🏦How Institutions trade

We don't exactly know when institutions enter or exit on trade but some smart money concepts allow us to help identify the POIs ( point of interests ) where we can anticipate instituional activity. Some of These POIs are called FVG ( Fair Value Gaps ) and OB ( Order block ). Institutions don’t just buy or sell randomly. They use specific price zones where they accumulate or distribute large positions. Retail traders often get stopped out in these areas, while institutions use them to their advantage.

• Order Blocks (OBs) → Institutional Buying & Selling Zones 📌

  • These are last bullish or bearish candles before a strong move, indicating where institutions have placed their orders.

  • Why it matters: OBs often act as support or resistance, where price reacts strongly when revisited.

• Fair Value Gaps (FVGs) → Market Imbalances ⚡

  • An FVG forms when price moves aggressively, leaving an imbalance between buyers and sellers.

  • Why it matters: Institutions look to fill these gaps before continuing their move, making them key retracement points.

Obsidian dynamically scans these zones for you, so you can easily identify POIs on the chart and plan your trades accordingly

There are two types of Order Blocks which are :

• Bullish Order Block (B-OB): The last bearish candle before an up move. This suggests institutions were accumulating long positions.

• Bearish Order Block (S-OB): The last bullish candle before a down move. This indicates institutions were distributing and entering short positions.

📌 Institutions don’t buy or sell randomly - they place large orders in zones of liquidity and execute them strategically.

📌 Retail traders get stopped out in these areas, while institutions use them for re-entries.

📌 Price often returns to OBs before continuing the trend, offering high-probability trade setups.

Actual screenshot of Obsidian AI

As you can see in the screenshot above, the price broke the uptrend, retraced back to the order block (blue box), and then continued its movement. This is a classic example of a liquidity trap, designed to trap retail traders. A BOS to retail traders who are trading, let’s say, a bearish flag or bearish pennant, may seem like an opportunity to short, but the big players liquidate their positions in a smart way like this. But using Obsidian I could dynamically identify the order block which help me entering a good 2:1 RR trade. I will also cover strategies using Obsidian to trade like the institutions.