In the trading world, the market does not move randomly. There is a class of large traders, such as financial institutions and hedge funds, that have the ability to influence price movements. Understanding the behavior of this class can give the individual trader a strategic advantage, especially when making entry and exit decisions.
What is meant by the behavior of big traders?
Big traders are those entities that trade in large volumes that affect liquidity and the overall market direction. Their behavior often appears in specific areas such as:
- Accumulation: When they start buying gradually without clearly raising the price.
- Distribution: When they gradually sell after pushing the price up.
- False breakout: When they create a breakout movement at a certain level to lure traders and then reverse the direction.
How can this behavior be observed?
The intentions of big traders cannot be directly known, but their traces can be tracked through:
- Trading volume: Unjustified increase in volume at support or resistance areas.
- Price movement: Long candles or strong reversals after false breakouts.
- Repetition: Repeating the same price pattern in multiple areas indicates strong intervention.
Trading strategy based on this behavior.
The goal is to enter with the big traders, not against them. Here are practical steps:
1. Monitor strong support and resistance areas.
2. Pay attention to trading volume at these areas.
3. Do not enter immediately after the breakout; wait for confirmation or reversal.
4. Use a stop loss far from manipulation areas.
5. Set your target based on the previous price movement, not just on the number of points.
Practical examples
If you notice that the price broke through resistance and then quickly returned below it with high trading volume, this could be distribution. In this case, entering a sell trade after confirming the reversal would be logical.
In conclusion
Trading based on the behavior of big traders requires careful observation and patience. It does not rely on indicators but on understanding market dynamics. Over time, the trader becomes more capable of distinguishing between random movement.
and the movement driven by influential entities.
