Smart money = big institutions (banks, hedge funds, market makers).
Retail = small traders like us.
1. Liquidity Hunting (Stop Hunt)
Retail traders place stop losses just below support or above resistance.
Smart money pushes price to those levels, hits the stops, collects liquidity, then reverses.
👉 Example: Price breaks below support → retail sells → smart money buys cheap → market goes up.
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2. Fake Breakouts
Retail sees a breakout above resistance and enters long.
Smart money makes a false breakout (short push up), then dumps the price back down.
👉 Retail gets trapped buying high, while institutions sell to them.
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3. Trend Continuation Traps
Retail often follows trend too late.
Smart money waits for retail to enter at the top of a move, then reverses trend.
👉 "Buy high, sell low" trap.
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4. Liquidity Pools
Retail traders place orders at obvious price levels (round numbers, recent highs/lows).
Smart money targets these zones to fill their big orders.
👉 Example: If many stops are at 0.130, smart money drives price there, takes liquidity, then moves market up.
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✅ In Simple Words:
SMC traps retail traders by pretending to move the market one way, taking their money (stops & bad entries), then moving the market the opposite way.