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