For many traders, one of the biggest challenges in the market is identifying the right time to enter or exit a trade. The unpredictable nature of price movements can lead to uncertainty, and without clear indicators, it’s easy to fall into the trap of chasing the market. Many traders focus on short-term price action or rely on unreliable volume indicators, resulting in frequent losses and missed opportunities.
However, there is a much stronger combination that can guide your trading decisions: Smart Money and Price Action. Knowing how to spot a block trade and understand professional volume will put you in sync with the most powerful movers in the markets—the smart money. In integrating such insights with the finest price action techniques, trades can be more than highly profitable.
We’re going to explore here how Smart Money and Price Action, together, serve as the recipe for unstoppable profits. Learn how to track block trades, volume patterns, and price action, and you’ll make those noise-reducing, high-confidence trading decisions.
1. What is Smart Money and Why Should I Follow It?
Defining Smart Money
Smart money is the investments of those institutions, professional traders or experienced individuals who have better resource access, information, and strategy. These decisions are usually well-researched, targeting longer-term trends than speculative short-term movements. Trading smart money can amplify the abilities to find profitable trade opportunities.
Why Trade with Smart Money?
Trading with smart money has specific advantages:
- Increased Chance of Victory: Smart money traders typically enjoy a higher chance of victories because of their experience and better risk management.
- Trend along the Trend: Trend following smart money makes you align with market movers, increasing your chances for profitable moves.
- Low Risk: Smart money typically enters at key levels and exits smartly that helps to avoid unnecessary risk and miserable trades.
2. Block Trades and Professional Volume
What are Block Trades?
Block trades are huge orders executed by institutional investors or professional traders. Of the signals of market intent considered most important, many believe they rank number one. Being able to identify block trades will allow you to track the smart money as it goes in and out of the market.
How Block Trades Appear on Your Charts
Specialized indicators, including the Block Trade Indicator, can be used to identify professional volume in your charts. Traditional volume indicators measure all market participants, but this indicator filters out those made by larger investors. Such trades are large in number and appear on the chart in real-time by using such windows as time and sales windows or volume histograms.
- Volume Histograms: These display the volume of smart money trade and usually spike or display larger bars at critical levels.
- Time and Sales: This window shows the size of the order, filtering out the smaller, less impactful trades.
Pay attention to the trade size and where they are in relation to the price action to make informed trading decisions.
3. Price Action And Smart Money: A Match Made in Heaven
The Power of Price Action
Price action is defined as the movement of prices in a time interval represented by candlesticks, chart patterns, and trends. It is an essential aspect of understanding market sentiment and to determine the direction of a trend. Combining price action with smart money insights makes it even more powerful for predicting future movements in the market.
Combining Price Action with Smart Money
Maximize your profits by focusing on specific price action patterns that correspond to block trades and professional volume. These are how to pair:
- Breakouts: Breakout supported by smart money volume indicates a high-probability trade. Pay attention to a spike in the volume that’s near major support or resistance levels as confirmation of a real breakout.
- Cycle highs and lows: Look out for professional volume coming in to indicate possible reversals or continuations. Smart money entry at cycle lows indicates that the price should ascend shortly.
- Retracements: Search for a pattern on the price indicating either support or resistance, and pair this with professional volume to determine if the market is going to continue into the previous trend.
Example: Second Retrace in Trend
The second retrace in the trend occurs when the market makes a pullback towards key support before going about its major direction. Smart money entered at that stage is confirmed by volume spikes and price action. Generally, when using this strategy, the false signals will be weeded out, and you will only be trading when professional volume confirms the move.
4. How to Avoid False Breakouts with Smart Money Indicators
Identifying False Breakouts
A false breakout is when the price breaks through a key support or resistance level and then quickly reverses direction. These false breakouts often result in huge losses for many traders, particularly those trading too soon without verifying the authenticity of the breakout.
How Smart Money Can Help Avoid False Breakouts
By using block trade indicators and price action analysis, it’s easy to avoid false breakouts. Here’s how:
- Professional Volume Confirmation: If the breakout lacks professional volume, then that breakout is more likely a false one. If you see no block trades on a breakout, then it may be best to stay out of that trade.
- Price Action Patterns: Look for candlestick patterns, like engulfing or pin bars, showing that the breakout is confirmed. When such patterns coincide with block trades, the breakout is more likely to hold.
- Retest of Breakout Level: Whenever there is a breakout, and price retreats to test the breakout level where smart money volume supports it, it is a sign that the breakout is genuine.
5. Putting It All Together: Smart Money + Price Action for Unstoppable Profits
The combination of smart money insights and price action is a game changer for the trader who wishes to unlock higher profitability. When tracking large trades, watching professional volume, and analyzing price action patterns, you place your trades alongside the smart money, increasing the likelihood of a successful journey.
Key Takeaways:
- Smart Money: Observe the trades of institutional investors and professional traders that could align your positions with the market’s true movers.
- Price Action: Keep a constant view on the candlestick patterns, support and resistance levels, and how they influence the market sentiment along with the price action.
- Block Trades: Observe the size and timing of large orders to spot high-probability trade setups.
- Avoid False Signals: Combine block trade volume with price action to avoid false breakouts and weak setups.
Conclusion
Smart Money + Price Action = Unstoppable Profits! is more than just a catchy phrase—it’s a powerful strategy that can transform your trading. By learning to track block trades, understand professional volume, and read price action patterns, you can take your trading to the next level.
This will allow you to filter out noise, not to receive false signals, and be ahead of the market. Start following smart money using price action in order to make informed and confident trades – unstoppable profits!
