Jack's Trading Classroom | BTCUSD Institutional Order Principles

We all know that the majority of winners in the trading market are controlled by institutional entities. Institutional strategies are also very diverse, but they all adhere to one principle, which is to make their moves at very low prices.

We all know that the majority of winners in the trading market are controlled by institutional entities, and institutional strategies are also very diverse, but they hold a principle that they will act at very cheap prices.

For example, buying a house always at the lowest point, and selling a house always at the highest point. Of course, institutions may make mistakes too, but the risk-return ratio for institutional trades is higher compared to ordinary retail investors.

If the chips that institutions play with account for 1%, perhaps a single operation can yield returns of more than five times, achieving a profit of 5% of the overall position upon exiting, which is a trading order that ordinary retail investors dream of.

The most common opening strategy for institutions is the fund-absorption method, which creates a false trend reversal in the market and forces retail investors to stop their losses and re-enter the market. As shown in the figure below:

For example, real estate tycoons create market panic, causing property holders to mistakenly believe that real estate prices are falling, and sell off their assets to cut losses and exit. At this point, the real estate tycoons will buy back the assets being sold at a cheap price, drive up the price, and profit from it.

The concept is the same in a bear market. Retail investors enter the market seemingly for short positions, and institutions create panic buying, causing retail investors to mistakenly turn the trend into a bullish one and cut losses.

At this point, the institutions turn their efforts into a bearish market and enter the market to profit from selling short positions at average prices.

Finally, looking at the daily chart of BTCUSD, it shows a typical pattern of higher lows in the daily chart of Bitcoin, indicating a standard uptrend.

Breaking the previous high of 62000 on April 13, 2020, retail investors entered the market for long positions, and later institutions created panic selling, forcing retail investors to stop out at the previous low of 50458.0.

In the future, attention should be paid to the resistance level around 56349.0, which can be considered as the average buying price for institutions. If the price effectively breaks through this level, Bitcoin is likely to continue to strengthen within the daily chart.

In recent days, the digital currency market has shown significant volatility. It is recommended that operators strictly implement risk control measures and avoid high leverage and high contract volumes to prevent additional losses caused by volatile market conditions. This article is a personal opinion, please read it carefully, and virtual currency trading may bring risks to your capital.

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