and demand.
  • 00:00:42
    According to Wyckoff theory, supply and demand determines the price direction.
  • 00:00:47
    • If demand is greater than supply, the price will rise.
  • 00:00:51
    • If supply is greater than demand, the price will go down.
  • 00:00:55
    • If supply and demand are in balance, there’s no significant price change.
  • 00:01:01
    This is one of the most basic principles of financial markets.
  • 00:01:05
    Now, in any market, there are 2 types of participants: aggressive and passive.
  • 00:01:12
    Aggressive traders are the ones that use “at market” orders.
  • 00:01:16
    They have urgency to enter and attack the best price possible.
  • 00:01:21
    This type of aggressive orders represent the real engine of the market since they are the
  • 00:01:26
    ones that initiate the transactions.
  • 00:01:30
    Passive traders are the ones that use limit orders.
  • 00:01:33
    This is important, because the interaction between aggressive buyers, aggressive sellers,
  • 00:01:39
    passive buyers and passive sellers is what moves the price.
  • 00:01:44
    The main point is: an aggressive participation of traders will produce a change in price.
  • 00:01:50
    Passive orders have the ability to stop a move, but not the ability to make the price
  • 00:01:55
    move.
  • 00:01:56
    For the price to move upwards, buyers have to buy all the supply orders that are available
  • 00:02:02
    at that price level and also continue to buy aggressively to force the price up, to find
  • 00:02:09
    new sellers to trade with.
  • 00:02:11
    Passive buy orders cause the downward movement to slow down, but by themselves cannot drive
  • 00:02:17
    the price up.
  • 00:02:19
    For the price to move downward, sellers have to acquire all the demand orders that are
  • 00:02:25
    available at that price level and continue to push downward, forcing the price to go
  • 00:02:31
    in search of buyers at lower levels.
  • 00:02:35
    Passive sell orders cause the upward movement to slow down, but do not have the ability
  • 00:02:40
    to drive the price down on their own.
  • 00:02:44
    The price needs aggressiveness to move, but it’s important to take into account also
  • 00:02:49
    that the lack of interest from the opposite side.
  • 00:02:53
    An absence of supply can facilitate the price rise, just as an absence of demand can facilitate
  • 00:03:00
    its fall.
  • 00:03:02
    In a rising market, as long as the buying initiative is able to consume all the liquidity
  • 00:03:08
    (supply) found at higher levels, the price will continue to rise.
  • 00:03:14
    On the other hand, in bear markets, as long as the selling initiative is able to consume
  • 00:03:20
    all the liquidity (demand) found at lower levels, the price will continue to fall.
  • 00:03:26
    At the moment of a market turn, we will normally always have a three-step process:
  • 00:03:32
    1.
  • 00:03:33
    Exhaustion 2.
  • 00:03:34
    Absorption 3.
  • 00:03:35
    Initiative During an uptrend, in the exhaustion phase,
  • 00:03:38
    there’s a lack of interest of the buyers to continue buying.
  • 00:03:43
    During absorption phase, you’ll see more and more sell orders placed by the smart money.
  • 00:03:49
    During absorption phase there are many passive sellers.
  • 00:03:53
    The initiative phase is characterized by aggressive selling.
  • 00:03:56
    More and more aggressive sellers are entering the market.
  • 00:04:01
    During a downtrend, in the exhaustion phase, there’s a lack of interest from the sellers
  • 00:04:06
    to continue selling.
  • 00:04:08
    During absorption phase, you’ll see more and more buy orders placed by the smart money.
  • 00:04:14
    During absorption phase there are many passive buyers.
  • 00:04:18
    The initiative phase is characterized by aggressive buying.
  • 00:04:23
    More and more aggressive buyers are entering the market.
  • 00:04:26
    And these interactions between aggressive and passive buyers and sellers creates supply
  • 00:04:32
    and demand zones on a chart.
  • 00:04:36
    2.
  • 00:04:37
    Supply and demand trading
  • 00:04:39
    So, if you are a trader who wants to improve your trading performance and trade along with
  • 00:04:44
    the big players, the first step is to implement supply and demand concepts into your trading
  • 00:04:50
    strategy.
  • 00:04:51
    We already established that the market is driven by the actions of smart money.
  • 00:04:56
    By identifying the areas where smart money has placed their orders, you can trade along
  • 00:05:01
    with them and benefit from their influence.
  • 00:05:05
    A supply zone is where smart money has sold at high prices, creating a bearish pressure
  • 00:05:11
    that pushes the price down.
  • 00:05:14
    A demand zone is where smart money has bought at low prices, creating a bullish pressure
  • 00:05:20
    that pushes the price up.
  • 00:05:22
    These zones act as potential turning points in the market, as smart money often leaves
  • 00:05:28
    pending orders at these levels to fill their remaining positions.
  • 00:05:33
    So, in theory, if prices revisit these supply and demand zones, it is highly probable that
  • 00:05:40
    they will be rejected.
  • 00:05:43
    To determine the optimal supply and demand zones, first you need to search for sharp
  • 00:05:49
    price increases or decreases, which indicate the involvement of smart money in the market.
  • 00:05:55
    These movements are referred to as market imbalances, significant price shifts in one
  • 00:06:00
    direction.
  • 00:06:01
    To identify demand zones, look for fast impulse moves, keeping a close watch on big green
  • 00:06:08
    candles.
  • 00:06:09
    These candles should have long bodies and minimal wicks.
  • 00:06:14
    Once an impulse move is identified, you need to locate the base of the zone.
  • 00:06:19
    To do so, place a line at the high price of the most recent red candle preceding the impulse
  • 00:06:26
    move and another line at the most recent swing low around the move.
  • 00:06:33
    To find supply zones, look for fast declines and red candles with extended bodies and minimal
  • 00:06:41
    wicks.
  • 00:06:42
    Then find the most recent up candle before the sharp down move and place a line at its
  • 00:06:48
    low price, along with another line at the most recent swing high formed at around the
  • 00:06:54
    move.
  • 00:06:56
    In theory, the price is likely to reverse once it returns to these supply and demand
  • 00:07:02
    zones.
  • 00:07:03
    But to effectively trade these zones, it is important to understand the two key rules
  • 00:07:08
    to identify the right zones on the chart.
  • 00:07:12
    The first rule is to trade only fresh and untouched zones because supply and demand
  • 00:07:17
    zones are one-time use.
  • 00:07:20
    Once price hits a zone and reverses, the zone loses its power, and the probability of it
  • 00:07:26
    causing another reversal in the future is lower.
  • 00:07:31
    The second rule is that recent zones are more important than older ones.
  • 00:07:37
    Supply and demand areas that have been created recently are far more effective than those
  • 00:07:42
    that were created a long time ago.
