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I Lost A Lot Of Money Day Trading, Until I Understood Smart Money Manipulation - YouTube
Channel: The Secret Mindset
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There is no feeling more depressing than getting
stopped out of a trade, only to see the market
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taking off in your direction immediately after
your stop gets triggered.
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And it makes you wonder whether you are simply
a victim of bad luck, or whether something
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else is happening within the markets you trade.
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Today itâs all about smart money manipulation,
and Iâll reveal how big players are seducing
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you to press the buy or sell button, to their
advantage.
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So, if you could, like, subscribe to the channel,
and stick around for the full video.
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Smart Money can see the balance of supply
and demand far better than anyone else can
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Many new traders are surprised to learn that
the markets can be manipulated in many ways.
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There are all sorts of professional interests
in financial markets: brokers, dealers, banks,
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trading syndicates.
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But the main price movements are funneled
down to a limited number of major players
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known as market-makers, or the âsmart moneyâ
or âprofessional moneyâ.
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These traders are the one that create a market.
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They are able to see all the buy and sell
orders as they arrive.
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They may also be filling large blocks of buy
or sell orders (with special trading techniques
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to prevent putting the price up against themselves
or their clients).
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These traders have the significant advantage
of being able to see all the stop-loss orders
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on their screens.
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They are also aware of âinside informationâ.
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Despite âinsider dealingâ being illegal,
letâs face it, privileged information is
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used all the time in different ways to make
huge sums of money.
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So to say it simply, smart money can see the
balance of supply and demand far better than
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anyone else can.
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Smart Money trading activity is shown in the
volume and the price spread
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Professionals trade in many different ways,
ranging from scalping to the long-term accumulation
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and distribution of prices.
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The result of smart money trading activity
is shown in the volume and the price spread.
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The volume is telling you how much trading
activity there has been.
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The spread or price action is telling you
the position the professional money are happy
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with on this activity (which is why the price
spread is so important).
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However, you do need to recognize that smart
money can do a number of things to enhance
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their trading positions, like gapping up or
gapping down stocks for example, shake-outs,
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testing and up-thrusts.
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These are moneymaking strategies helping the
smart money to trade successfully, at your
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expense.
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Smart Money have to keep their activities
as secret as possible
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Market-makers can see windows of opportunity
better than most other traders.
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Good or bad news is an opportunity.
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You, as retail trader, hear little of these
activities.
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The last thing smart money want is for you
or anybody else to know that a stock is under
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accumulation or distribution, for example.
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They have to keep their activities as secret
as possible.
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Smart money have been known to go to the extremes,
producing false rumors (which is far more
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common than you would perhaps believe), as
well as actively selling a stock in the open,
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but secretly buying it all back, and more,
through other ways.
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For example, when the Smart Money are expecting
higher prices, they want to catch all the
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stops before moving the price up.
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If they expect the price to go up, of course,
they want to buy at the best possible price.
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Or when youâre looking at great earnings
reports and fundamentals for a stock, which
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would create public expectation of higher
prices, and then you witness a drop in the
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stockâs price, again, this is a common smart
money practice.
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Top professional traders understand how to
read the interrelationship between volume
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and price action.
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From a practical point of view, professional
money consists of a mass of trades, which
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if large enough, will change the trend of
the market.
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However, this takes time.
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Their lack of participation is always as important
as their active participation.
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When these traders are not interested in any
up-move, you will see low volume, which is
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known as âno demandâ.
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This is a sure sign that the rally will not
last long.
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Remember, it is the activity of the professional
traders that causes noticeable changes in
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volume â not the activity of retail traders,
such as you or me.
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Smart Money will use good or bad news to enhance
their trading position and to capitalize on
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known human weaknesses
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Smart Money understands human psychology.
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They know that most traders are controlled
in varying degrees by 2 main FEARS: the fear
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of missing out and the fear of losses.
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Frequently, they will use good or bad news
to enhance their trading position and to capitalize
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on known human weaknesses.
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If the news is bad and if, at that moment,
it is to their advantage, the market can be
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marked down rapidly by the market-makers.
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The result?
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Weak buyers are liable to be shaken out at
lower prices (this is very effective if the
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news appears to be really bad).
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Stop-loss orders can be triggered, allowing
the stock to be bought at lower prices.
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At the same time, many traders who shorted
the market on the bad news, can be locked-in
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by a rapid recovery.
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Then those traders have to cover their position,
they are practically forced to buy, helping
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the professional money, which has been long
all the time.
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The main thing smart money want to hide from
you is not the price, but the VOLUME
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The main thing smart money want to hide from
you is not the price, but the VOLUME.
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Seeing the price will give you either fear
or hope, but knowing the volume will give
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you the facts.
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Markets may differ in some details but all
free markets around the world work the same
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way.
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The more liquid or heavily traded a market
is, the more difficult it will be to manipulate.
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Market-makers cannot just mark the price up
or down at will, as this is only possible
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in a thinly traded market.
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You will frequently see market manipulation
and you must expect it.
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But, smart money need some windows of opportunity;
like a temporary thinning out of trading orders
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on their books, or taking full advantage of
news items (good or bad).
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'Smart Money' knows how you will act as an
investor or trader
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Whether we admit it or not, human beings are
conditioned to act as a herd and the media
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play a key role in helping investors and traders
form an opinion about traded instruments such
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as stocks, futures, Forex or crypto.
