Pullback trading: Counter the market moves made by smart money

May 21st, 2024

Have you ever wondered what it’d be like to have insight into what the “big boys” or the smart money traders are doing so you can profit from it, too?

In the recent NinjaTrader Ecosystem webinar, “Applied Volume Spread Analysis in Short Term Trading,” Tony Peterson of The Intentional Trader outlined his pullback trading method and ideology behind competing with smart money traders and other retail traders for a competitive advantage in trading.

Smart money refers to the insiders and better-informed speculators who typically invest more than retail traders. Smart money can be spotted by higher than usual volume, especially when little or no public data exists to justify it, Peterson states.

“Knowing who the smart money is and where they’re investing can be of great benefit to retail investors who want to ride the smart money’s coattails,” Peterson added.

Smart money includes:

  • High-frequency traders
  • Market makers
  • Institutional funds

Pullback trading to go against the grain

Smart money traders know that retail traders follow their actions. Peterson likens trading against the smart money to standing in front of an oncoming train—and trading with the smart money to trying to catch a falling knife.

So that leaves trading after the smart money makes its move, and most retail traders follow suit. Smart money has the funds and technology (e.g., machines, algorithms) to have an advantage against retail traders who are impacted by their emotions.

Peterson created his pullback trading system in response to his stress and struggles with market manipulations while going against the grain of other retail traders.

Peterson goes in depth on pullback trading and more in the full presentation. Watch a clip here:

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