How to trade like hedge funds
How The Hedge Funds Trade
Timecodes:
hey traders mike sir here do you want to
know the trading strategy that many
hedge funds use to trade the way they
approach the market to buy hundreds of
thousands or even millions of shares
well in this video i'm going to show you
exactly how the big institutional
players build their positions in
individual stocks and how they profit
from this type of trading strategy now
this way you can better understand how
the big boys play and follow them in
their footsteps so let's get started we
all know in the financial markets that
the large institutional traders control
the market and we as retail traders have
no power to move any stock or financial
asset
therefore if you want to succeed as a
trader you have to learn to recognize
what the professionals are doing and
follow what they are doing because
chances are they are always right and
you'll be able to make a profit so one
of the secrets and profitable trading
strategies that you can employ is to
identify what the big money is doing
watch what the big boys are doing and
follow along in their trading in the
process of how the big boys buy or sell
financial assets in the markets involve
some form of manipulation to hide their
intent and positions so let me walk you
through step by step on how they do this
before i share with you how the big boys
trade please take a moment to like this
video i would really appreciate your
support
okay first of all let me explain how the
stock market is like any merchandising
business
now you try to buy items at the lowest
price with the hopes that you can sell
it at a higher price than what you paid
for it and you keep doing that at the
highest possible rate of turnover now
it's a saying that you probably heard of
of buy low and sell high so now let's
say for example you want to buy a
hundred thousand shares of tesla stock
and you want to buy it at the lowest
price possible but if you buy a hundred
thousand shares all at once you could
easily push up the price
especially if there's not a lot of stock
supply so therefore how do you
accumulate a sizable stock position
well what you want to do as a big boy
trader is to slowly accumulate shares in
the stock and this could sometimes take
days weeks or even months
and also you want to accumulate the
stock at the lowest price possible so
you want to shake out or scare the
little guys into selling the stock and
forcing the stock price to head lower
now the best way to do this is when the
overall stock market is particularly
weak or when the stock has very little
trading activity
this gives you an opportunity to rate
the market for tesla stock and make it
look like it's very weak by sending in
lots of sell orders through a number of
brokers
now this gives the appearance that
there's heavy liquidation of the stock
and therefore an opportunity for you to
accumulate the stock at much lower
prices
then once you have accumulated your 100
000 shares of tesla stock you try to
push the price higher by putting out
good news about the company that the
general public is already aware so for
example it could be that tesla has
already announced that they will be
releasing their new car
next month and all you have to do is
heavily promote this news now you may
have heard the saying buy on rumor and
sell on news
now the rumor is tesla is going to
release a new electric vehicle soon that
is going to sell like hot kicks
and the excitement around this news will
cause the stock price to go up
then once the news and the details of
the new car is finally released to the
public the stock price falls or has all
the big boys take their profits now let
me give you an example of how the big
boys made massive profits in tesla stock
so here you can see a chart of tesla and
the stock price is trading in between
four hundred dollars to four hundred and
sixty dollars per share
so let's just say that you think that
the stock price is going to go higher
and you want to buy a hundred thousand
shares of tesla stock
so ideally you want to try to buy most
of your shares near the bottom of the
price range which is around four hundred
dollars per share
so you start buying close to four
hundred dollars but the price starts
rising towards four hundred and sixty
dollars now when it reaches the top of
the range of 460 dollars you force the
price back down by offering large
amounts of stock and inducing other
traders to sell their shares or entice
short sellers to bet on the downside of
the stock now by pushing the price down
you may sell let's say 10 000 shares
close to 460 dollars
but as the price goes lower to 400
you're able to buy 20 000 shares so
hence you're able to accumulate
10 000 shares at the lower price range
and this is how you're able to
accumulate a hundred thousand shares as
close to four hundred dollars per share
by repeating the same process over and
over now if traders can spot the buying
patterns of these hedge funds on how
they buy and sell to accumulate shares
then you can follow along and profit
like them
essentially the big funds
cause prices to move up and down in the
trading range which you can see clearly
on the price charts
now that you accumulated your 100 000
shares
you have no interest in selling the
stock at 460 dollars
and this is where the stock price is
ready to move higher
and often referred to has the mark up
phase and this is where the hedge funds
publish positive news articles about the
stock or perhaps go on tv and talk about
how tesla is going to take over the
electric vehicle industry or how great
the company is as well if the stock
price isn't moving much they'll buy more
shares to prop up the stock price until
it starts moving higher but in tesla's
case as you can see in this chart the
stock price doesn't need any help and
goes up sharply
and reaches eight hundred and eighty
dollars
an almost a hundred percent increase in
the price
so now you're holding a hundred thousand
shares
and looking to take your massive hundred
percent return
but how do you sell a hundred thousand
shares all at once
so if you sold them all at once you
could probably easily push the price
lower
so in this case what you want to do is
coordinate the timing of selling your
shares
when tesla reports good news such as the
release of their new electric vehicle
or when there is considerable optimism
in the overall stock market now has new
buyers rush in to buy the stock
you look to easily offload your shares
10 000 to 20 000 shares at a time on the
strength of the stock price and you can
see here from the chart that the stock
starts trading in a range from eight
hundred dollars to 890 dollars per share
and what you want to try to do is
offload most of your shares at the upper
price range
then once you sold your entire 100 000
share positions
and other big hedge funds have taken the
profits from their tesla trade
the stock price usually falls back down
trapping all the retail traders or
amateurs who bought at the highs
and don't have the buying power to
control the stock price you can see here
from the tesla chart
that the price falls from a high of 890
dollars all the way down to 550
and this is exactly how the hedge funds
and the big boys accumulate large
positions in the stock that they like
and how they manipulate the stock price
to their benefit trapping the amateur
traders every single time now you could
say that this is stock manipulation or
should be an illegal activity
but the big boys didn't break any rules
or they're not trading utilizing any
insider information
they merely utilize the size of their
capital to accumulate shares and promote
publicly available information
now it's not ethical but on wall street
everyone is looking for an edge and this
is the big boy edge
thanks for watching if you like this
trading strategy and want to learn more
strategies from me
please smash that like button
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i'll see you all in the next video
Related queries:
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