Everything comes down to the flow of money.
The volume of money – literally billions of dollars flowing into and out of these assets – is what really moves prices.
I saw this firsthand in my time on Wall Street – how an influx of big money can drive stock prices into the stratosphere.
Discovering this made me want to know everything about the trading process. I started with the very exchanges this money flowed through.
Some are obvious, like the New York Stock Exchange or the American Stock Exchange. But others are much more secretive.
They’re known as Dark Pools. And they’re much bigger – and have a bigger effect on the stocks in your portfolio – than you think.
As I explained in the Dark Pools Summit earlier this week (you can watch the replay here if you missed it), as many as 40% of all trades take place in this anonymous way.
If you invest unaware of what’s going on in this huge chunk of the market, your decisions are made blindfolded, with one arm tied behind your back.
But if you can see these stock-moving money flows, you can compete on a more level playing field with the big boys… and win much more than you lose.
Why Wall Street Loves Dark Pools
When you and I buy stock – even if we’re buying what we would consider a lot – it’s nothing compared to big banks like Goldman Sachs.
They buy and sell millions of shares of stocks, even tens of millions.
When we buy shares, it’s like a few snowflakes falling gently on the ground. They technically add to the pile, but the impact is negligible.
But when Wall Street enters a trade, it can be an avalanche that changes the landscape.
The price can move… and move quickly.
If any big institution or hedge fund were to buy millions of shares on public exchanges, their own order would drive up the purchase price before it could get filled. They’d be fighting themselves, never getting the price they want.
Say a big Wall Street bank like Goldman Sachs (GS) wants to buy 20 million shares of Nvidia (NVDA) for $490 per share.
If Goldman placed that massive order on the NYSE, it would never get filled at that price. Everyone would see what’s going on, and Goldman’s own order would push up the purchase price immediately to, say, $495.
Because they’re buying millions of shares, that extra $5 could cost them tens of millions of dollars.
The “big boys” have to turn to unconventional methods to get the prices they want… and one of those main methods is Dark Pools.
Dark Pools are private stock exchanges Wall Street uses to make trades anonymously. Trades remain confidential until after they are reported, thereby avoiding any immediate market impact.
This is why Wall Street loves these more secretive methods like Dark Pools.
Seeing These Secret Trades Changes Everything
When I started digging into this world, I was shocked by the amount of money exchanging hands by the big boys behind the scenes. Billions of dollars change hands every day in the markets, moving from one place to another, and a lot of it in the Dark Pools.
This impacts stock prices, but the average person never sees this flow of money.
It’s a big reason why the average investor – even the average fund manager – hardly ever beats the market. When they invest, they don’t account for the significant percentage of money changing hands every day under the radar.
It’s nobody’s fault. These trades are kept hidden on purpose.
But because of my position on Wall Street and the access I had to Dark Pool networks – and all other exchanges – I saw all kinds of things most folks never do. I even began working with and improving these private exchanges myself.
When I left Wall Street, I created a system of my own by reverse engineering what I had pieced together during my time at Cantor Fitzgerald. To fuel that system, I found a way to legally tap into the Dark Pool data that shows trades placed by the big boys on Wall Street.
My system tracks nearly every dollar that changes hands each day throughout our financial ecosystem. And once you see where the money is flowing, you can anticipate where stock prices are heading with stunning accuracy.
If you see that a big institution just purchased 60 million shares of a company, how could you not conclude that the stock will move higher? It’s simple supply and demand.
Let me give you an example. On January 10, 2018, we saw that the big boys were pouring billions into pharmaceutical company Bioverativ, which was trading for around $60. Over the next few days, the stock jumped to $105 – a 67% move.
Twelve days later, a big announcement came out that Sanofi (SNY) was buying Bioverativ for $11 billion.
Every day, big institutions are sending tidal waves of capital across the globe through places like the Dark Pools, causing big price moves – both up and down.
Once you understand how the system works, you can track the big, hidden money flows the insiders don’t want you to know about, piggyback off them, and make big profits.
Talk soon,
Jason Bodner
Editor, Jason Bodner’s Power Trends
P.S. For a more in-depth look at Dark Pools, how they work, and how you can level the playing field in your own investing, I invite you to watch The Dark Pools Summit.
I’ll also tell you more about the system I designed to track these massive money flows – a system that would have beaten the market by a whopping 7-to-1 for decades, according to back testing.
With money flowing into stocks – likely continuing into 2024 – now is the time to understand these massive money flows and how to use them to make money.
