Who is Smart Money? Two Primary Targets of Big Capital

1. Identify Smart Money (Smart Money Flow)

Smart Money is not an individual trading account of several hundred thousand dollars. They are large financial institutions:

• Large commercial banks (JP Morgan, Citibank, HSBC...).
• Central banks (Fed, ECB, BoE...).
• Hedge Funds and sovereign wealth funds.

2. Two Action Goals of Smart Money

Due to the huge transaction volume, Smart Money cannot buy/sell randomly like retail. They are forced to push prices to areas where reciprocity is available:

1. Attract Stop-loss (Hunting liquidity): They need to match their orders with the corresponding orders of others. When you set your stop loss, that's when you provide them with buying/selling liquidity.
2. Return to the Rebalancing area: Match pending orders in liquidity gaps (like FVG) so that the market continues to move in balance.