Smart

Money

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Trading
Trading with the ELEPHANTS
 Section 1
Introduction into the Smart Money Trading

Section 2
ETS Sylabus Basic Tools of the Trade

Section

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Here are the 3 sections of
Applications and Live Examples

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the Smart Money Trading

PITCH
 Section 1
1.9 Billion
INTRODUCTION TO SMART MONEY TRADING
What is
SMART
MONEY
Smart money or a.k.a. big money
trading are the financial transactions
that the “well-informed” investors are
making. Usually big market moves are
preceded by professional traders
sitting on big trades.

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SMART
MONEY
Here is where smart money is
located on this chart (4H chart
Crude Oil)
Smart vs.
Dumb Money
All trades in the blue area are "smart"
All trades in the red area are "dumb"
 Section 2
1.9 Billion
BASIC TOOLS OF THE TRADE
 Support
Support is the level at which demand is
strong enough so that price does not go
lower. The logic behind that is that as the
price goes lower, it becomes cheaper and
more alluring for market participants to
buy.

Support & Resistance

Resistance Resistance is the opposite of support. It is

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the level at which sellers are hesitant to

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continue buying, because it is too
Simple definition expensive already. The logic says that as
buyers become more hesitant to buy,
sellers come into play and push the price
lower.
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Support &
Resistance Boxes
The explanation is simple- a break
above resistance shows the
unwillingness of sellers to continue
selling. At this moment new buyers
emerge and take the price to a new
equilibrium level or new resistance
level.
At this stage the process is repeated
and so on and so forth.
So basically, you can imagine price
moving in a series of boxes where
each ceiling is the “resistance” and
each bottom of the box its “support”.
 box5
box4
box2 box3

box1

Support & Resistance Boxes

Here is a real example of the daily chart of Dow Jones
Support Into Resistance
Anything in the blue zone (or above the black line) is above support
Anything in the red zone (or below the black line) is under resistance
When price moves from above the black line to under the black line, we say
that support turns into resistance
 Supply Zone
A supply zone is a very broad support
level. It is also a level concentrated in
sellers. Every time price approaches the
supply zone it quickly jumps back down.

Supply &
Demand
Demand
Zones
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Demand zone is a broad area of support. It
is also a level concentrated in buyers.
Simple definition Every time price approaches the supply
zone it quickly jumps back up.
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Supply & Demand
Zones
The best way to find supply and demand zones is to
look at a candlestick chart. Here is the order of things
to do to spot supply and demand zones :
1. Look at the chart and try to spot successive large
successive candles. It is important that price
moves a lot
2. Establish the base (beginning) from which price
started the quick move
3. Usually, before a large move you have a small
sideways move- that is where your supply and
demand zone is
Supply & Demand
Zones
The demand and supply zones are encompassing the
base on the beginning of the move. It is very hard to
be precise with those levels and here it is more of an
art than science.
Remember: The most important thing is to first a
sharp move in either direction, after which you can
pinpoint where it started from and roughly define the
demand/supply zone.
 Candlesticks
The candlestick is a thin vertical line
showing the period’s trading range.
A wide bar on the vertical line illustrates
the difference between the open and close.
The candlestick has a wide part, which is

Candlesticks called the “real body“.

This real body represents the range
between the open and close of that day’s
Simple definition trading.

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When the real body is filled in or black, it
means the close was lower than the open.

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If the real body is empty, it means the
opposite: the close was higher than the
open.
 Candlesticks continued...
When the upper shadow (the top wick) on a down day is short, the open that day
was closer to the high of the day.
And a short upper shadow on an up day dictates that the close was near the

Candlesticks high.
The relationship between the day’s open, high, low and close determine the look
of the daily candlestick.
Simple definition After viewing it, it is easy to see the wealth of information displayed on each

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candlestick.
At just a glance, you can see where a currency’s opening and closing rates, its

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high and low, and also whether it closed higher than it opened.
When you see a series of candlesticks, you are able to see another important
concept of charting: the trend.
 Market Liquidity
Bid-ask-spread or also called width. A low
or narrow bid-ask spread is said to be tight
and tends to reflect a more liquid market.
Depth refers to the ability of the market to

Market
absorb the sale or exit of a position. An
individual investor who sells shares of IBM,
for example, is not likely to impact the

Liquidity share price. On the other hand, an

institutional investor selling a large block of
shares in a small capitalisation company

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will probably cause the price to fall.
Simple definition

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 LIQUIDITY
Market -WHERE ARE THE MARKET ORDERS HIDING, or
where is the liquidity on the market

Liquidity The market moves to go to an area of liquidity or it

moves to rebalance
The other way is Central Bank rebalancing, but you

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Simple definition cannot predict this

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 Bull and Bear Traps

bull trap
Bull trap= failed high

Bull & Bear Bear trap= failed low

Traps *The distance between the tops for a bull

trap does not really matter.

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bear trap
Simple definition **The distance between the bottoms for a

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bear trap does not really matter
 Example
Bull
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Trap
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 Example
Bear
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Trap
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 3
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