Smart Money - Hedge funds, institutional banks, proprietary trading firms, billionaires.
They accumulate and distribute large quantities of stock.
They determine the market sentiment.
They buy at the lows and sell at the highs.
Institutions, High Frequency Trading Algorithms.
They follow Smart Money’s large orders.
They buy or sell aggressively depending on what Smart Money does.
They are the ones who cause exponential volume increase and big directional price moves.
Their orders are automated and their systems are capable of placing thousands of orders before you can place a single trade.
They are in and out quickly.
Investment Groups and Small Funds
The average investment company that is somewhat informed of the overall market.
They listen to suggestions made by the large institutions and follow market trends.
They buy and sell in the middle, not at lows or highs.
Small Investors and Retail Traders
The average retail trader/investor or very small funds.
They often buy towards the end of uptrends and sell towards the end of downtrends.
Uninformed Investors aka “Dumb Money”
This group is made up of everyone else with some extra cash to invest.
They have very little understanding of what is going on in the market.
They base decisions on emotion and are impulsive buyers.
They almost always buy at the highs and sell at the lows.
Market Share between Market Players.
Investment Groups, Small Funds, Retail and Uninformed Investors control roughly 15% of the market share.
Smart Money, Corporations, Billionaires, Institutions and HFT’s controls the other 85%.