  • 00:07:45
    There are four distinct types of supply and demand zones based on how the price approached
  • 00:07:52
    and left the zone.
  • 00:07:53
    These four types can be categorized into two groups: continuation structures and reversal
  • 00:08:00
    structures.
  • 00:08:01
    First continuation pattern is the Rally-base-Rally, which forms a demand zone during an uptrend.
  • 00:08:07
    The market structure begins with a rally, followed by consolidation, and ends with another
  • 00:08:15
    rally, which creates the demand zone.
  • 00:08:18
    The second continuation pattern is the Drop-base-Drop structure, which forms a supply zone during
  • 00:08:25
    a downtrend.
  • 00:08:27
    The market structure begins with a price decrease, followed by consolidation, and ends with another
  • 00:08:33
    price decrease, which creates a supply zone.
  • 00:08:37
    In both cases, if the market returns to these zones, the price is expected to move in the
  • 00:08:43
    direction that created the zone.
  • 00:08:46
    The Drop-base-Rally is the first reversal structure, which forms a demand zone in the
  • 00:08:53
    market.
  • 00:08:54
    This zone is located where the market changes from moving down to moving up.
  • 00:09:00
    The second reversal structure is the Rally-base-Drop pattern.
  • 00:09:05
    This forms a supply zone when the market reverses from moving higher to moving lower.
  • 00:09:11
    Again, if the market returns to these zones, the price is expected to move in the direction
  • 00:09:17
    that created the zone.
  • 00:09:19
    The main advantage of supply and demand trading is that it helps you to understand the market
  • 00:09:24
    structure and market dynamics much better.
  • 00:09:28
    This is the first component in your smart money plan.
  • 00:09:34
    3.
  • 00:09:37
    The Law of Effort and Result
  • 00:09:39
    The Law of Effort vs. Result is another fundamental principle of Wyckoff Theory and one of the
  • 00:09:43
    most important concept to follow the smart money on any market.
  • 00:09:47
    This concept states that the effort made by aggressive and passive buyers and sellers
  • 00:09:53
    will be reflected in the price movement of any market.
  • 00:09:57
    The principle is based on the idea that the market is a battle between buyers and sellers,
  • 00:10:02
    and the direction of the market is determined by the side with the greatest effort, which
  • 00:10:08
    is represented by volume.
  • 00:10:11
    High volume indicates strong market participation, while low volume indicates weak market participation.
  • 00:10:17
    Volume is very important because it provides insight into market sentiment and future price
  • 00:10:25
    movements.
  • 00:10:26
    And it’s not difficult to understand once you learn the basic principles of supply and
  • 00:10:30
    demand.
  • 00:10:32
    This simply requires you to relate the volume with price action.
  • 00:10:36
    4.
  • 00:10:37
    Volume Spread Analysis trading If you want to identify the signs of market
  • 00:10:43
    manipulation and follow the smart money's footsteps, you need to learn Volume Spread
  • 00:10:48
    Analysis.
  • 00:10:49
    This is a game changer, and can give you an edge over other traders who only look at price
  • 00:10:55
    action or indicators.
  • 00:10:57
    VSA can reveal when smart money is accumulating or distributing an asset, when they are testing
  • 00:11:04
    supply or demand, and when they are ready to start a new trend or reverse an existing
  • 00:11:10
    one.
  • 00:11:12
    Volume Spread Analysis (VSA) is based on the premise that volume is the fuel that drives
  • 00:11:17
    price movements.
  • 00:11:18
    Volume is the amount of trading activity in a given period, while spread (or range) represents
  • 00:11:25
    the difference between the open and close prices of a candlestick.
  • 00:11:30
    By analyzing the relationship between volume and spread, VSA can reveal the supply and
  • 00:11:36
    demand dynamics in the market.
  • 00:11:39
    It’s a lot to talk about, but the key concept of VSA is that when volume and spread are
  • 00:11:46
    in harmony, it means that there is a balance between buyers and sellers, and the market
  • 00:11:52
    is likely to continue in its current direction.
  • 00:11:55
    However, when volume and spread are in disharmony, it means that there is an imbalance between
  • 00:12:02
    buyers and sellers, and the market is likely to reverse or consolidate.
  • 00:12:07
    So, when price and volume are moving in the same direction, it is a sign that the price
  • 00:12:13
    move is strong and is likely to continue.
  • 00:12:16
    For example, if a market is in an uptrend and there is a significant increase in volume,
  • 00:12:22
    it is a sign that the uptrend is likely to continue.
  • 00:12:26
    Divergences between price and volume occur when there is a disagreement between the price
  • 00:12:31
    action and the volume of that market.
  • 00:12:34
    This can indicate that the price move is not supported by market participation and may
  • 00:12:39
    not be sustainable.
  • 00:12:41
    For example, if a market is in an uptrend, but the volume is decreasing, it is a sign
  • 00:12:47
    that the uptrend may not continue.
  • 00:12:50
    So, VSA is the second component of our smart money trading plan.
  • 00:12:55
    5.
  • 00:12:56
    The Law of Cause and Effect
  • 00:13:00
    Another important smart money concept states that the differences between supply and demand
  • 00:13:05
    are not random.
  • 00:13:07
    Instead, they come after periods of preparation, as a result of specific events.
  • 00:13:13
    This is the law of cause and effect.
  • 00:13:16
    For the market to develop an effect (trend), first there must be a cause (namely, accumulation/distribution).
  • 00:13:22
    Basically, this law states that every price move has a cause.
  • 00:13:28
    Changes cannot happen out of nowhere and a cause must be established first.
  • 00:13:33
    This starts during periods of sideways movement or when the market is ranging.
  • 00:13:38
    This can be seen in charts when we have small ranges or low volatility periods.
  • 00:13:44
    The longer this process continues, the larger the expected resulting move.
  • 00:13:50
    So after a period of consolidation, there is an expansion or explosive move in price.
  • 00:13:57
    In Wyckoff's terms, a period of accumulation (cause) eventually leads to an uptrend (effect).
  • 00:14:04
    In contrast, a period of distribution (cause) eventually results in a downtrend (effect).
  • 00:14:11
    6.
  • 00:14:12
    The Composite Man When I started to study Wyckoff, my first
  • 00:14:20
    aha moment was when I was reading about the Composite man.
  • 00:14:24
    Wyckoff created the idea of the Composite Man as an imaginary identity of the market.
  • 00:14:30
    This single entity is responsible for controlling the market.
  • 00:14:35
    And it always acts in his own best interest to ensure he can buy low and sell high.
  • 00:14:41
    Think of composite man as an evil entity, controlling markets by pushing buttons.
  • 00:14:46
    His single objective is to move the markets to your disadvantage, seeking to maximize
  • 00:14:53
    his profit at “your” expense.
