Every candlestick is a reflection of power shifting between different types of traders. If you want to trade consistently, it’s not enough to know the setup—you need to understand who’s moving price, when they’re in control, and how their behavior creates the opportunity.
At Profit Smasher, we reduce the noise by categorizing traders into three groups: algorithms, strategists, and gamblers. Each plays a role in the market cycle. Each moves price in predictable ways.
1. Algorithms (Fast Execution, No Emotion)
Algos are the machines. They dominate volume, especially in highly liquid markets like Nasdaq futures. They don’t hesitate. They don’t second-guess. They execute based on parameters like order flow, imbalance, VWAP deviation, and latency arbitrage.
How they move price:
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They react to inefficiencies and close them fast.
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They trap emotional traders by triggering stop hunts or false breakouts.
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They often fade overextension at key structural levels (like moving averages or Bollinger Band extremes).
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They trade in and out within milliseconds but leave behind clear fingerprints—sharp wicks, precision reversals, and volume spikes without follow-through.
What to watch:
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Sudden price reversals at the 20, 50, or 200 MA
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Sharp breakouts that immediately reverse (liquidity sweeps)
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Volume bursts with little directional follow-through
2. Strategists (Patient, Calculated Traders)
Strategists are the human edge. They don’t chase price. They don’t panic. They read the flow and wait for alignment. Their trades often look effortless—not because they’re lucky, but because they understand when the crowd is wrong and when the structure is right.
How they move price:
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They add size during pullbacks, when gamblers are exiting or algos are cooling off.
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They target reversion to structure after emotional extensions.
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They tend to enter quietly and exit into volatility.
What to watch:
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Entries near the 50 MA or 20 MA after RSI divergence
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Reaction to volume cooling—not spiking
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Patience in timing—strategists let price come to them
Strategists aren’t always first, but they often profit the most. They let the gamblers get trapped and let the algos do the work. Then they ride the correction.
3. Gamblers (Emotional, Reactionary Traders)
Gamblers are the fuel. They chase green candles. They sell red candles. They buy breakouts at RSI 80 and sell the lows at RSI 20. They’re not disciplined—they’re emotional, impulsive, and unaware of structure.
But without them, price wouldn’t move.
How they move price:
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They create the extension that algos fade and strategists trade against.
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They enter late, near the highs or lows, often triggering volume spikes that mark the top or bottom.
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They feed liquidity to both algorithms and strategists.
What to watch:
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Spikes in RSI above 70 or below 30 with no structure behind the move
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Candles breaking out from Bollinger Bands without a volume base
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Fast surges with no retest—signs of emotional decision-making
Gamblers are the crowd. Their job, unknowingly, is to lose. That’s why the market exists—to transfer money from the emotional to the prepared.
How Price Moves Through These Types
A typical intraday move in Nasdaq futures might look like this:
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Gamblers chase price into an emotional high or low—RSI overheats, candles stretch outside Bollinger Bands.
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Algos fade the move, trigger reversals, and snap price back to structure.
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Strategists enter on the return to moving averages, riding the mean reversion back to balance.
Then it happens again, in reverse. The market breathes in cycles, because these trader types are always active—and always predictable once you know what to look for.
The Takeaway
Price doesn’t move randomly. It moves because traders of different types feed, react, and adjust. When you understand how algorithms, strategists, and gamblers interact, the market becomes readable.
Don’t be the gambler. Don’t chase. Learn to think like a strategist—wait for energy extremes, confirm structure, and strike when emotion fades.
If you’re aware of who is in control, you can see where the trade is already forming—before it becomes obvious.
Trade with precision. Let the gamblers pay for it.