It is known that the price in financial markets is driven by big market players who have a large capital. These include institutional investors that the direction of the asset movement in many ways depends on.
Understanding their role in the market and having the ability to track down the behavior of these market players allows private traders to increase the number of accurate and high-yield position entries.
1. Institutional Investors: Definition
2. Types of Institutional Investors
3. Difference Between Institutional and Private Investors
4. How to Track Down Institutional Investors
Institutional investors are legal entities that act as intermediaries between private investors and the market. They do not work with equity capital. Instead, they accumulate the funds belonging to small investors in their accounts and make trades in financial markets on their behalf.
In essence, the investing margin is what constitutes their profit. Institutional investors perform a variety of functions ranging from managing and brokerage to auditor ones.
Let’s explore what types of institutional investors are out there. In the list below, you can see big players of financial markets that you have probably heard or read about as a part of your forex education:
These organizations allocate capital between different types of assets (stocks, shares in open-end mutual funds, defensive assets) achieving a certain level of profitability and risk.
It is a known fact that private investors or traders cannot enter financial markets by themselves. This requires big capital which forms in the accounts of institutional investors. These large market players have more strategic opportunities on exchanges and are offered better terms as far as transaction fees go.
And most importantly, they have a direct impact on the behavior of the asset prices, as well as the formation of trends and price levels.
Institutional investors play a leading role in the creation of the supply and demand for market assets. This is why private traders need to track down the traces left by big market players in the charts and learn how to understand where they will be pushing the price next.
By analyzing the chart, you can figure out where and which range a particular instrument will be moving with.
However, there is also another simpler method to see the market profile in the chart and distribution of positions belonging to institutional investors. Simply install the Real Market Volume indicator. This professional tool runs automatically using the Chicago Mercantile Exchange data.
Test out Real Market Volume with free 30-day trial version
1. Where strong support levels are and below which values big market players will not let the price drop. That’s the place where long positions are preferable.
2. Where the resistance formed above which the price won’t go. This level may not align with the horizontal line determined based on the technical analysis. To enter the position with surgical precision, make sure to use its signals along with Real Market Volume.
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