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When media-induced opinions about traded instruments
are wrong, and the âuninformed Herdâ believe
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them, it will cost them dearly.
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Because 'Smart Money' know how you will act
as an investor or trader.
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They know how to steer you.
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They know that the two most powerful human
emotions are greed and fear, and those emotions
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are our worst enemies when it comes to making
investment or trading decisions.
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You may also wonder, are the smart money evil
beings intent on stealing your money?
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Of course not.
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These are clever institutions who understand
human nature and market structure.
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They view their activity as a game, and have
acquired the knowledge and the skills required
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to win.
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They simply take advantage of opportunities
that arise in certain situations.
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They have the financial supremacy and understanding
of the financial markets.
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They have an edge over the retail investor
or trader, and they use this to their advantage
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to make profits.
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Volume Spread Analysis is the retail traderâs
weapon against Smart Money
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At this point you may be thinking, "Why is
this relevant to making money trading?
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Why can't you just show a strategy"?
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The answer is volume spread analysis.
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But before you learn VSA, it's vital and important
to know this information, because in order
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to win the game, you must first accept it
exists and understand it.
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I did not initially accept this as reality
when I first started trading, but as I began
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to examine the markets closely, I noticed
consistent patterns.
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And you know the patterns.
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You see a strong support level, maybe even
a confluence area with a moving average or
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a round number, you buy expecting the price
to go up, then the market drops below support,
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takes your stop loss, and then it shoots back
up, maybe hitting your initial target.
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It happens all the time.
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And you blame your broker.
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Yes, if you are using a broker from a dubious
country and you experience abnormal price
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movements or strange spread increase, then
yes, that broker has some shady practices.
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But it is NOT your broker that is hunting
your stop.
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Smart money are involved because they need
your stop to make money.
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Stop loss orders represent liquidity in the
markets.
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And the big players need liquidity.
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Those big players cannot just enter a trade
at once, but they slowly have to build a position
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by âhunting for liquidityâ.
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And stop loss orders in the markets are the
best way to get liquidity.
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Smart Money seduce retail traders to take
trades in the wrong direction
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Here are 2 common trading myths:
The more obvious a support or level is, the
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stronger and more reliable the signals around
it.
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Or, put your buy order right at the support
level and your stop right below it.
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Those are just a few examples of things that
you read in most trading books.
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And I probably said that in the past in my
older videos.
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However, think about this for a momentâŠIf
everyone wants to buy at a certain price,
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who are they going to buy it from?
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You need a seller for every buyer.
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If the smart want to buy a certain support
level but expect the mass of other traders
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wanting to do the same, theyâll have to
find ways to get traders on the other sides
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of their trades.
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What smart money wants to do is to seduce
traders to take trades in the wrong direction.
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Itâs a very simple thing to do and you have
noticed it before as well, probably without
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being aware of it.
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Again, letâs say you want to buy a support
level after a price drop.
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The price rarely stops right at that level.
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Only in trading books.
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In reality, youâll see the price going through
the level.
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It looks like the level isnât holding and
the price is breaking out.
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This scenario is ideal for smart money.
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First, those traders who have impatiently
bought a potential bounce off support see
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the price heading for their stops (which are
essentially sell orders).
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And second, other traders are now looking
to sell the breakout.
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Those retail traders are now selling to the
smart money who are happily buying at a very
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good price, below support.
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And now prices will rise and will take out
the stops from the traders who sold the fake
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breakout â which is accelerating the bullish
move even more.
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The traders who are left with profits are
smart money.
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The frustrating part for us, retail traders,
is that our initial idea of buying support
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was correct.
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But at the end of the day, we lost money.
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Smart Money Are Triggering Your Greed and
Fear
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Letâs say the price is currently at 58 dollars
and keeps falling towards the very important
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support level at 50 where you, and probably
90% of all other traders, want to buy.
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Very often youâll then see a reaction ahead
of the level.
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When price starts consolidating at 52 dollars
and starts moving up a few pips, the impatient
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retail traders will get very nervous and fear
that price has already found support and will
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take off without them.
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We, retail traders, are a very greedy bunch
of individuals and we hate it when price misses
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our orders.
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Smart Money of course knows this and will
use it to their advantage.
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They once again seduce the amateur traders
to pull the trigger early and take a long
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trade even if the price hasnât come to the
actual support level yet.
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And you know what happens next, the smart
money can now drive price further down, generating
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panic among the long positioned traders and
then buy back from them when they exit their
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trades because they think the price is breaking
down.
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Is Market Manipulation a good thing or a bad
thing?
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So you may be asking, âIs Market Manipulation
a good thing or a bad thing?â
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I feel that if you can learn to read a chart
correctly using Volume Spread Analysis, youâll
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discover some of the intentions of the smart
money, thus trading in harmony with whatâs
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happening.
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I mean, wouldn't you do the same - buy at
the lowest price knowing you could sell it
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later for much more than what you bought it
for?
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That's the trading game: buy low, sell high.
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But first, you must learn how to avoid becoming
the victim of market manipulation.
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You need to know how the big players think
and trade.
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You must align yourself with the big players
and join them.
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If this make sense, make sure you watch our
smart money playlist.
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If you found value and learned something new,
leave us a like.
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This way weâll know if you'd like to see
more videos like this one.
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And check out our academy program if you want
to further level up your trading.
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Until next time.
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