Large institutions are responsible for over 75% of all stock market activity. They literally control trillions of dollars of transactions within the market. The Buy Side institutions accumulate shares for long-term investments like mutual funds and pensions.
What’s important is to be able to identify their footprint in price action so you can follow and potentially enter a trade. The large institutions are trading for long term holds, never short term. They are also value investing meaning fundamentals and company strength is extremely important to them. They like to buy stocks at low prices and use very specific controlled order systems. They also invest a lot of money into research regarding where the company is in its business cycle, future innovation and evolving of said company, and many other factors. They are referred to as “Smart Money” for this reason.
Below is a typical footprint or Buy zone where they accumulate shares.
What is interesting here is how controlled price is from June up until September. This is a typical footprint of large institutions. They have a method of order entry called TWAP (time weighted at price) as to not disturb the trend/price of the stock.
Instead of having an order of 1 million shares filled in one day, their order is more systematic. Give me x amount of shares at no more than price X dollars but no less than x dollars over a period of 3 months.
What happens next is also a confirmation of the liquidity draw occurring. HFTs (high frequency traders; computers) and pro traders pick up on the action and move price.
Your goal is to be able to identify these platform areas, identify the buy signals and enter a trade for a good ROI.
We have many more examples of charts for example so feel free to reach out with any questions.