Here is a chart of the put to call ratio when compared with NASDAQ's ETF, QQQ. When the line is at the bottom of the PC chart, that means market participants are net short. When at the top, they are net long.
I'm sure we've all heard the saying that market makers usually take the other side of the trade. This chart shows that this is a true.
When stocks are going up, the majority of retail traders are shorting the market. When the market goes down, the majority of retail traders are longing the market.
Right now we're in an extreme situation where the majority of retail traders are shorting the market and institutions are doing what they do best, hitting their stop losses and squeezing them out, essentially taking the free money on the table. When this is no longer profitable, the trend usually changes with a few exceptions (see March 2020). To look at it another way, institutions make money on retail trader's emotions which is specifically disbelief.
They say 90% of retail traders lose money trading the stock market. I believe this chart is evidence of that.
I'm sure we've all heard the saying that market makers usually take the other side of the trade. This chart shows that this is a true.
When stocks are going up, the majority of retail traders are shorting the market. When the market goes down, the majority of retail traders are longing the market.
Right now we're in an extreme situation where the majority of retail traders are shorting the market and institutions are doing what they do best, hitting their stop losses and squeezing them out, essentially taking the free money on the table. When this is no longer profitable, the trend usually changes with a few exceptions (see March 2020). To look at it another way, institutions make money on retail trader's emotions which is specifically disbelief.
They say 90% of retail traders lose money trading the stock market. I believe this chart is evidence of that.
My goal is to find the best risk:reward setups. For instance, if you risk $1,000 at a chance to make $5,000, you can afford to be wrong 4 out of 5 times and still not lose money. I hit my targets over 50% of the time.
Also, yes institutions and high frequency trading firms are buying order flows from brokerages like Robinhood to run the stops and to take the other side of retail's trades.
Source: seekingalpha.com/art...gh-frequency-traders