📘 How Orders Traverse the Market and Flow Manipulation

This module covers how orders actually traverse the market, how institutions manipulate the flow at a micro level, and how this alters patterns, liquidity, and operational timing.

🏛️ 1. WHAT IS 'EXECUTION ARCHITECTURE'

It is the complete path that an order takes from the click to the final execution.

Includes:

  • Order origin

  • Routing

  • Priority

  • Matching

  • Forms of aggression

  • Speed and latency

  • Institutional optimization

Retail only sees the 'buy/sell button'. Institutions control how, when, where, and with what impact the order reaches the book.

⚡ 2. THE 4 TYPES OF INSTITUTIONAL EXECUTION

2.1 — Smart Order Routing (SOR)

It is the system that automatically decides which exchange, pool, or book has the best: Price, Liquidity, Depth, Slippage, and Latency.

  • 📌 Effect on the chart: The SOR creates micro-peaks of volatility and micro-inefficiencies when redistributing flow among different venues.

2.2 — Execution Algorithms (ALGS)

Institutions don't press a button. They use algorithms, the main ones being:

  • TWAP: Dilutes the order over time.

  • VWAP: Follows the real volume.

  • POV: Executes a percentage of the market volume.

  • Sniper: Executes only at ideal prices.

  • Iceberg Executor: Fragments invisible orders.

  • Impact Minimizer: Avoids moving the price.

  • 📌 Effect on the chart: Creates repetitive micro-patterns and a constant rhythm of absorption that retail misinterprets as sideways movement.

2.3 — Latency Arbitrage Execution

Occurs when institutions use the delay between exchanges to: Buy where it hasn't risen yet and Sell where it hasn't fallen yet.

  • 📌 Effect on the chart: Generates long Wicks, violent breakouts, and instant recompressions (false micro-BOS).

2.4 — Liquidity Capture Execution

Execution prioritizes consuming concentrated liquidity.

  • Examples: Clustered stops, Equal Highs/Lows, manipulated tops and bottoms with pending liquidity.

  • 📌 Effect on the chart: It's the famous 'go get it and return'. Retail thinks it's bad luck — it's programmed execution.

🧩 3. EXECUTION PRIORITY

When an order arrives at the book, it enters the priority system:

  • Price: The best price executes first.

  • Time: Who arrived first.

  • Size: Institutions receive preferential treatment.

  • Order type: Aggressive ones consume first, passive ones wait.

📌 Impact on flow reading: When you see several small repeated orders, this is often institutional routing, not retail.

🔍 4. HOW INSTITUTIONS 'SHAPE' THE PRICE THROUGH EXECUTION

  • 4.1 — Liquidity Compression: Algorithms progressively reduce the amplitude until an inevitable point of expansion. ➡️ Generates 'too clean' consolidations.

  • 4.2 — Programmed Expansion: The impulse is not 'random': it is the exact moment when the execution logic changes from passive ➡️ aggressive. ➡️ Generates strong BOS followed by a shift.

  • 4.3 — Artificial Candle Rhythm: TWAP and VWAP create candles with a constant body, as if they were 'cloned candles'. It's institutional hiding absorption.

  • 4.4 — False Visual Liquidity: Icebergs hide real size. Retail thinks there is 'no lot', but in fact, there is a whole invisible wall. ➡️ This defines where the price will really not pass.

🔬 5. MICRO-STRUCTURES THAT ONLY EXIST BECAUSE OF INSTITUTIONAL EXECUTION

These are signs of advanced flow reading, invisible to those who operate 'candle drawing':

  • 5.1 — Micro Imbalances (mFVG): Created by micro-bursts of aggressive execution.

  • 5.2 — Micro BOS (mBOS): Breaks of structure at the minimum level of HFT (High-Frequency Trading).

  • 5.3 — Velocity Shifts: Abrupt changes in price speed.

  • 5.4 — Time-Slicing Patterns: Patterns caused by temporal divisions of the algorithm.

🧠 6. WHAT IS THE REAL ADVANTAGE OF UNDERSTANDING EXECUTION?

You start to see:

  • Why does the price move at that specific timing.

  • Why certain candles don't make sense to retail.

  • Why certain breakouts are false by nature.

  • How to predict shifts before retail sees 'the pattern'.

  • Why liquidity is built so symmetrically.

📌 And mainly: You understand that the chart is a consequence of execution, not the other way around.

🎯 7. HOW TO USE THIS IN PRACTICE (WITHOUT COMPLICATING)

  1. 7.1 — Identify artificial rhythm (TWAP/VWAP): If the candles seem 'rhythmic', wait: sweep, breakout, and violent expansion.

  2. 7.2 — Identify abnormal compression: Too much compression = programmed explosion.

  3. 7.3 — Observe aggressive executions without volume: This is liquidity being captured silently.

  4. 7.4 — After the shift, wait for the cooldown: ALGS stop being aggressive and the market mitigates. ➡️ This is where you enter.

🧪 EXERCISES FROM CLASS 22

1 — Algorithm Identification

In BTC or ETH on H1, find a section where the candles have almost identical rhythm. Explain why this is TWAP/VWAP.

2 — Identify a Programmed Expansion

Mark on the chart:

  • Compression

  • Sweep

  • Expansion

  • Mitigation

3 — Real Operation Applied

Choose an expansion and identify:

  • OB (Order Block) that caused the execution change

  • FVG of aggression

  • Mitigation point

  • Ideal entry + SL + TP

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