In the first article of the series entitled Learn To Trade Forex With Smart Money Part 1 we talked

about how the retail trading sector is setup keep traders losing. We also discussed how this benefits the
forex broker, but have you ever considered who else might be benefiting from this business model?
Youll have to think bigger than yourself to answer this question, in fact youll need to think bigger than
the retail forex market to properly answer the question. Not only do forex brokers benefit from retail
forex traders but Smart Money in large part profits as well. How so? This is a question we will answer
later in this article, before we get to that let me reiterate the purpose of this series ofday trading articles.
The first article should have served as a wake up call for all retail forex traders caught in a cycle of
losses. It should also have clearly identified the problem forex trading strategies all losing traders tend
to use. Within this second article we will discuss who is driving the moves in the forex market.
Additionally we will cover the exact model those driving this market use! Think about that for a second. If
you can identify when those actually driving this market are getting in then you can essentially take their
same trades. The power behind that one fact alone is huge!
WHO REALLY DRIVES THE FOREX MARKET?
In the last article we discussed Smart Money (SM) briefly. To reiterate, SM refers to those who are
driving the forex market such as the banks, hedge funds, and/or large trading institutions. Its been said
that no one can control the forex market. This is a thought that most new traders are taught in regards to
forex. Id like to present to you a different school of thought, and that is that EVERY move during active
trading times is a calculated and manipulated move made by SM. First lets dispels the myth that this
market cannot be controlled even by a central bank. For this we will use the recent example of the
EUR/CHF. The Swiss National Bank (SNB) said they were going to not allow the EUR/CHF to move
below 1.2000 At the time of that announcement the EUR/CHF was around 1.1250 and within 15 minutes
the price spiked almost 1,000 pips! If thats not central bank manipulation and controlling the currency
market I dont know what is.
Considering this we now know the market can be controlled and manipulated completely by outside
forces. This was control on a grand scale. If one central bank can move the price almost 1,000 pips then
certainly any one of the top 10 mega banks can control a currency for one trading session. This is
exactly what we are interested in! Not only are they able to, but they do so every single trading day! Ok
so the market is moved daily by SM, but what does that mean to the average retail forex trader? By
learning to trade forex with smart money you will be able to duplicate their trades. Plain and simple SM
doesnt lose.therefore we need to understand exactly how SM trades in the forex market to then
replicate their trades and achieve similar results! This is where things get fun.
SMART MONEYS FOREX TRADING STRATEGY
Thinking back to the example we used above, what happened when the SNB started to buy the
EUR/CHF? Instantly the price shot up and never looked back. Now this was an extreme example but it
does illustrate a key point. Simply put SM cannot just enter the market as you and I can. Because of the
sheer volume of currency they move per trade they must accumulate over time. This is where one of the
greatest if not thee greatest lies in forex comes to light, that of consolidation. Every forex education
course tells you what lie about consolidation? In short all educators in the forex market talk of
consolidation in a negative light. Forex mentors tell their students to avoid consolidation at all cost, and
many even write chapters of their trading education specifically on how to go about doing so. If your
unaware as to how SM enters the forex market, then yes it is something you should learn to avoid.
However once you learn how SM trades it will become the single most important part of your day trading
strategy!
Remember before we talked about how SM needs to enter the market over time to avoid causing
massive price spikes? This simple observation will change the way you view the forex market forever!
Simply put CONSOLIDATION IS ACCUMULATION! Remember that statement and live by it. If you
dont quite understand the importance of that statement then lets elaborate on the common ground we
have already established. We know for a fact smart money needs to get into their position over time
correct? Therefore if entering the market takes them time then what would be the best place to get in?
You see if they just started buying or selling it would instantly push the market in that direction thus
giving away what they were doing. SM never wants the market to know their position until they have
fully accumulated their entire position. By concealing their accumulation of buy or sell orders within
consolidation they are able to slowly accumulate a massive long or short position over the course of
usually an hour or more and the market is none the wiser. Only after they have accumulated their
desired position will they then begin to push the price in their direction. This is where the question we
mentioned in the beginning paragraph comes in which was who else benefits from losing traders other
than forex brokers?
To answer that question and further elaborate on the accumulation period lets cover exactly how this
market works. For every buy order to be filled someone has to be willing to sell, and every time
someone sells there has to be someone else willing to buy it from them. Therefore the entire idea of the
market being oversold or overbought in the traditional sense is a complete fallacy! Considering this fact
that there is always a counterpart to every trade lets think again about the accumulation period of SM.
