Individual investors’ impact on the market, or even on the price of a single stock, is negligible. Because of the amount of money circulating in the market, an individual doesn’t command the sort of leverage necessary to sway prices. Institutional investors -- funds professionally managed that pool members’ funds for diversity -- command large-enough blocks of stock and capital that their trades may indicate shifts in markets. Although it’s impossible for individuals to track a single institution’s trades, because of statistics that track block trades -- trades of 10,000 or more shares at once -- investors can keep an eye on trends in institutional trades.
Locate a block-trading table published by an investment-tracking company such as "Investor's Business Daily" or Tradetrek. These tables, which are usually only available online to subscribers or published in daily print editions of a periodical, only track block trades of 10,000 shares or more. These large-scale trades are generally made only by institutional investors, because they represent major sums of money.
Examine the volume percentage change data for the stock. This statistic represents the volume of block trades made each day as compared to a rolling 50-day average volume for block-trade exchanges. This figure is often represented as a three-digit number, which corresponds to a percentage: A stock with a VPC of 226 traded 22.6 percent above the average for the day. Large block-trade volumes indicate volatility in the stock.
Consult the over/under statistics for block trading of the stock. While high volumes of block trading indicate that institutional investors are trading the stock, they provide little information on its expected performance. Most tables index block trades by listing them under or over the market price for the stock. If many institutional investors sell large quantities of stock under its market value, it indicates that many managers expect the stock’s value to decrease in the near future, and vice versa for a high number of above-market trades.
Examine money-flow statistics presented on the table. This statistic measures the amount of funds represented in a stock’s block trades, which can also be helpful in determining institutional investors’ outlook on a stock. Rather than merely representing volume of trades, this measure places trade volumes in perspective, providing small investors with additional data on trading amounts: A stock’s overall average trading volume may not be high if it’s been volatile for a long period, so total money-flow statistics help examine the amount of trades each day.
While block-trade data provides information about institutional trades, automated trading and dark pool trading allow institutions to sell large amounts of stock in many small trades, thus bypassing block-trade reporting.
- While block-trade data provides information about institutional trades, automated trading and dark pool trading allow institutions to sell large amounts of stock in many small trades, thus bypassing block-trade reporting.
Wilhelm Schnotz has worked as a freelance writer since 1998, covering arts and entertainment, culture and financial stories for a variety of consumer publications. His work has appeared in dozens of print titles, including "TV Guide" and "The Dallas Observer." Schnotz holds a Bachelor of Arts in journalism from Colorado State University.