INSTITUTIONAL TRADERS WILL ONLY MOVE MARKETS FOR THESE 2 THINGS!
מעודכן
Let me start this with a question that every retail trader wants to know every day.
And it's one that, we all as traders, get asked most often.
-WHERE IS THE MARKET GOING?
In one form or another, we all here this asked about every coin, every commodity, every currency pair, etc.
To be successful over the long-term, you don't have to know where the market is going at every turn. It's impossible, but more importantly, it's irrelevant for consistent profits.
But the ANSWER to that question is one of the more vital factors we need to get correct with a slight degree of accuracy. I can show you many 40% reliability systems that are highly profitable.
One method of analysis that will help you stay on the right side of the action more often, is identifying Institutional Liquidity Zones.
Remember this:
A MARKET WILL TRADE AS HIGH OR AS LOW AS IT WANTS, AS LONG AS THERE IS LIQUIDITY ON THE OTHER SIDE OF THE TRADE.
You can't sell anything on the open market 1 sat, 1 penny or 1 dollar higher than the last price if there are NO MORE BUYERS left in the market at the current price.
Its called total absorption.
Markets run TO and AWAY from value while trying to find the most liquidity. Markets need liquidity participants( traders) to facilitate trade. Someone has to take the other side of your trade for a trade to be had. If there was no liquidity to enter, then there is no market.
INSTITUTIONAL TRADERS (SMART MONEY) ONLY MOVE MARKETS FOR 2 THINGS!
1: THEY WILL MOVE A MARKET SO THEY CAN ENTER
2: THEY WILL MOVE A MARKET SO THEY CAN EXIT
THAT'S ALL THAT MATTERS.
Now, WHERE they do that, is what you need to know as a retail trader to trade alongside and PROFIT WITH THEM.
In order for institutional traders to be able to successfully enter and exit profitably with large volume orders, they need HIGH LIQUIDITY ENVIRONMENTS. And who do you think creates them?
Thats right...SMART MONEY! The markets do not move at random. Price action is for a reason.
You may already know this as Market Structure.
INSTITUTIONAL POSITIONING to ENTER can be done over a duration of time(accumulation)
or by creating a high liquidity environment.
This is done with a quick but fake directional move, usually through an obvious support or resistance level, that causes traders to react by entering the market on the other side of the trade so they can absorb all the new available volume in one move. You see these as trap trades or failure tests that have long wicks usually at a turn in the market.
INSTITUTIONAL EXITING is where high liquidity environments become crucial for profitability.
Think about this : If everyone is on the sell side of the market, who is left on the other side? Who are you going to get to take the other side of your trade so you can exit with profit? What happens to your profit if there isnt any more buyers and the market has to turn back on you to bring them back in the market. (Illiquid price discovery)
As a retail trader, you really never have to worry about this problem because of the smaller volume orders you are trading relative to the available liquidity.
But this is a major factor for Institutional traders as they need to be able to exit with large volumes and over a smaller adverse price movement by shedding as much of their position as possible within these high liquidity environments. This is another reason smart money traders strategically take profits along the way at different (higher volume) levels. They also know other institutional traders are trying to exit as well and they want to get their volume off their books before the liquidity runs out.
How high they will run a market depends on how large of a position (liquidity) they have to shed to the available takers on the other side of their trade. As a market makes new structure highs/lows and causes people to enter the market, who do you think is on the other side of the trade supplying that volume to allow it to run? Its whoever has that amount of liquidity to provide, which is the smart money traders who positioned much earlier, and are now exiting as dumb money/late retail traders are getting in when they see price accelerating or breaking new highs/lows( High liquidity environments)
Conversely , if an institutional trader has built a 100'000 LTC position and they are now at a price level where they want to take profits, they must start distributing that 100K LTC. But if there is only liquidity( willing participants to the other side) for 25K LTC at that time, then they are stuck with the 75K and the market will then trade to the most readily available liquidity, which is back the other way and the price reverses, and they begin losing profit.
HOW YOU MAKE MONEY is once you have confirmation you are in a mark up/profit release phase, you find the areas on your chart where institutional traders might target as levels that would create high liquidity environments to exit into.
Remember, they will be taking profit along the way at the levels/targets they have in their trade plan AS LONG AS there is enough liquidity at those levels. This is the reason you see some retracements that are smaller or almost non-existent, while others are larger (Think .618 , .786 fibs). Why 618 and 786 fib levels are institutional levels is a whole other lesson, but they are good targets to be aware of for longer-term entries or re-entries in an overall move.
They will also take portions of profit (Scaling) at liquidity zones and allow it to retrace and add more back into the trade (reaccumulate). Then push it higher/lower to the next level and repeat until they start to see liquidity on the other side is drying up.
