How Big Money Enters and Exits the Market (Key Signals for Traders)

Successful traders aim to minimize risk by identifying factors that lead to losses. One critical skill is recognizing how "big money" (institutional or smart money) enters and exits the market—a key driver of price movements.

Identifying Big Money Entry

In the chart example provided:

  • Between points A and B, market liquidity is low, particularly on the sell side.
  • The downtrend weakens as traders' psychological and financial commitment declines (C > B > A).
  • Fewer aggressive sellers prevent further significant price drops.

Key Signals of Money Entering the Market

  1. Reduced Selling Pressure – The slope of leg C is less steep than B, indicating weakening bearish conviction.
  2. Bullish Absorption – A strong bullish candle forms, engulfing previous sell-limit orders and six prior candles, signaling a potential trend reversal.
  3. Market Conditions – This occurs when:
    • There’s a lack of effective money in the market.
    • Traders' persistence in selling diminishes.
    • The downtrend fails at a key tension zone.

When these factors align, traders can expect upward momentum, either:

  • A push toward the opposite framework level.
  • >60% retracement before continuation.

Detecting Big Money Exit

Traders don’t always need to pinpoint the exact exit of large players—instead, they can watch for:

Signs of Money Leaving the Market

  • Weightlessness – In shorter timeframes, the last 2-3 candles show little progress, with closes near each other, indicating balance and profit-taking.
  • Decreasing Momentum – As price nears a tension level:
    • Projections weaken.
    • Candles develop long wicks or engulfing patterns.
    • Fewer new funds enter, reducing trend persistence.

How Big Money Exits Strategically

Large traders avoid sudden exits to prevent market disruption. Instead, they:

  1. Exit Gradually – Cashing out in phases to avoid drawing attention.
  2. Let Retail Traders Drive Late Trends – In the final stages, retail traders (late entrants) sustain price movement until exhaustion.

Key Takeaways for Traders

  • Trade at Tension Levels – These zones offer high-probability entries with controlled risk.
  • Watch for Absorption & Momentum Shifts – Strong engulfing candles signal potential reversals.
  • Monitor Exit Patterns – Weightlessness, decreasing projections, and long wicks indicate weakening trend commitment.

By mastering these signals, traders can align with big money movements—improving timing, reducing risk, and capitalizing on high-probability setups.

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