In this article, you’ll discover a different perspective on the markets and how trading really works. The “Smart Money Concept” is actually the secret behind the success of the major players who move the market - banks, hedge funds, and large institutions.

These players don’t rely on the usual indicators most retail traders use. Instead, they know how to manipulate price action, creating false moves and traps that catch inexperienced traders off guard.

Chances are, you’ve had moments where the price hits your stop-loss only to reverse in the exact direction you expected. That’s no coincidence. SMC traders understand how to avoid these common pitfalls and enter trades alongside the big players - not against them.

What are the advantages of this trading style?

Here are a few reasons:

• Higher accuracy - You're not guessing anymore. You're following the moves of the smart money;
• Better risk-to-reward ratio - No need for 100 trades a day. A few quality entries are more than enough;
• Less stress - Say goodbye to cluttered charts and confusing indicators. Here, it's all about clean price action.

To spot high-probability setups, you’ll need to dedicate some time to testing the SMC strategy. A great way to do that is by trading on a demo account for a while.

Which strategies are "Smart Money"?

The SMC strategies are extremely effective, and the main ones are:

• Silver Bullet - The perfect entry at the perfect time. You wait for the New York session, look for liquidity grabs, and enter after a clear reversal and additional confirmation;
• Turtle Soup - Weird name, but it works. This setup targets breakout traps. Price “breaks” a level, lures in buyers or sellers, then sharply reverses. Catch it right - and you're in profit;
• Supply & Demand - A timeless classic. Big players buy and sell at key zones. If you can spot those zones, you can trade right alongside them;
• Fair Value Gap (FVG) - Sometimes price moves too fast and leaves behind unfilled gaps. These areas often get revisited, making them great spots to enter or exit trades.

Want to dive deeper into Fair Value Gaps? Click the button below to learn more.

You have probably noticed a strong impulse in the price, followed by a retracement and then the impulse continues again. This usually happens when the price closes such a gap.

How does the liquidity strategy work?

This is where it gets interesting. “Smart Money” likes to hunt for retail traders’ stops before they make their real move.

What happens then?

• Trap for the inexperienced - Most traders place their stops around obvious highs and lows;
• Eliminating the small players - "Smart Money" pushes the price just below or above these levels to activate them;
• The real move - After they clear the liquidity, the market reverses.

An actual trade based on the Liquidity strategy

This chart illustrates how liquidity builds up, followed by a strong upward move. Here’s a breakdown of how this trade setup unfolded:

1. Accumulation phase - Price moves within a range, forming equal highs and lows. These areas become liquidity zones, as many traders place stop-loss orders around these levels.
2. Stop-Loss sweep - Near the bottom of the range, traders attempt to buy, but their stop-losses stack just below the support level. “Smart Money” (large institutions) often push the price lower to trigger these stops and collect liquidity.
3. Fuel for the move up - Once liquidity is taken, price quickly shifts upward. This signals that the big players have filled enough buy orders to drive the market higher.
4. Entry point - After the liquidity below the low is cleared, price begins to climb. This is the cue to enter a long position, placing your stop-loss just below the sweep zone.
5. Exit target - The first target is typically the previous liquidity pool above the equal highs, where many traders will start closing their positions.

This setup is a textbook example of liquidity manipulation that often precedes a strong trend move.

For the market to make its next big move, it needs liquidity - orders. The big players create a fake breakout, grab stop-losses and pending orders (liquidity), and then "run" in the opposite direction. If you know how to spot these traps, you can take advantage of them instead of falling victim.

Ever had your stop hit, only to watch the market go exactly where you expected? Frustrating, right?

Well, now you know why it happens.

Supply & Demand zones

What are Supply and Demand zones? They’re the secret weapon of big institutions - areas where they quietly build their positions. You can usually spot them on a chart at the origin of a strong impulsive move.

While most retail traders jump into trades at classic support and resistance levels, banks and hedge funds patiently wait for deeper pullbacks. Why? Because that’s where most traders place their stop-losses—just above or below those levels - creating high-liquidity zones.

As you’ll notice on the chart, price often sweeps those stops first, then makes its true move in the intended direction - right from a supply or demand zone. This is the key to trading with institutional logic.

To learn each of these strategies and everything related to trading with "Smart Money," check out our latest course: