Smart Money Concepts | Supply & Demand

🧐What is Smart Money? Smart money refers to the capital that institutional investors, central banks, and other professionals or financial institutions control. It is managed by expert investors who can foresee market trends and make most of the profits. Smart money was originally a gambling term, where it refers to the gamblers that have extensive knowledge of the activity that they wager on or have insider information that the common public is not able to access.

The smart money concept suggests that these investors can identify trends and opportunities before the broader market and position themselves accordingly. They may also be able to manipulate the market to their advantage by creating buying or selling pressure on certain securities. Some traders try to follow the smart money by analyzing the actions of these large investors through public filings, news reports, or other sources of information.

However, it is important to note that not all trades made by institutional investors or large financial institutions are necessarily "smart," and blindly following their actions can be risky. ‍

‍🔹 Supply Zone: In trading, a supply zone is a price range where there is an abundance of sell orders, resulting in increased selling pressure and potentially a temporary resistance level. A supply zone can be identified on a price chart as an area where the price has previously reversed or stalled, and where there are many unfilled sell orders or pending sell orders. Traders may use supply zones as a reference point for making trading decisions. For example, if the price approaches a supply zone, traders may consider selling or taking profits on existing positions. Conversely, if the price breaks through a supply zone, traders may see it as a bullish signal and consider buying or adding to long positions.

‍🔹 Demand Zone: In trading, a demand zone is a price range where there is an abundance of buy orders, resulting in increased buying pressure and potentially a temporary support level. A demand zone can be identified on a price chart as an area where the price has previously reversed or found support, and where there are many unfilled buy orders or pending buy orders. For example, if the price approaches a demand zone, traders may consider buying or adding to long positions. Conversely, if the price breaks through a demand zone, traders may see it as a bearish signal and consider selling or taking profits on existing positions.