Tracking the Big Players

[Zack Zarr 5]

Institution Footprints

 

Supply and Demand is the only force in the market, everything else is the noise.

 

We buy “stuff” on a regular basis in our daily lives. Things we need and things we think we need. (George Carlin’s description of “stuff” is much better, so I stop here).

 

The price of anything we purchase, from our grocery to our iPhone or house, is determined by the fundamentals of supply and demand. A bottle of coke is $2.50 because we are willing to pay $2.50. If 70% of population decides not to pay that much for the coke, then the supplier must decrease the price until the customers come back and buy it. An iPhoneX is $1,000 because we are willing to pay that much for it. If more people want to buy it and Apple cannot increase their production capacity, then the price would have to go up. Because there is demand for it.

 

Anyhow, our lives are affected by this single rule of economics so why shouldn’t it be the single rule in trading? Trading sits at the extremity of the world we live in where everything has a price. There are no human morality principles in this part of the world. You cannot ask a favor from your broker, imagine this conversation:

 

You to your broker: Could you do me a favor, close my order at breakeven, I got stuck cleaning the bath tub and forgot to move my stoploss there. I owe you one buddy!

 

In the case of an institutional trader, supply and demand is THE ONLY game in town. They must buy or sell at the best price or else they lose money. And they NEVER lose! If an institution was willing to pay for an instrument, a stock or currency pair, at a certain price level, what makes them stop doing it again next time?

 

As I mentioned in previous posts, the only signal you get from institutions is their big orders flooding the market. And you see it on the chart as big body candles similar to what you see here:

 

 

This is different way of looking at a chart, there is not green/red or white/black coloring of the normal candlestick charts. I programmed the chart so that it only shows the giant body candles (it’s a code, so there are always flaws). What if you always see the chart this way. What if you have never ever seen the conventional type of chart and this is the first candlestick chart you see in your life. I can assure you that you would think different than 99% of traders in the forex market. Does that mean you would think as an institutional trader? No!

 

But, you are one level closer to their game than the rest of retail traders. In my opinion, these large body candles are the RESULTS of big players deciding to move the market in a particular direction. Whether it is a direction of their interest or not, is something for future posts. My point here is that you and I, and every single trader in our community all together would not be able to create such a move in the forex market. The key concept here is PROBABILITY!

 

It is more probable that the giant candles have been create by the institutions rather than retail traders.

 

So, if you know where an institutional decision has been made, you know where they might make similar decision again. That is the basics of finding the institutional footprints but, there is more to it. My book covers these concepts in more detail and I plan to provide more insights here on our community platform. So, stay tuned and communicate your questions here. I’m more than happy to help in any way I can.

 

Zack