You want to target the area that would, with a higher probability, create the largest amount of liquidity for them to exit into. Why do you think they love to break "obvious/strong" resistance/support levels? It causes an emotional reaction of potential profit or loss depending on which side of the trade you're on, which causes traders to respond by exiting or entering their positions. This will most likely be the area they are running it to as long as liquidity doesn't fall off before then.
When smart money create those high liquidity environments and they get such large amounts of volume coming into the trade, they will try and distribute as much of their position as they can right then and there because they do not want to waste that amount of liquidity and the opportunity to profitably exit with most of their position.
This when you see a buying/selling climax with large exhaustion wicks towards the end of the move. These are the High Volume Highs(HVH) or the High Volume Lows(HVL) we look for when we start to see signs of major distribution around high liquidity environments.
Sometimes you will see a buying/selling climax where it is evident that smart money positions distributed, and then after a retrace, see another attempt to break the highs/lows again but on much lower volume. This is a combination of the last of the institutional positions needing to be shed, institutional traders now building a new position to the other side, and last but not least
dumb money/late retail traders just getting in the trade thinking its going to run higher/lower.
You have to be able to identify when institutional traders are distributing then buying back(re-accumulation) and when distribution looks to be complete. Once complete, they are done, for now. Then it starts all over again to whichever direction would cause traders to enter the market again to create more high liquidity environments.
REMEMBER THIS ALSO: THERE IS NO MONEY IN TRYING ENTER TOPS AND BOTTOMS.
YOU WANT TO IDENTIFY SIGNS OF CONFIRMATION THAT THE TOP OR BOTTOM MAY BE IN, THEN FIND THE BEST RISK:REWARD TO ACCOMPANY YOUR ANALYSIS WITH A DIRECTIONAL TRADE IN THE TREND.
Institutional traders don't care so much about certain price points to exit at as they do certain levels with the most possible liquidity. It doesn't matter if they would like to take LTC or BTC to $10'000.00 if there isn't enough liquidity to get there. They need to figure how far they might be able to take their position based on the current depth of market liquidity. Sometimes what they might analyze to be a high liquidity level may turn out to have very little volume and will cause price to retrace and chop up and down as they try to bring in buyers/sellers to try again ,but if not ,eventually they will distribute in the chop, reposition and run it back the way they came. They will push a market as far and as hard as they can until they are OUT of their positions or until liquidity runs out.
It's your job as a trader to know what that looks like.
Good luck and Successful trading.
And it's one that, we all as traders, get asked most often.
-WHERE IS THE MARKET GOING?
In one form or another, we all here this asked about every coin, every commodity, every currency pair, etc.
To be successful over the long-term, you don't have to know where the market is going at every turn. It's impossible, but more importantly, it's irrelevant for consistent profits.
But the ANSWER to that question is one of the more vital factors we need to get correct with a slight degree of accuracy. I can show you many 40% reliability systems that are highly profitable.
One method of analysis that will help you stay on the right side of the action more often, is identifying Institutional Liquidity Zones.
Remember this:
A MARKET WILL TRADE AS HIGH OR AS LOW AS IT WANTS, AS LONG AS THERE IS LIQUIDITY ON THE OTHER SIDE OF THE TRADE.
You can't sell anything on the open market 1 sat, 1 penny or 1 dollar higher than the last price if there are NO MORE BUYERS left in the market at the current price.
Its called total absorption.
Markets run TO and AWAY from value while trying to find the most liquidity. Markets need liquidity participants( traders) to facilitate trade. Someone has to take the other side of your trade for a trade to be had. If there was no liquidity to enter, then there is no market.
INSTITUTIONAL TRADERS (SMART MONEY) ONLY MOVE MARKETS FOR 2 THINGS!
1: THEY WILL MOVE A MARKET SO THEY CAN ENTER
2: THEY WILL MOVE A MARKET SO THEY CAN EXIT
THAT'S ALL THAT MATTERS.
Now, WHERE they do that, is what you need to know as a retail trader to trade alongside and PROFIT WITH THEM.
In order for institutional traders to be able to successfully enter and exit profitably with large volume orders, they need HIGH LIQUIDITY ENVIRONMENTS. And who do you think creates them?
Thats right...SMART MONEY! The markets do not move at random. Price action is for a reason.
You may already know this as Market Structure.
INSTITUTIONAL POSITIONING to ENTER can be done over a duration of time(accumulation)
or by creating a high liquidity environment.
This is done with a quick but fake directional move, usually through an obvious support or resistance level, that causes traders to react by entering the market on the other side of the trade so they can absorb all the new available volume in one move. You see these as trap trades or failure tests that have long wicks usually at a turn in the market.
INSTITUTIONAL EXITING is where high liquidity environments become crucial for profitability.
Think about this : If everyone is on the sell side of the market, who is left on the other side? Who are you going to get to take the other side of your trade so you can exit with profit? What happens to your profit if there isnt any more buyers and the market has to turn back on you to bring them back in the market. (Illiquid price discovery)
As a retail trader, you really never have to worry about this problem because of the smaller volume orders you are trading relative to the available liquidity.
