Recently, I was figuring out why most traders blow their deposits, and I came across an interesting concept - smart money. Essentially, it’s an analysis of the behavior of large capital in the market. Whales, banks, hedge funds, institutional investors – they play by completely different rules than the average crowd.

Here’s the gist: a big player always acts against the expectations of small traders. They intentionally create formations that the crowd wants to see – beautiful triangles, support-resistance levels. Then suddenly break everything in an “illogical” direction and collect stops. The classic technical analysis used by 95% of the crowd is just a tool for manipulation. That’s why most end up with nothing.

Smart money teaches you to see the market from a different angle. It’s also technical analysis, but based on candlestick analysis and the behavior of big players. The main difference is – you start to understand how whales think and why they move the market in this way.

The market has three main structures. An uptrend is characterized by a series of higher highs and higher lows (HH+HL). A downtrend is the opposite, with lower lows and lower highs (LH+LL). And sideways movement, when the market moves back and forth without a clear trend. Identifying the current structure is the foundation of all analysis.

In sideways movement, whales usually accumulate positions or wait for interest in the asset to fade. During the flat, they acquire the liquidity they need. When the price breaks out of the trading range – it’s called a deviation. Often, this signals a reversal and a return back into the corridor.

And now the most interesting part – liquidity. It’s fuel for whales. In practice, liquidity consists of stop orders from small traders, placed just beyond obvious levels, outside of chart patterns, behind candle shadows. Whales hunt specifically for this liquidity to fill their positions. The highest concentration of orders is behind significant highs and lows – these are liquidity pools.

There’s a pattern called SFP (Swing Failure Pattern). When highs or lows are equal, whales break them with a candle’s shadow, triggering stops. Entry is after the SFP candle closes, with stops placed behind its shadow.

In sideways or trending markets, the candle shadow that breaks the liquidity zone is called a Wick. Entry here is at 0.5 Fibonacci retracement of the wick with a tight stop behind it. The risk-reward ratio becomes maximally favorable.

Imbalance (Imbalance) occurs when a long impulsive candle “tears” through the shadows of neighboring candles with its body. To restore balance, whales will try to close this “gap.” Imbalance acts like a magnet for price. Entry occurs when the 0.5 Fibonacci level of the imbalance is reached.

Order block (OB) is a place where whales have traded large volumes. It’s a key zone for liquidity manipulation. In the future, order blocks act as support-resistance and magnets that the price tends to return to. A bullish order block is the lowest descending candle that absorbs liquidity. A bearish order block is the highest ascending candle. The optimal entry is on retest of the order block or at 0.5 Fibonacci of the candle’s body with stops behind the shadow.

Structural reversal points are called Swings. Swing high consists of three candles: a main candle with the highest high and two neighboring candles with lower highs. Swing low is the opposite: a main candle with the lowest low and two neighbors with higher lows.

When the structure is broken within a trend – it’s called Break Of Structure (BOS). A change in trend direction is called Change of Character (CHoCH). The first BOS after a CHoCH confirms the trend reversal.

Structures are divided into primary (higher timeframes – 1W, 1D, 4h) and secondary (lower timeframes – 1h, 15min). The secondary structures occur within the primary ones. The best trading is trend-following. To find a good entry point, you go down from higher to lower timeframes. The structure should be roughly the same across all.

Divergence is when the price direction diverges from the indicator’s direction. Bullish divergence: price lows are decreasing, but indicator lows (RSI, Stochastic, MACD) are rising – a signal for a reversal upward. Bearish divergence: price highs are increasing, but indicator highs are falling – a signal downward. The older the timeframe, the stronger the signal. On lower timeframes, divergences often get broken. Triple divergence is a very strong reversal setup.

Volumes reflect the actual interest of participants. Increasing volume indicates trend strength, decreasing volume indicates weakness. In a bullish trend, buy volumes grow; in a bearish trend, sell volumes grow. If the price is rising but volumes are falling, a quick reversal downward may be imminent.

Three Drives Pattern (TDP) is a reversal pattern with a series of higher highs or lower lows. Bullish TDP: a series of lower lows. Entry when the price enters the support zone or after the third low. Stop below the zone. Bearish TDP: a series of higher highs, entry at resistance zone, stop above.

Three Tap Setup (TTS) is similar to TDP but without the third lower low or higher high. The goal of TTS is for large players to build a position in the support or resistance zone. Entry on the second move or on the third retest of the zone and the order block of the second move.

Trading sessions are important. Asian: 03:00-11:00, European: 09:00-17:00, American: 16:00-24:00 (Moscow time). During the day, there are three cycles: accumulation (Asia), manipulation (Europe), distribution (America).

CME (Chicago Mercantile Exchange) trades Bitcoin futures from Monday to Friday. Opens at 01:00 (or 02:00 in winter time) on Monday, closes at 24:00 on Friday. Gaps often form between traditional crypto platforms and CME – price gaps. A gap is a magnet for the price, and in 80-90% of cases, it gets filled sooner or later.

Crypto depends on the traditional stock market. S&P 500 has a positive correlation with BTC – index growth usually accompanies Bitcoin growth. DXY (Dollar Index) has an inverse correlation – dollar strength generally puts downward pressure on crypto. These indices should not be ignored in analysis.

So, smart money isn’t just a strategy; it’s a way of thinking. You start to see whale manipulations, understand their logic, and can trade alongside them rather than against them. Save this info, subscribe, and good luck in trading.