Institutional order flow..

[Skitch]

Say an institution exits a large short position on a low time frame graph..

What.. if any is the expected affect on price?
Would the new volume of supply push prices down drastically?
Would PA be affected beyond the 15M time frame?
Would the sell off ticks become staggered?..

Talking in general rather than an over sized position & ofc the forex market specifically :]

 

[everyonerich]

during exits, it must have buyer take over the short selling.

if there isnt really any buyer around, probably institution would only able to exits at higher price. but most likely wont happen because there are many banks willing to take your order

 

[DionysusToast]

A large institutional trade exiting a short position is a buy.

There would be no new volume of supply because the order is a buy. There would be demand.

Now - institutional orders may show up on the tape when they happen, after they happen (block trade) or not at all (dark pool).

 

[foredog]

If they exit it will affect all charts as the 1m show the same price as the 1hour etc

 

[A Dashing Blade]

Institutions often want to get out on a volume weighted average price basis + the trade will often be a switch (stock to stock / sector to sector / equity to bonds) + may well be offered to potention execution firms as a basket trade to be executed that they all have to bid for without the actual individual instruments being disclosed eg "£50m of the FTSE oil to be switched into Banks"

 

[Skitch]

Embarrassingly I had to review short selling again but it brings up a bigger question..
When a buyback for the large short occurs, would price action reflect this?
I had no idea that dark pool even existed thanks, very eye opening.

Dashing blade this is really interesting, what surprises me is that institutions would use vwap in forex without a grasp of real volume and a fixed start time.. Or is there a bigger picture that retail is again excluded from?

 

[Rhody Trader]

Whether a big institutional trade moves prices depends on how deep the market is on the other side. If there is plenty of liquidity, then the trade may be done without any kind of price movement. In a thinner market, though, prices could move substantially before the order finally was filled in total.

Consider this example. The market for USD/JPY is 100.00/01 with a yard of depth on either side. If an institution comes in to buy 500mln it will only cover half the depth, so price probably doesn't change at all. If, however, the depth is only 100mln it's a different story. After that 100mln is covered you go to the next higher offier. If there is 100mln in offers at 100.02, 100.03, 100.04, and 100.05 you would see the offer rise to above 100.05 as all those offers were covered by the trade (assuming the buyer didn't want to do it all in one block).