  • 00:14:55
    And he plans and executes his deceptions well in advance.
  • 00:15:00
    He’s basically there to fool you to buying positions that he has already accumulated.
  • 00:15:06
    He will tempt you to buy and sell at the worst possible time.
  • 00:15:09
    And it makes a lot of sense.
  • 00:15:12
    Have you ever had the feeling that someone is watching your positions?
  • 00:15:16
    That you entered the market, and immediately price went against you?
  • 00:15:21
    Or the market is quiet, with low activity, and as soon as you enter, the price starts
  • 00:15:26
    jumping up and down?
  • 00:15:27
    It’s like someone is driving prices, playing with your emotions.
  • 00:15:32
    In essence, the Composite Man represents the biggest players (so-called smart money).
  • 00:15:39
    It always acts in its interest to ensure that it can buy at a discount and sell at a premium.
  • 00:15:46
    The Composite Man’s behavior is the opposite of retail traders, and in order to adapt to
  • 00:15:52
    changing market conditions, we, retail traders, must learn from his behavior.
  • 00:15:58
    If you don’t understand the game as he plays it, you’ll take the wrong side of the trade
  • 00:16:04
    and you’ll sit in front if your screen, desperate that the market moves once again,
  • 00:16:09
    against your position.
  • 00:16:11
    In order to understand the behavior of the Composite man, you need to understand the
  • 00:16:16
    concept of liquidity.
  • 00:16:17
    7.
  • 00:16:18
    Liquidity clear-outs
  • 00:16:23
    In the world of smart money, it's important to question the liquidity of the market you're
  • 00:16:27
    trading.
  • 00:16:29
    Whether you're trading the EUR/USD or Bitcoin or Amazon, liquidity plays a crucial role
  • 00:16:35
    in a market's functionality.
  • 00:16:37
    In fact, an ample participation from buyers and sellers is necessary for a market to be
  • 00:16:43
    considered rich in liquidity.
  • 00:16:46
    This is why market makers and smart money often engage in liquidity hunting or liquidity
  • 00:16:53
    clear-outs, which involves extracting liquidity from the market by flushing out weak players.
  • 00:16:59
    A Liquidity clear-out is when the price will move just above or below an area where stop
  • 00:17:06
    loss orders of retail traders are placed, executing those orders and reversing.
  • 00:17:13
    The goal of this strategy is to take advantage of the liquidity that is provided by the stop-loss
  • 00:17:18
    orders of other traders.
  • 00:17:22
    Liquidity hunting works by identifying areas of high concentration of stop-loss orders
  • 00:17:28
    in the market.
  • 00:17:29
    These areas are usually near support and resistance levels, where many traders place their stops
  • 00:17:36
    to protect their positions.
  • 00:17:39
    Smart money, or the Composite man, will then push the price towards these levels, triggering
  • 00:17:45
    the stop-loss orders and creating a spike in volume and volatility.
  • 00:17:51
    This spike can also cause other traders to panic and join the move, creating a double
  • 00:17:57
    trap.
  • 00:17:58
    Once the liquidity hunters have filled their orders at favorable prices, they will quickly
  • 00:18:04
    reverse their positions and drive the price back to its original range.
  • 00:18:09
    This can leave many traders with losses or missed opportunities, while the Composite
  • 00:18:15
    Man profits from the price swing.
  • 00:18:18
    This is one of the main strategies used by smart money to make money.
  • 00:18:24
    Liquidity is the third component in our smart money trading plan.
  • 00:18:28
    8.
  • 00:18:29
    How to Think Like Smart Money If you are a retail trader who wants to succeed
  • 00:18:36
    in the market, you need to learn how to think like a smart money trader.
  • 00:18:41
    Imagine you don’t have a 5.000 dollars account.
  • 00:18:43
    You have a 1 billion dollar account.
  • 00:18:46
    You have the power to influence price movements and develop trends on the market.
  • 00:18:52
    You have access to more information, more resources, and more capital than 99% of retail
  • 00:18:58
    traders, and you need to use various tactics to deceive and manipulate other traders to
  • 00:19:05
    your advantage.
  • 00:19:06
    How would you do it?
  • 00:19:07
    You wouldn’t trade like most retail traders.
  • 00:19:10
    You’re in the business of making money, so you need many tactics to create false signals,
  • 00:19:16
    traps, and illusions in the market.
  • 00:19:19
    Here’s the reality.
  • 00:19:21
    Smart money are not necessarily smarter than retail traders.
  • 00:19:25
    They are simply more experienced, disciplined, and strategic.
  • 00:19:30
    They have a clear understanding of how the market works, how other traders behave, and
  • 00:19:36
    how they can exploit their emotions and biases.
  • 00:19:39
    They do not trade based on predictions, opinions, or hopes.
  • 00:19:44
    They trade based on probabilities, facts, and evidence.
  • 00:19:48
    Smart money does not care about being right or wrong.
  • 00:19:52
    They care about making money.
  • 00:19:54
    They are flexible and adaptable to changing market conditions.
  • 00:19:57
    They do not chase after trades or revenge trade.
  • 00:20:02
    They wait patiently for high-probability opportunities and execute them with precision.
  • 00:20:08
    Smart money does not follow the crowd.
  • 00:20:10
    They lead the crowd.
  • 00:20:12
    They do not rely on lagging indicators, news, or tips from others.
  • 00:20:17
    They do not trade what they see or hear.
  • 00:20:20
    They trade what they know and understand.
  • 00:20:23
    They do not react to the market.
  • 00:20:25
    They anticipate the market.
  • 00:20:26
    9.
  • 00:20:27
    The Tactics Used By Smart Money Smart money knows that the market is a game
  • 00:20:34
    of psychology and deception.
  • 00:20:36
    They know that most retail traders are driven by fear and greed, and they use these emotions
  • 00:20:43
    against them.
  • 00:20:44
    They use various tactics to create false signals, traps, and illusions in the market that lure
  • 00:20:51
    retail traders into making bad trades or missing out on good ones.
  • 00:20:56
    You already know their tactics very well, you were the victim of those tactics on many
  • 00:21:01
    occasions: - Stop hunting is the most obvious strategy:
  • 00:21:06
    This is when smart money pushes the price to a level where they know many retail traders
  • 00:21:12
    have placed their stop losses or take profits.
  • 00:21:15
    This triggers a cascade of orders that either liquidates their positions or fills their
  • 00:21:22
    orders at unfavorable prices.
  • 00:21:24
    This allows smart money to either exit their positions with a profit or enter new positions
  • 00:21:31
    with a better price.
  • 00:21:34
    - Fakeouts are another tactic: This is when smart money creates a false breakout of a
  • 00:21:39
    support or resistance level that attracts many retail traders to enter in the direction
  • 00:21:45
    of the breakout.
