Anyone who has seen how professional traders trade know they often place their orders ahead of time and less often do market orders. A general theme that shows up is about 70+% of all institutional orders are placed at prices ahead of time, while <30% are market orders.
Now every institution and trader has their own approach. Some use price action, some use the ichimoku cloud, some use fibonacci levels, some use indicators, etc. Regardless, none of that matters.
What does matter is all of them are paying attention to key support and resistance zones. These ‘zones‘ are where they most often place their orders. Now it’s important to understand that each trader and institution has their own ‘holding time‘, meaning how long they like to hold their positions.
Traders who have shorter holding periods will often require a smaller stop. Hence they will want to get as close to the support/resistance level as possible to create the smallest stop available while maximizing their upside. Traders with longer holding times won’t require as much precision and will likely have a larger stop loss to avoid getting kicked out of minor swings to capture the underlying trend.
Now to give you a visual of how this works, lets look at the chart below on the USDJPY weekly chart.
Now every institution and trader has their own approach. Some use price action, some use the ichimoku cloud, some use fibonacci levels, some use indicators, etc. Regardless, none of that matters.
What does matter is all of them are paying attention to key support and resistance zones. These ‘zones‘ are where they most often place their orders. Now it’s important to understand that each trader and institution has their own ‘holding time‘, meaning how long they like to hold their positions.
Traders who have shorter holding periods will often require a smaller stop. Hence they will want to get as close to the support/resistance level as possible to create the smallest stop available while maximizing their upside. Traders with longer holding times won’t require as much precision and will likely have a larger stop loss to avoid getting kicked out of minor swings to capture the underlying trend.
Now to give you a visual of how this works, lets look at the chart below on the USDJPY weekly chart.