They need someone to sell to them if they are accumulating buys and if they are accumulating sells they
need someone to be buying from them. Retail traders often times out of ignorance serve to fill the orders
of SM. Additionally once SM accumulates their desired position and begin to allow the price to push in
their direction who comes jumping on board? Its at this point the market begins to run and every most
retail forex traders chase the market all the way only fueling the trade further in SMs direction.
Therefore not only forex brokers but also SM benefit from the average losing retail forex trader.
RIDING THE SMART MONEY TRAIN
Most every retail forex trader wants to believe the market is some massively complex engine that takes
years and years to understand. I could show them the simple facts I stated above in live markets over
and over and they will still dismiss it as to simple. When it really comes down to it the market breaks
down into 3 separate phases. Accumulation, manipulation, and finally market trend. Yes there are
hundreds of reasons the forex market will move but at the end of the day there is only one way the
market is actually able to move the price..accumulation, manipulation, and finally market trend. No
matter what the catalyst for the move the market will follow that pattern because that is the way SM
must enter the market due to the sheer volume of their positions. Therefore if you can learn to trade
forex by identify when and what SM is accumulating you will never need to learn anything else again, Its
that simple! Let me state it another way.if you know which direction SM is going to drive a
currency.then does it really matter why? It sure doesnt to me, and once your learn to identify direction
the why will not matter to you either:)
In the third and final article in this series on learning to trade with SM we will discuss what more than
likely youve all been waiting for.the exact rules of the Smart Money forex trading strategy! I hope you
all understand the importance of why I prefaced the actual day trading strategy. Its critical to understand
at least the basics of why traditional forex trading techniques will fail you overall. Additionally it is critical
to understand the foundation of SMs currency trading strategy, why SM MUST trade that way, and the
truth about consolidation. This is quite simply the very basics of this trading methodology but for now
this is all that is needed. As I mentioned previously the next article will FULLY break down how to trade
with Smart Money and the exact trading strategy we break down in the forex bank trading course! If you
enjoying what your reading and you find it useful then do me one favor and share it! I will see everyone
very soon with the exact Smart Money forex trading strategy. Stay tuned!
In this training course article series covering how Smart Money (SM) trades in the currency market we
have covered quite a bit of information. If you havent yet read the first two articles in the series
entitled Learning to Trade Forex With Smart Money I recommend you go back and do so now. The first
two articles in the series covered the problem with most trading strategies, and the second article in the
series covered the very basic foundation of how SM trades in and moves the currency market. We also
learned the all important fact that consolidation is accumulation. Through the rest of this article we will
cover and break down the 3 phases banks use to drive the market. Lets begin!
ACCUMULATION BEFORE THE TREND
Plain and simple without accumulation SM cannot and does not take a position in the currency market.
Therefore accumulation is the first phase of the bank trading system, and must be identified when
looking for a setup. SM has no option but to enter the market through periods of accumulation which is
often seen visually to you and I as sideways consolidation. Normally you will want to see at least an
hour of sideways accumulation, with the market on average accumulating for a few hours before moving
off into one of the next phases. This stage is absolutely critical to the trade setup. As discussed in the
second article of the series, because of the sheer volume of currency SM moves they MUST enter their
position over the course of time so as not to spike the market thus giving away what exactly they are
accumulating. Additionally by entering over time and keeping price relatively stable they are able to
achieve a much better overall entry price.
Accumulation is often found in choppy back and forth price action as discussed above but what other
ways might SM accumulate their overall position. This is where things begin to get interesting. Often
times after the initial accumulation phase there is a secondary accumulation found in the form of stop
hunting. As an example lets assume SM was accumulating buy orders and the price was in a tight
channel between 1.5000 and 1.5020. Once SM reaches their desired position size or close to it you may
then see them run the price down through the 1.5000. How would doing so benefit SM. Think about
what type of orders sit right below any major support level. You have stop loss orders from anyone who
was long (thus a sell order) and you also have sell orders for those looking to trade the breakout down.
Therefore by running the price below the support they thus drive the price into an area where many sell
orders have accumulated. At this point they quickly buy up every sell order they can, knowing they are
going to run the price up shortly. They are able to complete the last portion of their accumulation
through the use of stop runs, filling those last orders at even better prices! This is quite the crafty tactic,
but it works every time. They know retail forex traders are predictable and thus clearly know where
traders will place their limit orders.

