The video discusses the concept of "Smart Money" trading, which refers to the way institutional traders operate in the market. The speaker argues that most online information is geared towards retail trading, but institutional trading is a more effective way to trade. The key principles of Smart Money trading include:
1. Indicators Lag, Price Action Leads: Institutional traders do not rely on indicators, but instead, focus on price action and supply and demand zones.
2. Supply and Demand Zones: These zones are areas where the price is moving away from with a lot of momentum, indicating a shift in the balance of supply and demand.
3. Volume Spread Analysis (VSA): This type of analysis helps to identify the differences between supply and demand by looking at the volume and price spread.
4. Liquidity: Institutional traders understand where liquidity is accumulating and use this information to their advantage.
5. Monitoring Daily Highs & Lows, Obvious Swing Points, and Boundaries of Ranges: This helps to identify areas of liquidity and potential trading opportunities.
To trade like institutions, the speaker recommends:
1. Being prepared and treating trading like a business.
2. Knowing your edge and having a clear plan.
3. Reviewing and learning from your trades.
4. Having multiple plans, including a pre-market, execution, and post-market plan.
5. Continuously learning and improving.
Overall, the video emphasizes the importance of understanding institutional trading principles and adapting them to individual trading strategies.
Here are the key facts from the text:
1. Most online information about trading is focused on retail trading, while institutional trading is less well-represented.
2. Smart Money trading is considered one of the best-kept secrets in the world of trading.
3. Institutional traders use supply and demand zones to inform their trading decisions.
4. Indicators, such as Stochastic and MACD, were created before modern computer systems and are considered lagging indicators.
5. Indicators show what has happened in the past, but do not predict future price movements.
6. Trading without indicators can be beneficial, as it eliminates the middleman and allows traders to see the market for themselves.
7. Supply and demand zones are areas where there is a balance between supply and demand, with imbalances in between.
8. A supply zone is an area where a lot of sudden selling has occurred, while a demand zone is an area where a lot of sudden buying has occurred.
9. Volume spread analysis (VSA) is a type of analysis that looks at the relationship between volume and price spread.
10. Institutional traders understand where liquidity is accumulating and use this information to inform their trading decisions.
11. Liquidity describes how easily an asset can be bought or sold, with high liquidity making it easier to get orders filled.
12. Institutional traders use special techniques to get good prices for their orders, such as entering positions part by part.
13. Retail traders often get trapped by stop losses, which can be avoided by understanding supply and demand zones.
14. Marking out important areas of liquidity, such as daily highs and lows, can help traders understand how smart money operates.
15. Backtesting rules and generating data can help confirm a trading edge.
16. Waiting for confirmation is important before entering a trade.
17. Smart money enters the market to fill orders, generate liquidity, and hedge longer-term investments or trades.
18. Retail traders try to profit from small directional moves, while institutional traders have a different approach.
19. To start trading like banks, it's essential to be prepared, treat trading like a business, and have a well-calculated approach.
20. Knowing your edge, having multiple plans, and reviewing and learning are essential principles for becoming a profitable trader.