But this is a major factor for Institutional traders as they need to be able to exit with large volumes and over a smaller adverse price movement by shedding as much of their position as possible within these high liquidity environments. This is another reason smart money traders strategically take profits along the way at different (higher volume) levels. They also know other institutional traders are trying to exit as well and they want to get their volume off their books before the liquidity runs out.
How high they will run a market depends on how large of a position (liquidity) they have to shed to the available takers on the other side of their trade. As a market makes new structure highs/lows and causes people to enter the market, who do you think is on the other side of the trade supplying that volume to allow it to run? Its whoever has that amount of liquidity to provide, which is the smart money traders who positioned much earlier, and are now exiting as dumb money/late retail traders are getting in when they see price accelerating or breaking new highs/lows( High liquidity environments)
Conversely , if an institutional trader has built a 100'000 LTC position and they are now at a price level where they want to take profits, they must start distributing that 100K LTC. But if there is only liquidity( willing participants to the other side) for 25K LTC at that time, then they are stuck with the 75K and the market will then trade to the most readily available liquidity, which is back the other way and the price reverses, and they begin losing profit.
HOW YOU MAKE MONEY is once you have confirmation you are in a mark up/profit release phase, you find the areas on your chart where institutional traders might target as levels that would create high liquidity environments to exit into.
Remember, they will be taking profit along the way at the levels/targets they have in their trade plan AS LONG AS there is enough liquidity at those levels. This is the reason you see some retracements that are smaller or almost non-existent, while others are larger (Think .618 , .786 fibs). Why 618 and 786 fib levels are institutional levels is a whole other lesson, but they are good targets to be aware of for longer-term entries or re-entries in an overall move.
They will also take portions of profit (Scaling) at liquidity zones and allow it to retrace and add more back into the trade (reaccumulate). Then push it higher/lower to the next level and repeat until they start to see liquidity on the other side is drying up.
You want to target the area that would, with a higher probability, create the largest amount of liquidity for them to exit into. Why do you think they love to break "obvious/strong" resistance/support levels? It causes an emotional reaction of potential profit or loss depending on which side of the trade you're on, which causes traders to respond by exiting or entering their positions. This will most likely be the area they are running it to as long as liquidity doesn't fall off before then.
When smart money create those high liquidity environments and they get such large amounts of volume coming into the trade, they will try and distribute as much of their position as they can right then and there because they do not want to waste that amount of liquidity and the opportunity to profitably exit with most of their position.
This when you see a buying/selling climax with large exhaustion wicks towards the end of the move. These are the High Volume Highs(HVH) or the High Volume Lows(HVL) we look for when we start to see signs of major distribution around high liquidity environments.
Sometimes you will see a buying/selling climax where it is evident that smart money positions distributed, and then after a retrace, see another attempt to break the highs/lows again but on much lower volume. This is a combination of the last of the institutional positions needing to be shed, institutional traders now building a new position to the other side, and last but not least
dumb money/late retail traders just getting in the trade thinking its going to run higher/lower.
You have to be able to identify when institutional traders are distributing then buying back(re-accumulation) and when distribution looks to be complete. Once complete, they are done, for now. Then it starts all over again to whichever direction would cause traders to enter the market again to create more high liquidity environments.
REMEMBER THIS ALSO: THERE IS NO MONEY IN TRYING ENTER TOPS AND BOTTOMS.
YOU WANT TO IDENTIFY SIGNS OF CONFIRMATION THAT THE TOP OR BOTTOM MAY BE IN, THEN FIND THE BEST RISK:REWARD TO ACCOMPANY YOUR ANALYSIS WITH A DIRECTIONAL TRADE IN THE TREND.
Institutional traders don't care so much about certain price points to exit at as they do certain levels with the most possible liquidity. It doesn't matter if they would like to take LTC or BTC to $10'000.00 if there isn't enough liquidity to get there. They need to figure how far they might be able to take their position based on the current depth of market liquidity. Sometimes what they might analyze to be a high liquidity level may turn out to have very little volume and will cause price to retrace and chop up and down as they try to bring in buyers/sellers to try again ,but if not ,eventually they will distribute in the chop, reposition and run it back the way they came. They will push a market as far and as hard as they can until they are OUT of their positions or until liquidity runs out.
It's your job as a trader to know what that looks like.
Good luck and Successful trading.
עסקה פעילה
Keeping an eye on the underlying coin's structure is important if you're trading a derivative product or another pair with it.
עסקה פעילה
GOODNESS, excuse the blatant disregard of spellcheck and the rest of it. I forget that TV only gives you so much time to edit, so I just hit PUBLISH then usually find my errors after the fact..AAAANYWAYS.. its all there regardless.
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