  • 00:21:47
    However, after a few candles, the price reverses sharply in the opposite direction, trapping
  • 00:21:53
    those traders in losing trades.
  • 00:21:56
    - Whipsaws are another smart money tactic: This is when smart money creates a lot of
  • 00:22:02
    volatility and noise in the market that confuses many retail traders and makes them second-guess
  • 00:22:10
    their trades.
  • 00:22:11
    The price moves up and down rapidly without any clear direction or trend, causing many
  • 00:22:17
    traders to exit their trades prematurely or switch sides frequently.
  • 00:22:24
    The reality is that many retail traders will use the same price levels to place their entries
  • 00:22:30
    or stop losses.
  • 00:22:31
    And these are the perfect zones for smart money to trigger one of their traps.
  • 00:22:37
    You might ask: why is this difference between us, retail traders, and smart money?
  • 00:22:43
    Because they don’t trade like us, using technical analysis, indicators or chart patterns.
  • 00:22:50
    Institutional players cannot trade the same as the retail trader, because in low liquidity
  • 00:22:55
    price areas, they will push price far away with large orders.
  • 00:23:00
    So they must use high liquidity zones to put their own large orders in the market without
  • 00:23:07
    having too much impact on the price.
  • 00:23:09
    10.
  • 00:23:10
    Smart money traps - Fake breakout at the high/low of the day
  • 00:23:13
    Now let’s go even deeper and let’s discuss about the most common smart money traps.
  • 00:23:20
    If you are a day trader, you have probably experienced the frustration of being stopped
  • 00:23:24
    out of a trade by a sudden spike in price at the high or low of the day.
  • 00:23:31
    This practice is one of the most common ways that smart money manipulates the market to
  • 00:23:36
    trap retail traders.
  • 00:23:38
    These are price movement that break a significant level of support or resistance, in this case
  • 00:23:44
    the high or low of the day, but fail to sustain the momentum and quickly reverse back into
  • 00:23:51
    the previous range.
  • 00:23:53
    Fake breakouts come with a higher volatility.
  • 00:23:55
    You see them often, on any market.
  • 00:23:58
    Here’s a fake breakout at the high of the day, when price breaks above the highest point
  • 00:24:03
    reached during the trading session, but then falls back below it.
  • 00:24:08
    And here’s a fake breakout at the low of the day, when price breaks below the lowest
  • 00:24:14
    point reached during the trading session, but then rises back above it.
  • 00:24:20
    Smart money uses these fake breakouts for two main reasons: to shake out weak hands
  • 00:24:26
    and to accumulate or distribute positions.
  • 00:24:29
    Shaking out weak hands means forcing retail traders to exit their trades prematurely by
  • 00:24:36
    creating fear or greed.
  • 00:24:39
    Smart money may push the price above the high of the day to trigger stop losses and buy
  • 00:24:45
    orders from retail traders who are following the breakout.
  • 00:24:49
    This creates a surge in demand that drives the price higher.
  • 00:24:53
    However, once smart money has filled their orders, they will dump their positions, causing
  • 00:25:00
    the price to fall back below the high of the day and trapping retail traders who bought
  • 00:25:06
    at the top.
  • 00:25:07
    This also creates a supply and volume imbalance that drives the price lower.
  • 00:25:13
    You can identify this type of fake breakouts by carefully analyzing the volume and some
  • 00:25:19
    common price action patterns.
  • 00:25:22
    Fake breakouts often form specific price action patterns that signal a reversal or continuation
  • 00:25:28
    of the trend.
  • 00:25:29
    For example, a double top at the high of the day, after a fake breakout, or double bottom
  • 00:25:36
    pattern at the low of the day, again, after a fake breakout, is a clear sign of market
  • 00:25:43
    manipulation.
  • 00:25:44
    If you find a reversal candlestick pattern, that even better.
  • 00:25:48
    Fake breakouts often form specific candlestick patterns that indicate bullish or bearish
  • 00:25:54
    sentiment in the market.
  • 00:25:56
    For example, a pin bar or a candle with large wick is a clear sign of rejection after a
  • 00:26:03
    failed breakout.
  • 00:26:05
    Asian session trap The Asian trading session is one of the main
  • 00:26:12
    zones targeted by the smart money.
  • 00:26:15
    The Tokyo range trap is a common phenomenon if you’re trading Forex, crypto and indices,
  • 00:26:21
    and occurs during the Asian session, which is typically characterized by low volatility
  • 00:26:27
    and tight trading ranges.
  • 00:26:29
    The Tokyo range trap refers to the situation where smart money use the range of the session
  • 00:26:36
    to trap retail traders into false breakouts and reversals, and then exploit their positions
  • 00:26:42
    during the London and New York sessions, which are more volatile and liquid.
  • 00:26:48
    One of the most common tactics is to create a false breakout of the Tokyo range, which
  • 00:26:54
    is the high and low of the price action during the Tokyo session.
  • 00:26:59
    Price moves beyond the range, and then quickly reverses and moves back into the range.
  • 00:27:05
    This creates a false signal for the average retail trader, who may enter or exit trades
  • 00:27:11
    based on the breakout, only to find himself trapped in losing positions when the price
  • 00:27:16
    moves against him.
  • 00:27:19
    Another tactic used by smart money traders is to create a false reversal of the Tokyo
  • 00:27:24
    range, which is the opposite of a false breakout.
  • 00:27:28
    How to avoid falling into the Tokyo range trap and even make some money?
  • 00:27:34
    One of the most effective ways is to use volume to measure the strength of the breakout.
  • 00:27:40
    A high volume outside the Tokio range indicates that there is strong market participation
  • 00:27:46
    and conviction behind a price movement, while a low volume indicates that there is weak
  • 00:27:53
    market participation and low conviction behind a price movement.
  • 00:27:58
    Therefore, a high volume breakout or reversal is more likely to be genuine than a low volume
  • 00:28:07
    one.
  • 00:28:08
    Additionally, you can learn from past examples of how the Tokyo range trap has affected market
  • 00:28:15
    trends.
  • 00:28:16
    If you analyze these consecutive Tokyo sessions we see an interesting pattern:
  • 00:28:22
    Range traders who have taken short positions at the top of the Asian range had their stop
  • 00:28:28
    losses hunted, outside of the range.
  • 00:28:31
    Each time, the market reversed aggressively in the opposite direction.
  • 00:28:36
    The upward movement outside of the range also seduced traders to take long positions, hoping
  • 00:28:43
    for a breakout trade.
  • 00:28:45
    That’s the second batch of traders, who were trapped.
  • 00:28:48
    Long breakout traders.