During the accumulation you do not know what is being accumulated. However all that changes once
you see the stop run. In our example above price is ran below support in an effort to trigger sell orders
that SM quickly buys up. Therefore after the stop run forms we know they accumulated buy orders, and
thus if they used the stop run to accumulate buy orders more than likely the accumulation prior to the
stop run was the accumulation of buy orders as well! That information if huge! If you know they were
accumulating a long position then you are almost assured the price will later go up in a fairly sizable
way. If you had only this information, you could make precise day trading decisions and over time with
practice clearly identify which direction SM was going to push the forex markets. While this is a large
part of the equation this leaves out the phase of price manipulation and then the precise entry signal
called the Jump Bar which gives us even further clarity!
SMART MONEY MARKET MANIPULATION
Manipulation in the forex market often comes following the period of accumulation. During very
aggressive times you will see the market go immediately from accumulation to the third phase called
market trend, but this however is not the most common. The one time this does occur with some
consistency is when you see accumulation and then a clear stop run as described above. Often times
immediately after stop run reversal trade setup the market will go straight into the trending phase. Again
this is less common than the market moving into manipulation from accumulation. This manipulation
period is very simply a time of what seems like random swings back and forth in the market. Again the
key with manipulation is the same as a stop run. The same as the stop run tells us what SM is
accumulating, manipulation does as well. Manipulation moves that are quickly rejected are identified as
intentional misdirection and this this shows us what SM has been accumulating.
Intentional misdirection is something that should be saught out in the forex market. While we never
know exactly when and where we will see this misdirection, we are able to use it after it has already
formed. Essentially once a period on accumulation has been clearly identified we then must establish
what was accumulated. If there is a false move down of maybe one or two candles and then the price is
brought back quickly above the accumulation we can assume the first move down was intentional
misdirection. What would clear misdirection down that was quickly rejected back up show us? Without
getting to deep into the subject, all markets are made up of either a belief in higher prices or a belief in
lower prices. If SM can run the price down breifly how might this change overall short term market
belief? Common sense would tell you it would sway beliefs more towards future prices moving lower. If
someone believes in lower prices they are more likely to sell and would be much less likely to go long
without major changes in the market. Again it all goes back to SM needing someone to sell them
currency if they are looking to buy, and therefore this is as well used as an accumulation tool. Therefore
if it was again used to trigger sellers in the market we can be assured that the previous accumulation
was more than likely buys. This is the base foundation of manipulation and intentional misdirection, and
I will discuss this further in later articles.

FOREX MARKET TREND

This is the final phase in the cycle created by SM. During this cycle the market often goes into a very
aggressive move with small retracements along the way. This is a time where SM wants the rest of the
market to join in. Why? Lets assume there has been an accumulation of buy orders and the market
begins to trend to the upside after SM finishes accumulating their desired position size. Remember
when we talked about the fact that for every buy order in the market that gets filled there has to be
someone to sell it to them, and for every sell order that is processed someone must buy it from them?
Therefore as the market goes up and the average retail trader comes in to buy the market that has
started up SM begins to sell their position to those entering the market. This is in large part responsible
for the retracements in trending moves. Without people continuing to buy on the way up SM would have
no one to unload their position to and thus they would be stuck with it. This is also why their
accumulation is limited to what they think they can get rid of later. To small of a position and you limit
your profit potential, and to large of a position and you could be stuck holding a negative position. Its a
very fine line that SM must walk with every trade.

