What is Smart Money when Investing in Stocks?

Knowing Where Money Flows Can Help You Understand Trends

Experienced Traders follow the Smart Money. Now, most investors out there are clueless what this means because you're busy going to a 9 to 5 job. Investors just want to make money and as long as they observe their portfolio increasing, that's all they care about. Well, I'm here to report to you that there is a lot more than you know of what goes on behind the scenes. It does affect your investing. It's called "Where is the Smart Money?" Where the Smart Money goes determines whether the market is going up or down. So, how do you find the Smart Money? Well, it doesn't hurt to find some good investment forums because most traders will post weekly updated chart positions of where the Smart Money is - long or short the market. Or you can go to the source and try and figure it out: http://www.cftc.gov/cftc/cftccotreports.htm

First, I'll give you an explanation of what Smart Money and Dumb Money is. Then I'll explain the terminology of being long or short the market and the implications.

In commodity trading, conventional wisdom has it that commercial and non commercial which are also called large speculators (hedge funds, institutional funds) are always right. The big money really comes from this side. Hence they are Smart Money traders. They trade the futures market. Futures market trades around the world, currencies, commodities, and financials by trading market trends in these areas. The equity market is a different market from the futures.