Large Investors Trading Manual: Detailed Explanation of Smart Money Trading Rules

Have you ever wondered why those technically perfect charts are often easy to get slapped in the face? The answer is right here—retail investors see charts that large investors have already seen through.

What is Smart Money?

In simple terms, Smart Money refers to the trading logic of large investors (banks, hedge funds, institutional investors). These “whales” control massive amounts of capital and can influence price trends. Their strategies are quite consistent:

• Create false signals: Draw technical charts that retail investors like, and then short the market.
• Hunting Stop Loss Order: Sweep retail stop losses above or below obvious support/resistance levels to accumulate positions.
• Create FOMO: Smash then pull or pull then smash, harvesting emotional trading.

95% of retail investors lose money, essentially acting as “liquidity providers” for Large Investors.

Three Market Structures

All market trends can be categorized into these three types:

Ascending Structure (Higher Highs + Higher Lows) = Bull Market Descending Structure (lower highs + lower lows) = Bear Market Consolidation Structure (repeated friction within a range) = Large Investors accumulation period

The most critical thing is to identify which structure you are currently in. Many people see an uptrend on the daily chart but suddenly go short on the 15-minute chart—resulting in being trapped. You must proceed from higher time frames to lower time frames to ensure that all time frames are consistent.

How Do Large Investors Accumulate Funds? Core Mechanism

1. Liquidity Sweep

Large Investors need counterparties. They will quickly sweep retail investors' stop-loss orders with a rapid wick (shadow) outside the support/resistance, and then reverse in an instant. This is called SFP (Swing Failure Pattern).

Practice: Seeing the wick pierce through the structural level and then immediately retract indicates that Large Investors are sucking blood, entering with reverse positions.

2. Imbalance

If there is a particularly large candlestick between two candlesticks, and its body “tears” through the shadows on both sides—this is called imbalance. The price will often return to fill this “gap” as if attracted by a magnet.

3. Order Block

Large Investors have traded in large volumes within a certain range, which has become an “order accumulation point.” In the future, these areas will repeatedly act as support/resistance, as Large Investors will need to close positions there.

The Essential Difference Between Retail Investors and Large Investors

Classic strategy: draw a perfect bullish triangle → retail investors all go long → Large Investors directly break the lower boundary, triggering a wave of stop-loss profits → reverse surge. This is why classical technical analysis is a trap for retail investors.

Trading Conversations and Rhythm

Although the crypto market trades 24/7, there are three main rhythms:

1. Asian Session (03:00-11:00 Moscow Time): Large Investors Accumulation
2. London Session (09:00-17:00): Manipulation Phase, quick stop-loss sweep
3. New York Session (16:00-24:00): Distribution phase, gradually selling off.

Similarly, this logic is followed on each trading day.

The Secret of CME Gaps

CME (Chicago Mercantile Exchange) is closed on weekends and reopens on Monday. If there are significant price changes over the weekend, a “gap” will form on Monday.

80-90% of gaps will eventually be filled—this is the “magnet effect” of prices. If a large gap forms over the weekend, the main direction for the following week will be towards filling that gap.

Macroeconomic: DXY and S&P 500

Don't just look at the BTC candlestick chart; the US Dollar Index (DXY) and the S&P 500 are the invisible manipulators.

• DXY Rising = Dollar Appreciation → BTC Usually Falls (Dollar Bloodsucking Effect)
• S&P500 rises = Risk appetite increases → BTC usually follows suit

Many times the BTC trend is “inexplicable”; it actually moves along with the US stock market.

Practical Advice

1. Follow the structure: Identify which structure you are in during an uptrend/downtrend/consolidation, and make all decisions around it.
2. Pay attention to imbalance and order accumulation: These are the footprints of Large Investors.
3. Do not confront Large Investors: Wait for them to trigger stop-loss orders before getting in, minimizing risk.
4. High Cycle Confirmation, Low Cycle Execution: The daily chart indicates direction, while the 15-minute chart is for entry.
5. Observe Macroeconomic Indices: DXY and US stock trends are crucial.

Bottom Line

The core of Smart Money trading is: find out where Large Investors are manipulating, and then follow behind to profit. Don’t try to predict; the goal of Large Investors is always to counter-harvest the thinking of the majority. Learn to recognize their patterns, and you will transform from prey into hunter.

If you don't want to be cut, you have to learn to think like a Large Investor.