Institutional Trading
Think like a fund. Trade where the big money trades.
Who Are Institutional Traders?
Types
| Institution | Focus |
|---|---|
| Hedge funds | Absolute returns |
| Mutual funds | Benchmark beating |
| Banks | Client flow |
| Proprietary | Firm profit |
Size Differences
Retail: 1-100 lots
Institutional: 10,000-1,000,000+ lots
What Institutions Need
1. Liquidity
Can't buy 1M shares at once
Will move price
Need to accumulate
2. Discretion
Don't want to show hand
Hide size
Use algorithms
3. Risk Management
Size based on:
- Account size
- Tolerance
- Volatility
Institutional Flow
How Institutions Buy
1. Place bids below
2. Accumulate slowly
3. Don't push price
4. Build position
5. Push when ready
How Institutions Sell
1. Distribute slowly
2. Sell into strength
3. Don't push price
4. Unload
5. Push down when loaded
What Institutions Look For
Order Flow Signals
| Signal | What It Is |
|---|---|
| Absorption | Buying at bottom |
| Distribution | Selling at top |
| Icebergs | Hidden orders |
| Stops hunting | Filling orders |
Market Structure
| Structure | Meaning |
|---|---|
| Accumulation | Smart money buying |
| Distribution | Smart money selling |
Trading Like Institutions
Step 1: Think Long-Term
Don't: In/out daily
Do: Build position
Step 2: Find Structure
Institutional: Accumulation zones
Retail: Any swing low
Step 3: Wait for Confirmation
Institutions: Confirm before entry
Retail: Anticipate
Common Mistakes
1. Fighting Institutions
Problem: Shorting at accumulation.
Solution: Trade with institutions.
2. Not Understanding Size
Problem: Trading against 1000-lot orders.
Solution: Trade with flow.
Key Takeaways
- Institutions — Trade smart money
- Accumulation — Smart money buying
- Distribution — Smart money selling
- Long-term — Build position
- Confirm — Don’t anticipate
Related
order-flow.md >>>
Think like the money.