Institutional buying and selling methods are usually intently guarded secrets and techniques, however some strategies have been leaked, reverse-engineered, or shared by ex-traders over time. Listed below are some confirmed or extremely suspected institutional methods which were mentioned publicly:
1. Order Movement & Liquidity Searching (The Most Leaked Technique)
2. Iceberg Orders & Hidden Liquidity
3. Algorithmic Cease Hunts (Spoofing & Layering)
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The way it works:
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HFT companies place pretend orders (spoofing) to trick retail merchants.
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As soon as stops are triggered, they cancel their pretend orders and commerce in the wrong way.
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Proof:
4. VWAP (Quantity-Weighted Common Value) Buying and selling
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The way it works:
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Proof:
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Publicly documented in Bloomberg Terminal’s VWAP algo.
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Utilized by pension funds and hedge funds (e.g., Renaissance Applied sciences).
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5. Market-Making & Statistical Arbitrage
6. The “POMO” Technique (Fed-Induced Strikes)
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The way it works:
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When the Fed does Everlasting Open Market Operations (POMO), large banks front-run liquidity injections.
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They purchase earlier than the Fed and promote into the rally.
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Proof:
7. The “Turtle Soup” Technique (Fading Breakouts)
8. Correlation Buying and selling (Threat-On/Threat-Off)
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The way it works:
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Huge funds commerce asset correlations (e.g., USD-JPY vs. S&P 500).
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If shares rally, they brief JPY and purchase SPX futures.
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Proof:
How Retail Merchants Can Use These Leaks
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Commerce with the banks, not towards them – search for liquidity swimming pools and fakeouts.
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Look ahead to VWAP rejections – establishments usually fade excessive deviations.
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Keep away from chasing breakouts – look ahead to affirmation (establishments love trapping retail).
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Use time & gross sales information – spot iceberg orders and hidden liquidity.