So weve identified the 3 phases of the market which is the complete SM trading strategy, but how does
the average retail trader go about taking advantage of this information? After all its one thing to know
what SM does, and its a completely different scenario to actually be able to take advantage of it. Initially
when I set out to complete this forex education article series I had planned on making it all textual.
However after trying to explain exactly how to use the banks day trading strategy I realized I could not
achieve a full and complete explanation without using video as well. Therefore the explanation of the
SM forex strategy is complete, and now we move on to the application of it which is what everyone
reading this really wants. Next to be released, the video covering the exact trading strategy entry rules,
take profits, stop loss, and trade management.
Knowing when a trend is going to end can be a very powerful and profitable piece of knowledge. For
those with even a limited knowledge of the trading strategies that we teach you probably notice how
consistently Smart Money (banks) tend to cycle the market is pushes of three over the span of 3-4 days.
Understand just this small piece of information can keep you from placing a trade when the market has
a higher probability of reversing. But what else can we use to more effectively predict when the weekly
trend is going to reverse? This forex training article is going to be extremely valuable. In it we are going
to completely cover a forex trading strategy that can stand alone, or you can use it along side any
trading system you are already using. The strategy is what I call the Weekly Trend Exhaustion Reversal.
Learning how to spot reversal is critical for many reasons. One key reason we all need to know how to
spot reversals is to avoid fighting shifts in the trend that wipe out other traders. Second these reversals
often get us in near the beginning of the three to four day trend thus allowing us to take high risk/reward
trade setups.

CRITERIA FOR THE TREND EXHAUSTION REVERSAL

SETUP
Before we discuss the criteria for this specific reversal trade setup we need to lay the foundation. For
those familiar with our forex bank trading strategies much of this information will be familiar. If you are
new however, you may want to read other training article and videos on the site covering how to
determine market trend. So then what criteria do we generally look for before considering market
reversal?
1.) Do we have 3 clear cycles?
2.) Are those cycles moving at least the Average Daily Range (ADR), and preferably 90 pips or more
each?
3.) Have these 3 cycles occurred over the course of 3 or 4 days?
4.) Was the overall move (From the start of the first cycle to the end of the third) at least 150 pips?
Once this criteria has been satisfied the foundation for an exhausted market becomes established, and
the possibility of a reversal begins to rise. Its important to remember that in trading we must be
adaptable. There will be slight variations from the four points listed above and using some common
sense goes a long way in those circumstances. Lets say for example that we see only 2 cycles but they
are much larger than average both moving 160+ pips each, and it occurred over 3 days. We have to
remember that some level of human intervention in trading is always necessary. It is important to
remember why those rules are in place. They are in place to give us a set of guidelines as to how the
market tends to trend on a weekly basis. Since all trends in the forex market are not the same it is more
important to understand the principle behind the rules rather than a strict adherence to the rules no
matter what. In general the most important part of the above rules are numbers 3 & 4. These two rules
alone tend to more often than not make an adequate foundation to move forward from when
determining possible forex trend reversals.

IDENTIFYING MARKET EXHAUSTION

We have to this point laid the foundation of when we should begin looking to trade a forex trend
reversal. When though is the trade taken and what exactly are we looking for to signal a trade entry.
One thing I always say to members is we need to see manipulation at a high probability point before
taking a trade. In the example of a exhaustion setup I do as well prefer to see a high probability point
(Major previous S/R level, 200EMA, Daily Pivot, ADR, 61.8% Fib, Cross Pair Confluence, Ect) being
broken and then rejected away from. Unlike any other setup I take however, I will take these reversal
trades without a high probability area.let me explain why.
To explain why we do not have to have a high probability level during an exhaustion reversal setup we
first must understand what the setup itself is, and what it looks like. Lets assume we have the
foundation already set in place as we discussed earlier. In order to be an exhaustion candle I want to
see a 1 hour candle that is at least double the 21 period Average True Range to begin. There are times
where the candle following the exhaustion candle will move up slightly, but in general to have a valid
setup I want to see the market retrace the entire exhaustion candle before the following days Asian
session ends at 2:00 AM Eastern. In the picture above the arrow second from the right marks the grey
Asian box. The end of that box marks the end of the Asian session. Above is a perfect setup, and a
great recent occurrence of this trend reversal strategy. The exhaustion candle is well over twice the 21
period ATR. Immediately after it closed the market begins to retrace, and easily retraces the entire
candle.
In the example above you can see I labeled a previous major daily high. As you can see the exhaustion
candle breaks through that high, takes the stops, and then quickly gets rejected back down away from
that level. Preferably there will be a major resistance or support level where the stop run can take place,
but as I mentioned earlier that is not essential in this trade setup. Now that we have a basic
understanding of what an exhaustion candle looks like lets explain why seeing that manipulation is not
necessary in the trading strategy. This question is answered once we understand what is happening
during this move and what the purpose of it is.

