Smoothed Particle Hydrodynamics (SPH) is analysed as the weighted residual method. In particular the analysis focuses on the collocation aspect of the method. Using Monte Carlo experiments we demonstrate that SPH is highly sensitive to node disorder, especially in its symmetrised energy and momentum conserving form. This aspect of the method is related to low [Beta] MHD instabilities observed by other authors. A remedy in the form of the Weighted Differences Method is suggested, which addresses this problem to some extent, but at a cost of losing automatic conservation of energy and momentum. ¶ The Weighted Differences Method is used to simulate propagation of Alfven and magnetosonic wave fronts in [Beta] = 0 plasma, and the results are compared with data obtained with the NCSA Zeus3D code with the Method of Characteristics (MOC) module. ¶ SPH is then applied to two interesting astrophysical situations: accretion on to a white dwarf in a compact binary system, which results in a formation of an accretion disk, and gravitational collapse of a magnetised vortex. Both models are 3 dimensional. ¶ ...