  • 00:28:55
    Wedges triangles trap
  • 00:28:56
    Wedges and triangles are two of the most common chart patterns that traders use to identify
  • 00:29:01
    potential reversals or continuations in the market.
  • 00:29:04
    However, not all wedges and triangles are genuine.
  • 00:29:09
    Sometimes, they are deliberately created by smart money, to trap retailer traders.
  • 00:29:16
    Wedges and triangles are usually formed by two converging trend lines that connect the
  • 00:29:21
    highs and lows of a price action.
  • 00:29:24
    They indicate a period of consolidation, where the market is indecisive and the trading range
  • 00:29:29
    narrows.
  • 00:29:30
    Now, smart money knows that many traders rely on wedges and triangles to make their trading
  • 00:29:37
    decisions.
  • 00:29:38
    Therefore, they can use these patterns to create false signals and lure unsuspecting
  • 00:29:44
    traders into their traps.
  • 00:29:47
    You’ll often see that price breaks out of a wedge or a triangle in one direction, but
  • 00:29:53
    then quickly reverses and moves in the opposite direction.
  • 00:29:57
    This creates confusion and panic among traders who followed the initial breakout signal and
  • 00:30:03
    entered positions in that direction.
  • 00:30:05
    The idea is to trap traders on the wrong side of the market.
  • 00:30:10
    For example, smart money can create an ascending triangle pattern in an uptrend and induce
  • 00:30:17
    a fake breakout to the upside.
  • 00:30:20
    This will attract buyers who think that the uptrend will continue.
  • 00:30:24
    However, smart money will then sell their positions at higher prices and drive the price
  • 00:30:30
    down below the lower trend line of the triangle, triggering stop losses and creating more selling
  • 00:30:38
    pressure.
  • 00:30:39
    This will result in a sharp decline in price and a minor reversal of the uptrend.
  • 00:30:46
    Stop loss hunting is also common.
  • 00:30:49
    This occurs when smart money pushes the price to a level where many traders have placed
  • 00:30:55
    their stop losses, triggering them and causing a sudden spike or drop in price.
  • 00:31:01
    Smart money can use stop runs to shake out weak traders from their positions and create
  • 00:31:08
    liquidity for their own trades.
  • 00:31:10
    For example, they can create a symmetrical triangle pattern in a sideways market and
  • 00:31:17
    induce stop runs on both sides of the triangle.
  • 00:31:21
    This will cause traders who entered positions based on either side of the breakout to exit
  • 00:31:27
    their trades at a loss.
  • 00:31:29
    Smart money will then take advantage of this liquidity and enter positions in their desired
  • 00:31:35
    direction.
  • 00:31:36
    From my experience, it’s very hard to know for sure whether a wedge or a triangle pattern
  • 00:31:44
    is genuine or fake.
  • 00:31:46
    In this example, you can observe that on the lower boundary of the wedge, the lows become
  • 00:31:53
    slightly higher each time it comes down to the line.
  • 00:31:57
    This has the effect of ensuring that none of the trades that have taken short positions
  • 00:32:02
    in these regions can turn a profit.
  • 00:32:05
    Similarly, on the upper boundary of the wedge, the same thing is happening with each of the
  • 00:32:11
    highs becoming progressively lower and trapping the long traders and pulling them down.
  • 00:32:18
    There is no way of predicting which direction the price will ultimately breakout.
  • 00:32:23
    I personally avoid trading during this type of consolidation.
  • 00:32:27
    But if you want to be active in the market, volume is the only indicator that will help
  • 00:32:33
    you to anticipate the future direction.
  • 00:32:36
    Generally, volume should decrease as a wedge or a triangle pattern forms, indicating that
  • 00:32:43
    traders are waiting for a breakout signal.
  • 00:32:51
    Market open manipulation Market open manipulation is another common
  • 00:32:54
    trap, which refers to the deliberate actions of smart money to create false impressions
  • 00:33:00
    of supply and demand in the market.
  • 00:33:03
    These actions are designed to influence the price movements and the psychology of retail
  • 00:33:08
    traders, who often trade based on technical analysis, indicators or news.
  • 00:33:14
    It’s a reality that every trader has to face and deal with.
  • 00:33:18
    The market open manipulation happens for two main reasons: smart money want to take profit
  • 00:33:24
    from their existing positions or to accumulate or distribute more positions at favorable
  • 00:33:31
    prices.
  • 00:33:32
    For example, if smart money wants to sell a large position, they may drive up the price
  • 00:33:38
    at the market open.
  • 00:33:39
    This will attract retail traders who buy into the breakout, thinking that the market is
  • 00:33:45
    going to rally.
  • 00:33:47
    However, once enough retail traders are trapped in their long positions, smart money will
  • 00:33:54
    dump their positions into the market, causing the price to reverse.
  • 00:33:59
    This will trigger stop-loss orders and panic selling from retail traders.
  • 00:34:04
    There are many types of market open manipulation that smart money can use to trick retail traders.
  • 00:34:12
    By now, you already know them: - Fake breakouts: This is when smart money
  • 00:34:17
    pushes the price above or below a significant support or resistance level, only to reverse
  • 00:34:24
    it shortly after.
  • 00:34:26
    This creates a false signal that the market is trending in one direction, when in fact
  • 00:34:31
    it is going in the opposite direction.
  • 00:34:34
    - Stop-loss hunting: This is when smart money targets the areas where retail traders place
  • 00:34:40
    their stop-loss orders, such as below support levels or above resistance levels.
  • 00:34:47
    - False signals: This is when smart money uses indicators, news events, or other factors
  • 00:34:54
    to generate misleading signals that contradict the actual market direction.
  • 00:34:59
    For example, smart money may release positive news about a stock before the market open,
  • 00:35:07
    causing retail traders to buy into the hype.
  • 00:35:11
    Or they deliberately move the price above a common moving average, to determine moving
  • 00:35:15
    average traders to enter.
  • 00:35:17
    And, once the market opens, smart money will sell their positions at a high price and then
  • 00:35:24
    drive the price down.
  • 00:35:28
    During the market open manipulation, you’ll witness increased volatility.
  • 00:35:32
    You’ll see fast price swings and fluctuations in a short period of time.
  • 00:35:38
    This increases the risk for retail traders who may get caught on the wrong side of the
  • 00:35:43
    market.
  • 00:35:45
    Market open manipulation can reduce the liquidity in the market by creating artificial supply
  • 00:35:51
    and demand imbalances.
  • 00:35:53
    This can make it harder for retail traders to enter or exit their positions at favorable
  • 00:36:00
    prices.
  • 00:36:01
    For a beginner trader, it’s very hard to make money in these conditions.
  • 00:36:06
    Market open trap can distort the true direction and strength of the market trends by creating
  • 00:36:13
    false breakouts or reversals.
