With this post, we'll try to understand the selling narrative of the institutions and how they trap the traders on both sides. Just remember this one thing, "the market is never moved by retailers, only institutions can do that".
The only reason why the institutions sell is to buy at lower prices. Nothing more than that.
This happens in the following way:
1. Institutions initiate selling near a support level so as to create a narrative of a "Bearish trend". 2. When the narrative is set, the retailers think in the following ways: •Longs fear for their stops below the support line •Others wait to initiate shorts at the close below the support.
3. When the price closes below the support level, two types of orders are placed instantly. Stop losses of longs and fresh sell orders of the shorts with buy stops above the support line. 4. Longs get stopped out. These retailers are selling to institutions which acts as a discount for them. 5. Breakout shorters start shorting but their stops get taken out in the next few candles when the institutions move the price back up in the intended direction. 6. In this way, the majority of the retail longs and shorts are taken out of the market.
After the initial rally, the price returns to the demand block for the following 2 reasons:
1. To fill the pending buy orders from institutions 2. To close the shorts which the institutions initially opened so as to push the price downwards. This is also called mitigation.
After the longs get filled and the mitigation is over, the price moves back up in the original direction.
This process repeats like the clockwork. You can go and back test on any time frame. The only thing that requires skill is the identification of these phases in the live market, which obviously takes a lot of practice. The more you practice, the better you will become.
If you don’t believe in these concepts and are trading profitably using the indicators, then just ignore this post. This post is meant only for those who want to get an insight as to how the institutions work. All these concepts are real and work very much, you are free to read from Google.
Also, if anyone is interested in getting a PDF version of this thread, then you can check the links under this post. I spend a lot of time creating these educational posts, illustrations, charts, and PDFs. Please be appreciative of that and leave a like and comment if you found these helpful. It will help to know that people are reading these posts.
Disclaimer:This is NOT investment advice. This post is meant for learning purposes only. Invest your capital at your own risk.
Really Appreciate that you're taking your time to make these. Thank you
satishmoogala
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its so true and laughable content becoz it happenned to me few times and then learned to be patient and moved by SL little low (more loss accepted thaan fake loss) and going good...when there too much up/down of price...then it is for hunching for stop loss of retailers trades... probably many retailers like me relate that after hitting stoploss stock moves in your analyzed direction but you are already out of it even though you are right in your analysis...your analysis is right but hit by SL!!!!! :)
Gandhi_Market
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always great to gone through ur post............
seshu_007
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Hi, You are really amazing. you are teaching us in depth concepts in very simple language . Thanks is small word. Love you
shinhmar72
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Can you share the pdf please ?
HENSON
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wonderful mate--good appreciate your work
zaidsk70
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I cannot find the PDF links, this content is rare to find these days.
saitejarokzz9502
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Hey thanks a lot for making this post! I have few doubts on the second part price coming back to demand zone. Can you explain more briefly? It's a request. and second question is you said that the institutions will close their short positions when price comes to that demand zone, but for stocks they need to close their short positions at the end of the day right?