Smart Money

Definition - What does Smart Money mean?

Smart money is a slang term for the trading capital that is deployed by banks, hedge funds and sophisticated investors. This slang originated in the stock market to distinguish between the investment moves of the general public and those of the professionals. In the forex market, the activity of the smart money is most noticeable when large orders hit the market.

ForexDictionary explains Smart Money

Whether the smart money is actually smart is a matter of some debate. Unlike the stock market, some of the large orders on the forex market represent national governments attempting to influence markets through their central banks. In this situation, the smart money may often make moves that are intentionally dumb in hopes of relieving upwards or downwards pressure on a particular currency. No one player can influence the market for long, however, so smart money may end up wasted on a dumb cause.
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