  • 00:36:16
    This will confuse retail traders who rely on trend-following strategies or indicators.
  • 00:36:22
    Accumulation / distribution trap
  • 00:36:26
    I hope you realize that trading is a game of psychology and strategy, where smart money
  • 00:36:32
    traders try to outsmart and outplay retail traders who often lack the knowledge, experience
  • 00:36:39
    and discipline to succeed in the market.
  • 00:36:41
    One of the ways that smart money gain an edge over retail traders is by using accumulation
  • 00:36:48
    and distribution strategies to manipulate and trap them.
  • 00:36:53
    Accumulation is the phase where smart money traders buy or accumulate an asset at low
  • 00:36:58
    prices, creating a strong demand.
  • 00:37:02
    Distribution is the phase where smart money traders sell or distribute their positions
  • 00:37:07
    at high prices, creating a strong supply.
  • 00:37:11
    The goal of these accumulation and distribution strategies is to create false signals and
  • 00:37:16
    expectations in the market that lure retail traders into buying or selling at the wrong
  • 00:37:23
    time.
  • 00:37:25
    For example, during an accumulation phase, smart money traders may create a downtrend
  • 00:37:31
    or a consolidation pattern, making it appear that the market is weak or bearish.
  • 00:37:37
    This may induce retail traders to sell their positions or short the market, expecting further
  • 00:37:44
    price declines.
  • 00:37:45
    However, once smart money traders have accumulated enough positions at low prices, they may suddenly
  • 00:37:53
    reverse the trend and push the price up, triggering stop losses of retail traders with short positions.
  • 00:38:01
    This creates a bullish breakout that attracts more buyers into the market, allowing smart
  • 00:38:07
    money traders to distribute their positions at high prices.
  • 00:38:13
    During a distribution phase, smart money may create an uptrend or a consolidation pattern,
  • 00:38:19
    making it to appear that the market is strong and bullish.
  • 00:38:23
    This may induce retail traders to go long, expecting further price increases.
  • 00:38:28
    And, once smart money have distributed enough positions at high prices, they may suddenly
  • 00:38:34
    reverse the trend and push the price down, triggering stop losses of retail traders who
  • 00:38:41
    went long.
  • 00:38:42
    This creates a bearish breakdown that attracts more sellers into the market, allowing smart
  • 00:38:49
    money traders to accumulate more positions at low prices.
  • 00:38:55
    Smart money traders often use volume to confirm or conceal their accumulation and distribution
  • 00:39:01
    strategies.
  • 00:39:02
    For example, during an accumulation phase, smart money traders may use low volume to
  • 00:39:09
    hide their buying activity and create a false sense of weakness in the market.
  • 00:39:15
    But, if you analyze price action during this phase, you’ll see higher lows at the bottom
  • 00:39:21
    of the accumulation, a bullish signal.
  • 00:39:25
    Then smart money traders will use support and resistance to test and break the confidence
  • 00:39:31
    and conviction of retail traders by creating false breakouts that trap them on the wrong
  • 00:39:37
    side of the market.
  • 00:39:40
    During an accumulation phase, smart money traders will usually use the support level
  • 00:39:45
    to create false breakdowns that make retail traders think that the price will fall further
  • 00:39:51
    below support.
  • 00:39:53
    11.
  • 00:39:54
    How To Align With Smart Money
  • 00:39:57
    Trading will always be a game between the smart money against the dumb money.
  • 00:40:04
    Retail traders might see some patterns as continuation ones, but the smart money are
  • 00:40:09
    seeing them as reversal patterns.
  • 00:40:11
    You’ve seen the different traps used by big players.
  • 00:40:15
    In order to align yourself with their true intentions, always remember that smart money
  • 00:40:21
    are always searching for pockets of liquidity in order to fill their desired positions in
  • 00:40:28
    the market.
  • 00:40:29
    They are always looking to shake out weak hands, particularly around support and resistance
  • 00:40:35
    levels that are being widely watched.
  • 00:40:38
    It’s time to reconsider how you trade and to start building a strategy that allows you
  • 00:40:44
    to join the smart money, after a liquidity clear-out, or after an obvious market trap.
  • 00:40:51
    Again, the big players need LOTS of liquidity in order to fill their massive orders.
  • 00:40:58
    How do they get this liquidity?
  • 00:41:00
    By creating well known retail chart patterns and traps in order to involve the retail traders
  • 00:41:08
    into the market.
  • 00:41:09
    So, remember this, never enter a position if you haven’t spotted a recent liquidity
  • 00:41:16
    clear-out.
  • 00:41:17
    For retail traders like you and me, the aim should be to spot such potential liquidity
  • 00:41:22
    zones and join the game of market maker and to avoid being a liquidity target.
  • 00:41:29
    The simplest structure to pay attention to are zones with equal highs or lows.
  • 00:41:35
    Always assume smart money will want to trap traders around these areas.
  • 00:41:41
    A liquidity clear out should always present itself with a rapid, strong reversal move
  • 00:41:49
    after a critical area is taken out—basically a rapid rotation of price back into the previous
  • 00:41:56
    trading range.
  • 00:41:58
    And always monitor the lowest low or highest high of a structure.
  • 00:42:03
    If the structure is not even on highs or lows positioning (for example, when highs or lows
  • 00:42:10
    are connected through a trend line instead of flat line), then the main area to watch
  • 00:42:16
    is the lowest low or highest high of structure, because this is where the majority of stop
  • 00:42:23
    losses will sit and where breakout traders might initiate other positions.
  • 00:42:29
    12.
  • 00:42:30
    Strategy no.1: Demand zone entry after liquidity clear-out
  • 00:42:33
    My favorite way to align my positions with the ones of smart money is to trade demand
  • 00:42:39
    zones, after a liquidity clear-out.
  • 00:42:43
    You need to follow these steps: 1) First, identify a liquidity run that breaks
  • 00:42:48
    below a previous swing low or support level where many retail traders have placed their
  • 00:42:55
    stop-loss orders.
  • 00:42:56
    2) Then, identify a potential demand zone that was previously formed near the liquidity
  • 00:43:03
    run 3) Wait for the price to retest the demand
  • 00:43:06
    zone and confirm its validity, by finding signs of rejection or bounce.
  • 00:43:12
    Here you can check the volume, to confirm the rejection
  • 00:43:15
    4) Enter a long position at or near the demand zone with a stop-loss below the zone
  • 00:43:22
    5) Exit the position at or near a previous swing high or at the next important supply
  • 00:43:29
    area, or where smart money may initiate another liquidity run.
  • 00:43:35
    Here’s EUR/USD.
  • 00:43:38
    Market is in a general uptrend, so the plan is to trade a long position, at a demand area,
  • 00:43:44
    only after we spot a liquidity clear-out.
