Institutional Trading Strategy: Rules, Backtest, and Analysis

Trading securities can be as simple as clicking the buy or sell button on your trading device, and the trade orders get executed. While that may be true for retail trading, it may not be so for institutional trading which requires a lot of tact and planning. But what exactly is an institutional trading strategy?

An institutional trading strategy is the buying and selling of financial assets, such as stocks, commodities, currencies, futures, and options by institutions like banks, credit unions, pension funds, hedge funds, mutual funds, and REITs.

The way and manner these institutions make their trades are referred to as an institutional trading strategy. Now, let’s take a look at how institutional traders play the market. As you’ll discover, they are a bit more “sophisticated” that the average retail trader, but we also explain how you as a retail trader can employ some institutional trading strategies in your own trading.

Let’s dive in: