How To Identify Institutional Buying And Selling

By identifying institutional buying and selling levels, you will be way ahead of other traders. Your price chart clearly shows who is behind a price change-Institutions or Retail traders.

After reading this post you will be able to identify institutional buying and selling inside your regular price chart.

Look for stocks nearing trend change

Institutional investors are much interested in buying stocks that refuse to go down further.

What I mean by this are stocks that have very few sellers after a big correction or fall could produce interest in buying for institutions.

Stocks nearing trend change will have fewer sellers and will look like trading in a range.

Look at the below chart.

Trend reversal after institutional buying

This is an NSE(NATIONAL STOCK EXCHANGE) stock VEDL.

This stock almost looks exhausted with the downtrend.

It looks like at this point, people willing to sell are less. We can expect that institutions might be interested to buy at these levels.

After a long period of downtrend continuations, if the underlying asset has strong fundamentals, institutions will be interested in buying.

It doesn’t mean the prices of that underlying asset will keep on increasing further.

For a while, after institutions buy the asset, prices might shoot up.

But for continuous upside movement of price, you need more and more people buying it over a period of time.

Below is another example where institutions started buying a stock that was in a downtrend for more than a year.

Within 6-7 trading days, stock prices made a move of more than 40 %.

institutional buying confirmation

The trend is clearly changed by the institutions. Look at the big move.

This is not possible by normal retail traders.

Big candle size=institutional buying and selling

Look at candle size in the same above example. It’s not an ordinary size candle. This type of big candle is a clear indication of institutional buying.

large bullish candlestick indicates institutional buying

Large volume with sudden price change indicates institutional buying and selling

As you can see from the above-shown example of NSE stock IDEA, take a look at the volume.

big volumes confirms institutional buying

So the volume will be high when institutional buying or selling happens.

Now the question is how do you enter with the direction of institutional buying or selling ??

In the conclusion section of this post, you have a link to the post which shows you how to trade in big institution’s direction.

Ordinary volumes could be an indication of amateur retail trading.

Before seeing the spike in volume, previous volumes were normal in size. Check the normal volume size below.

small volume confirms retail traders

Sometimes you might see high volumes but not much change in price. This indicates heavy trading was done for the day on the underlying asset. This type of volume is not an indication of institutional positional buying.

Conclusion

Now you have seen the top 3 ways of identifying institutional buying and selling.

You need to trade in their direction for consistent results.

To make trades in the direction of institutions, you can read Trade in the direction of big institutions.

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12 thoughts on “How To Identify Institutional Buying And Selling”

  1. Not necessarily true as high and low prices can create a big candle either way thru retail traders. To identify if the big candle is an institution more work needs to be done, like looking at the size of the individual trades done during that day in association with the candle and volume. Even then it is not always obvious as institutions may trade in smaller tranches during the day.

    Reply
  2. “Sometimes you might see high volumes but not much change in price. This indicates heavy trading was done for the day on the underlying asset. This type of volume is not an indication of institutional positional buying.”

    Why is this not an indication of institutional buying?

    Reply
  3. Hi,
    Can you pls explain in a more simple way. As I am new to trading so couldn’t get the context clearly.

    Thanks

    “Sometimes you might see high volumes but not much change in price. This indicates heavy trading was done for the day on the underlying asset. This type of volume is not an indication of institutional positional buying”

    Reply

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