How to Read Big Player Trader Patterns

As an educator I have made assumptions that new traders already have a good understanding of market fundamentals. The more I teach the more I realize most traders have not experienced trading pits and the valuable lessons we were privy to in that environment. Looking back, it was a privilege to watch the auction process in its most basic form: a trading pit. Big players tend to execute trades during high-volume periods. Markets are most liquid near the open and close of a trading day. Thus, taking directional signals during those times reveals which direction the professional traders favor.  

The ’Players Card’

When I started my career at the CBOT my title was “runner.” Basically, I did whatever my supervisors told me to do. Getting lunch, buying birthday and anniversary cards for a spouse, and appearing in court for someone were just a few of my duties. When it came to my actual job, maybe the most valuable task I had was to fill out a “players card.” 

When I think back, I was a spy of sorts. To fill out a players card required me to walk around the circumference of the pit and gather intelligence from the brokers assistants of the top Wall Street firms. The task was to find out who was buying and selling and how many contracts were involved. After computing the total buys and sells I would report the findings. It seemed inane at the time. But, in fact, my job was to gather this intel and report to my superiors, who would relay these messages to traders around the globe.

Seeking Edge

An edge could be gained simply from knowing what direction the big money was favoring. If the order flow showed bids or buy orders were coming from top-tier firms, long positions might be held and short trades exited. On the other hand, if sell orders outweighed bids, lower prices were likely in the next session; thus short positions were held and longs exited.

Market Nuances

A trained eye could gather a wealth of information from a trading pit, but that info is no longer available. Therefore, we must find a way to get that real-time info using charts to gain an edge.

One way to find the players who move markets is to track the most liquid times of day. Large orders to buy and sell are usually executed in the first and last hour of the regular trading day. These are the most liquid periods because volume peaks around those hours.

On days when the high for the session is made in the first hour and the low made late in the day, chances are the market will continue lower during the next session. If you view candlestick charts it would show a daily candle that has small wicks and large bodies. When the low is made in the first 60 minutes of the session and the high near the close, higher prices are probable the next session. On the other hand, when candle wicks are larger than the body it is an indication of neutrality, which is common at the end of a trend.

As traders we all seek an edge and endeavor to catch trends early. If you are aware of when the market movers are trading it may enhance your timing for early entry in a trend and exit when the trend reaches exhaustion.

John Seguin, Market Taker Mentoring

Trader Education