Institutional Buying/Selling
- Thread starter deaddog
- Start date
A buy side trader will usually analyze adv and seek to cap orders as a % of adv through some time period.
If you have a block of shares that you need to fill, you’ll first reach out to crossing networks (dark pools or brokers), before doing anything on a lit exchange. Once you need to go public you’ll use strategies to limit market impact (basic examples include vwap, iceberg, dark ice, etc.). Those orders break up a larger order through the trading period.
That’s a basic overview of how buy side (institutional) orders are managed.
If you have a block of shares that you need to fill, you’ll first reach out to crossing networks (dark pools or brokers), before doing anything on a lit exchange. Once you need to go public you’ll use strategies to limit market impact (basic examples include vwap, iceberg, dark ice, etc.). Those orders break up a larger order through the trading period.
That’s a basic overview of how buy side (institutional) orders are managed.
Kinda hard, these days there is so much emphasis on separation of roles, there is no single person that knows everything about everything. The buyer conveys intent to buy 1 million xyz at avg cost x$. What happens, how it happens he hardly controls.
The only fool proof way is to hire a mole.
Check dxfeed bookmap it can run fingerprints on icebergs. Check A/D indicator which can be helpful to track accumulation. Volume and number of successive trades with nearness of close price to high can be tracked to get clues.
There are hundreds of ways order is broken and routed. Just like how everyone wants to break into this they are also equally researching new ways to hide.
what if Institution A sells stocks to Institution B,
or Institution A sells stocks to big bank B?
Then you ended up trying to figure out who is the greater stupid fool.
The more you try to gather such information,
the more stock analyst reports you read,
the more confused you will be
and you will end up suffering from data paralysis / analysis paralysis
Just focus on the chart and that should suffice.
or Institution A sells stocks to big bank B?
Then you ended up trying to figure out who is the greater stupid fool.
The more you try to gather such information,
the more stock analyst reports you read,
the more confused you will be
and you will end up suffering from data paralysis / analysis paralysis
Just focus on the chart and that should suffice.
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When there is high demand, ie urgent buying across the board, will institutions usually be forced into trading larger size quickly. Or will institutions find other ways around this problem and continue buying incrementally?
It can happen but that’s normally done in a dark pool. Lit exchange liquidity is too little for buy side firms to move size quickly. Dark pools have dominated venues for over a decade lol.
Do dark pool trades have to be reported?
FINRA Trade Reporting Facility facilitates darkpool trade report. It is a regulatory mandate.
Yes on the tape.
For example:
You want to buy 50k shares of Ford
- the total liquidity around the market price is say 5k shares
- you would route your order to 5-6 brokers simultaneously and would first get filled at nbbo before getting the dark pool price
- unless you are the participant you do not know the direction of the institutional trade or who it is
- buy side traders are constantly trying to stay a step ahead of hft — retail traders (unless you’re an hft order seeking genius) have no way to compete in this domain