Smart investment is an art. How one approaches and plans their investment determines their chances of success. Approaching the market with a calm and focused mind is a primary ingredient of a smart investor. Sure, the market is determined by the market forces of demand and supply; however, when an investor takes this stance, the external forces are no longer able to take them by surprise.
In this Smartvestments chapter, we’ll talk about Smart Money.
What is Smart Money?
Originally, the term “smart money” referred to bets placed by gamblers with a history of success. The gamblers were either immeasurably knowledgeable about the game they gambled or held inside information that guided their betting.
Today, Smart Money refers to the capital controlled by institutional investors, central banks, market makers, and other financial institutions. Thus, Smart Money is always managed by expert investors who are well-informed about market trends and make most of the profits.
Literally, “Smart Money(es)” are the largest and the smartest players in the game of investment.
A smartvestor does not move with the waves. They don’t do things blindly simply because others are doing it or because the market forces stipulate so. For example, a smart crypto investor would not rush to “dispose of” their assets because everyone anticipates that the market is likely to hit its lowest in a couple of days. Instead, they use their experience and expertise to make an informed decision, and often, hold their position until when they are very sure of the next move.
In the Smart Money milieu, investors invest more. Sometimes, there may be a noticeably higher trade volume than usual. When such a trend occurs, there is often no available information to justify the sudden increase in trade volume. An increase in trade volume is a prediction of a better market and vice versa.
The Smart Money organs (mentioned above) are primed for success hence are not merely in the game to lose. Therefore, what happens is that these institutions take advantage of their understanding of market psychology and positions to move the market.
How Can I Learn Smart Money Trading?
By now, you may be overwhelmed by the thought of becoming a “Smart Money” investor. Unfortunately, no higher learning institution teaches people the techniques of Smart Money trading because there is no single academic unit on it. Notably, the concepts of Smart Money are discovered by professional traders through years of market findings because they are neither written in a book nor taught in a classroom context. However, those fortunate enough can find a mentor to guide them through.
What Must I Do?
Is it possible for an individual or smaller players to invest in a market primarily driven by Smart Money trading? The answer is “yes”.
As stated above, Smart Money investors take advantage of the information at their disposal and use it aggressively for their own benefit. Similarly, a smaller player must also take advantage of the market moves and positions that these institutions set up for themselves and align their thinking in a similar direction.
Use a Calculated Move
Smart Money institutions have a tricky tactic that works to their advantage and that a smartvestor can implement. Thus, the big players “get rid” of the floating supply of stock by buying it. Once they accumulate the stock, they now have the power to move it down or up. Therefore, when the market condition is favorable, the institutions mark up the stock price.
Sometimes, the Smart Money investors go up to the distribution stage, whereby they make more profits by reselling the stock to the smaller traders/investors.
While Smart Money is highly valued as an investment playground for the largest financial institutions, all is not lost for retail investors. There’s no harm in following these institutions’ investment psychology.
Being a smartvestor results from dedication, preparation and perseverance. Are you ready to put your knowledge to the test? Your Friendly Crypto Exchange is the perfect place to start.
Register on IXFI to find out how you can take crypto trading to the next level.
Disclaimer: The content of this article is not investment advice and does not constitute an offer or solicitation to offer or recommendation of any investment product. It is for general purposes only and does not take into account your individual needs, investment objectives and specific financial and fiscal circumstances.
Although the material contained in this article was prepared based on information from public and private sources that IXFI believes to be reliable, no representation, warranty or undertaking, stated or implied, is given as to the accuracy of the information contained herein, and IXFI expressly disclaims any liability for the accuracy and completeness of the information contained in this article.
Investment involves risk; any ideas or strategies discussed herein should therefore not be undertaken by any individual without prior consultation with a financial professional for the purpose of assessing whether the ideas or strategies that are discussed are suitable to you based on your own personal financial and fiscal objectives, needs and risk tolerance. IXFI expressly disclaims any liability or loss incurred by any person who acts on the information, ideas or strategies discussed herein.