  • 00:43:47
    1) We see this liquidity run that breaks below this area where many retail traders have placed
  • 00:43:54
    their stop-loss orders.
  • 00:43:55
    2) We found a fresh and recent demand zone, right here
  • 00:44:00
    3) Once the price touched our demand zone we confirmed its validity after we saw this
  • 00:44:07
    candle with a lower wick.
  • 00:44:09
    A rejection candle.
  • 00:44:11
    4) A long position after the demand rejection, after the liquidity clear-out, was the correct
  • 00:44:18
    trade in this case 5) Stop-loss below the liquidity run, and
  • 00:44:23
    you target the next important supply area
  • 00:44:26
    Strategy no.2: Supply zone entry after liquidity clear-out
  • 00:46:04
    Another strategy to align your positions with the ones of smart money is to trade supply
  • 00:46:10
    zones, after a liquidity clear-out, or after you find other market trap.
  • 00:46:15
    1) First, identify a liquidity run or a market trap that breaks above a previous swing high
  • 00:46:23
    or resistance level where many retail traders have placed their stop-loss orders.
  • 00:46:29
    2) Then, identify a potential supply zone that was previously formed around the liquidity
  • 00:46:35
    run 3) Wait for the price to retest the supply
  • 00:46:39
    zone and confirm its validity by finding signs of rejection
  • 00:46:43
    4) Enter a short position at or near the supply zone with a stop-loss above the zone or above
  • 00:46:52
    the liquidity clear-out 5) Exit the position at or near a previous
  • 00:46:58
    swing low or at the next important demand area, or where smart money may initiate another
  • 00:47:04
    liquidity run.
  • 00:47:07
    Here’s GBP/USD.
  • 00:47:10
    Market is in a general downtrend, so the plan is to trade a short position, at a supply
  • 00:47:15
    area, only after we find a liquidity clear-out.
  • 00:47:19
    1) We see this liquidity run that breaks above this area, where many retail traders have
  • 00:47:26
    placed their stop-loss orders.
  • 00:47:27
    2) We found a fresh and recent supply zone, right here.
  • 00:47:33
    We find the most recent green candle before the drop and mark our area of interest
  • 00:47:38
    3) I see another trap here.
  • 00:47:42
    A triangle, which was broken to the upside, baiting traders to enter into long positions.
  • 00:47:49
    But the trend is down, we are near a supply area and we also have a liquidity clear-out
  • 00:47:56
    and many long traders trapped.
  • 00:47:58
    4) A short position after the supply rejection, after the liquidity clear-out, was the better
  • 00:48:05
    trade 5) Stop-loss above the liquidity run, and
  • 00:48:08
    you target the next important demand area
  • 00:48:11
    Strategy no.3: Demand zone entry after down thrust VSA pattern
  • 00:49:49
    Another way to align with smart money is to trade demand zones, after you find a down
  • 00:49:54
    thrust VSA pattern.
  • 00:49:57
    You need to follow these steps: 1) First, you need to find a down thrust formation,
  • 00:50:02
    which appears as a bullish pin bar or a Doji bar having an ultra-high volume or above average
  • 00:50:09
    volume.
  • 00:50:10
    The Spread of the down thrust bar is low meanwhile the volume is relatively high.
  • 00:50:15
    So, there is more demand than supply, potentially causing price to rise in near future.
  • 00:50:22
    2) Then, identify a potential demand zone around the same area
  • 00:50:27
    3) If you find a liquidity clear-out, that’s even better
  • 00:50:30
    4) Enter a long position at or near the demand zone with a stop-loss below the zone
  • 00:50:38
    5) Exit the position at or near a previous swing high or at the next important supply
  • 00:50:45
    area, or where smart money may initiate another liquidity run.
  • 00:50:51
    Here’s Tesla.
  • 00:50:54
    Market is in an uptrend, so the plan is to trade a long position, at a demand area, after
  • 00:51:00
    we spot a down thrust.
  • 00:51:02
    1) First, we see this liquidity run that breaks below this area, and at the same time, we
  • 00:51:09
    have a down thrust VSA candle.
  • 00:51:12
    The Spread of the candle is low and the volume is relatively high.
  • 00:51:16
    So, there is more demand than supply, a sign that price may rise in near future.
  • 00:51:22
    2) We also have a fresh and recent demand zone, right here
  • 00:51:27
    3) A long position after the demand rejection is a high probability trade
  • 00:51:33
    4) Stop-loss below the down thrust candle, and you target the next supply area
  • 00:51:39
    Strategy no.4: Supply zone entry after up thrust VSA pattern
  • 00:53:07
    Another smart way to trade is to find entries at supply zones, after you find an up thrust
  • 00:53:13
    VSA pattern.
  • 00:53:15
    1) First, you need to find the up thrust, which appears as a bearish pin bar or doji
  • 00:53:21
    bar having an ultra-high volume or above average volume.
  • 00:53:26
    The Spread of the up thrust candle is low while the volume is relatively high.
  • 00:53:32
    In this case there is a disagreement between spread and volume which signifies that there
  • 00:53:37
    is more supply than demand, potentially causing price to fall in near future
  • 00:53:43
    2) Then, identify a potential supply zone around the same area
  • 00:53:48
    3) If you find a liquidity clear-out, that’s even better
  • 00:53:53
    4) Enter a short position at or near the supply zone with a stop-loss above the zone
  • 00:53:59
    5) Exit the position at or near a previous swing low or at the next important demand
  • 00:54:06
    area, or where smart money may initiate another liquidity run.
  • 00:54:12
    Here’s Amazon.
  • 00:54:15
    Market is in a downtrend, so the plan is to trade a short position, at a supply area,
  • 00:54:20
    after we find an up thrust pattern, which is right here.
  • 00:54:25
    A bearish pin bar having above average volume.
  • 00:54:29
    Low spread while the volume is relatively high.
  • 00:54:33
    A disagreement between spread and volume which implies that there is more supply than demand,
  • 00:54:39
    a sign that price could fall in near future 2) Then we found a fresh and recent supply
  • 00:54:45
    zone.
  • 00:54:47
    We find the most recent green candle before the drop and mark our area of interest
  • 00:54:52
    4) A short position after the supply rejection was the obvious trade
  • 00:54:58
    5) Stop-loss above the supply area, and you target the next important demand area
  • 00:55:29
    Strategy no.5 – Over and under break of structure
  • 00:56:45
    The over and under break of structure is another way to align yourself with the big players.
  • 00:56:49
    The break of structure is the first sign that smart money have initiated a price shift.
  • 00:56:55
    For a bearish over and under pattern, after a previous uptrend.