WHY DOES THE MARKET FREQUENTLY CREATE

EXHAUSTION TYPE TREND REVERSALS
In an earlier article series entitled learn to trade forex with smart money we broke down the very basic
foundation of how the banks MUST trade. They first begin accumulating positions over the course of
hours. Next they create manipulation in the form of a false push or stop run reversal. After this they then
quickly snap the price back and start the trend in their direction, and the rest of the market begins to pile
on after fueling the trade all the more. Therefore when they complete their weekly trend and the profit
targets have been achieved they now have to exit this large position. Remember how it took them
hours, and a manipulation move to enter their position? Wouldnt it take the same to exit that position?
Of course it would! How does moving the price

up help allow them to exit their long position? If you are long how do you close out that position?
Anyone in a long position must eventually sell that position back, and therefore they must have buyers
to sell their position to. By allowing the price to move up it creates more buyers as it looks like the
market is going to just make another push up in the already established up trend. This however is the
trap!
These manipulation moves are often created near the beginning of a major session opening. Generally
from 2-5 AM Eastern or during the NY Session from 8-11 AM Eastern. Why is this done? In order to
drive the market up they use what is referred to as general order flow. Remember banks primary job is
to exchange money for global commerce to take place. During the overnight sessions massive amounts
of general order flow (money that needs to be exchanged for general world wide commerce to take
place) stack up and needs to be processed. On days where they look to create the trend reversal and in
the example above exit their long position they simple begin aggressively pouring all the buy orders
(client general order flow) into the market creating a rapid spike up. When this happens the rest of the
market begins to pile on to the aggressive buying thinking they are missing the boat. Guess who is more
than happy to sell to all those buyers?:) You guessed it the banks! The trap has been set, and the
traders took the bait. They have done it in the past, they do it now, and traders will continue to take the
bait in the future.

Now that you know what happens during these exhaustion reversal setups you now know why it is not
critical that a high probability manipulation point is broken. Banks break through high probability levels to
take out stops and accumulate or exit positions. In these day trading setups however the move itself
creates enough liquidity for them to exit their position therefore breaking through a high probability level
is not essential.

HOW TO RIDE THE WAVE THE BANKS CREATE

Its important to not be greedy. We could try to figure out a way to catch the exhaustion move itself but in
general its much easier to take the trade the following day. Not only does taking the trade the following
day give us time to really be sure were not forcing a trade, but it also gives the market time to provide
even more confirmation of direction. How then is the entry taken the following day. In the chart below
the grey box to the left is the same Asian session box you see in the charts above. The taller/skinnier
box is the 8-11 AM Eastern NY session time block.

In the chart above this is the 15 minute chart the day after the 1H exhaustion candle setup the day
before. The trade is taken when we see a proper stop run or stop run topping formation above the Asian
highs. If you are unfamiliar with the criteria needed for these two entries you can check out the forex
training video on timing your entires. Within this trade setup we see a massive amount of confirmation.
Not only did the initial exhaustion trend reversal itself show you the change in market direction, but the
following day smart money creates the stop run or false push which validates the day trading setup and
entry even more.
At best you should expect to see this once a week per pair. It you to trade forex and work a full time job,
and do so with a sound and logical trading strategy. For those who cannot be around the following day
to place entries manually, pending orders can be used above the highest probability manipulation
points. This allows you to look at the market once a day after coming home from work. Like anything
else it will take practice. Forex is anything and everything BUT a get rich quick scheme. It takes a logical
and sound forex trading strategy to trade forex profitably. If you would like to learn how to trade the
Trend Exhaustion Reversal setup you can check out ouradvanced forex bank trading course.
Additionally in our members daily market review we list the highest probability manipulation points each
and everyday. If you are struggling with doing so yourself you might find our daily market reviews useful.
Next week I will more than likely be doing a training video on this strategy so make sure to look out for
that. I hope you all find this trading strategy useful and I wish you all the bestHappy Trading!