  • 00:57:01
    • Price creates a higher high • then creates a lower high
  • 00:57:04
    • Price breaks the previous high and creates a new higher high
  • 00:57:09
    • Then price breaks the previous low as well and forms a lower low
  • 00:57:16
    For a bullish over and under pattern, after a previous downtrend.
  • 00:57:21
    • Price creates a lower low • Price creates a lower high
  • 00:57:25
    • Price breaks the previous low and creates a new lower low
  • 00:57:30
    • Then price breaks the previous high as well and forms a higher high
  • 00:57:36
    Now, this break of structure doesn’t always result in a reversal.
  • 00:57:42
    That’s why, in order to align your positions with the smart money, you need to use once
  • 00:57:49
    again, supply and demand zones.
  • 00:57:53
    So the plan is to find the break of structure pattern, to wait for a retracement, and to
  • 00:57:58
    find a supply or demand zone for an entry, to execute the trade with a higher accuracy.
  • 00:58:05
    Here, we see a significant decrease in price on EUR/USD.
  • 00:58:10
    The price makes a swing low, followed by a lower high.
  • 00:58:14
    Then makes a lower low, and it shoots up and breaks the previous high, making a higher
  • 00:58:20
    high.
  • 00:58:22
    We have our break of structure and our over and under pattern.
  • 00:58:24
    Now we need to find a demand zone for an entry.
  • 00:58:27
    First, you need to take a look at the left-hand side of previous low, where the strong rally
  • 00:58:33
    has started.
  • 00:58:35
    You need to find the last bearish candle before the strong rally.
  • 00:58:39
    I see a rally base rally formation, which is a continuation pattern, forming a demand
  • 00:58:45
    zone.
  • 00:58:47
    When price returns to this area, you can open a buy position, with stops below this demand
  • 00:58:54
    zone.
  • 00:58:55
    If you find a liquidity clear-out, again, even better.
  • 00:58:59
    Here’s another break of structure pattern, a bearish one.
  • 00:59:03
    The previous trend is an uptrend.
  • 00:59:06
    The price is forming a new swing high, declines, then forms a swing low.
  • 00:59:12
    Price then rallies again to exceed the previous high (making a higher high).
  • 00:59:18
    Then it decreased to form a new lower low.
  • 00:59:21
    This is our first sign that we might have an over and under pattern.
  • 00:59:26
    Remember, you don’t enter just because you find a possible break of structure.
  • 00:59:31
    You need to wait for price to rise again, to a fresh and untested supply area.
  • 00:59:38
    You look at the left side of the previous high where the previous strong down move started.
  • 00:59:44
    I see a drop base drop formation, which is a continuation pattern, forming a supply zone.
  • 00:59:51
    When price returns to this area, you can open a sell position, with stops above this supply
  • 00:59:58
    zone.
  • 01:00:29
    Strategy no.6 – Psychological numbers VSA clear-out
  • 01:01:32
    Psychological numbers are quite important for smart money traders.
  • 01:01:36
    These are price levels that have a significant impact on the market sentiment and behavior.
  • 01:01:42
    They are often round numbers or multiples of 50, 100, etc.
  • 01:01:46
    These numbers tend to act as support and resistance levels, as well as trigger points for stop-losses
  • 01:01:53
    and take-profits.
  • 01:01:55
    These round numbers reflect the collective psychology of the market participants, especially
  • 01:02:01
    the large institutional traders who have the power to move the market.
  • 01:02:06
    One simple way to identify psychological numbers is to look at the price charts and observe
  • 01:02:12
    how the price reacts when it approaches or breaks these levels.
  • 01:02:17
    You will often see increased volatility, increased volume, and many liquidity clear-outs around
  • 01:02:25
    these levels.
  • 01:02:27
    Supply and demand areas in combination with round numbers is a powerful way to align yourself
  • 01:02:33
    with the smart money.
  • 01:02:35
    A supply zone, in combination with a psychological level, is a good area to initiate a sell position.
  • 01:02:43
    A demand zone, which includes psychological level, again, offers a low risk - high reward
  • 01:02:50
    buy situation.
  • 01:02:52
    Liquidity clear-outs in combination with round numbers is one of the simplest way to trade.
  • 01:02:59
    If you know the main VSA patterns you’ll have even better chances to trade with the
  • 01:03:05
    smart money.
  • 01:03:06
    Here’s Amazon, with the main psychological levels added.
  • 01:03:10
    Have a look at this liquidity run, just below the price of 90$.
  • 01:03:15
    And look at the candle which broke below the level.
  • 01:03:18
    It’s a down thrust VSA pattern.
  • 01:03:22
    A bullish pin bar having an ultra-high volume.
  • 01:03:25
    In fact it’s the highest volume in recent period.
  • 01:03:29
    The spread of the down thrust is low while the volume is relatively high.
  • 01:03:33
    So, there is more demand than supply, a sign that price to rise in near future.
  • 01:03:40
    And it happened at a very important psychological number of 90$.
  • 01:03:45
    And we had a liquidity clear-out.
  • 01:03:47
    This buy right here is a no brainer.
  • 01:03:50
    Here’s Apple, with the main psychological levels added.
  • 01:03:56
    I see an obvious liquidity run, taking stops above 150$ and trapping long traders above
  • 01:04:04
    this level.
  • 01:04:05
    And look at the candle which broke below the level.
  • 01:04:08
    It’s an up thrust VSA pattern.
  • 01:04:11
    A pin bar having above average volume.
  • 01:04:14
    The spread of the up thrust is low while the volume is relatively high.
  • 01:04:19
    So, there is more supply than demand, a sign that price could fall in near future.
  • 01:04:26
    And it happened at a clear supply area.
  • 01:04:29
    It’s right here.
  • 01:04:31
    So we had the liquidity clear-out.
  • 01:04:35
    The 150$ psychological number.
  • 01:04:36
    A supply area.
  • 01:04:38
    And the up thrust VSA pattern.
  • 01:04:41
    Perfect sell trade.
  • 01:04:42
    These trades are rare.
  • 01:04:44
    You’ll be lucky if you find one trade per week, with a supply or demand area, a VSA
  • 01:04:51
    pattern, a liquidity run and psychological number confluence.
  • 01:04:55
    But when you find this type of trade, don’t hesitate, and take the trade, every single
  • 01:05:02
    time.
  • 01:05:03
    If this smart money trading course made sense, please show your support by giving a like,
  • 01:05:09
    it goes a long way.
  • 01:05:11
    And if you haven’t watched our previous day trading course, you definitely must watch
  • 01:05:16
    it later!
  • 01:05:17
    And check out our academy program, if you want to further level up your trading.
  • 01:05:22
    Until next time!
Tags
  • smart money
  • trading course
  • supply and demand
  • Volume Spread Analysis
  • liquidity
  • trading strategies
  • Wyckoff Theory