Market Structure from a Retail Perspective

[atcsam]

Understanding Market Structure from a Retail Perspective
A practical guide for new and developing traders

Most retail traders start with indicators, patterns, and YouTube strategies — but very few begin with a clear understanding of who actually moves the market and why price behaves the way it does. This guide breaks down market structure into three main groups (plus one special case), using a simple, practical model that reflects how the market truly operates.

This is not academic theory. It’s a retail‑friendly explanation of the incentives and behaviors that shape price action every day.

(Wish I had this mind‑set when I started trading equities.)

1. Institutions

(Banks, asset managers, pensions, sovereign funds — including firms like PIMCO)

Role:
Institutions set the long‑term direction of the market. Not because they’re trying to, but because their size forces them to.

Behavior:
• Move slowly and quietly
• Hide their footprints to avoid moving the market against themselves
• Accumulate and distribute over weeks or months
• Ignore retail entirely
• Monitor market makers only for liquidity conditions
• Operate based on value cycles, macro flows, and capital allocation mandates

Footprints:
• Subtle volume anomalies
• Absorption
• Rotation
• Volatility regime shifts
• Slow, persistent trends

Institutions are the “deep current” beneath the surface.

2. Market Makers (including HFT and certain hedge funds)

Role:
Market makers control the short‑term game — the microstructure. They manage inventory, not opinions.

Behavior:
• Appear to create traps when rebalancing inventory — but these are structural, not intentional.
• Trigger stop clusters indirectly when liquidity is thin — but not intentionally.
• React to institutional flow
• Provide liquidity when it benefits them
• Withdraw liquidity when it doesn’t
• Exploit predictable retail behavior

Footprints:
• Whipsaws
• Stop runs
• Fake breakouts
• Liquidity vacuums
• Sudden volatility pockets

Market makers don’t care about direction — they care about inventory and order flow.

“Evil Market Makers”

The Retail Story vs. The Real Story

Retail traders often blame Market Makers for:

• fake breakouts
• stop runs
• liquidity sweeps
• sharp reversals
• exhaustion wicks

From the retail seat, it feels like Market Makers are setting traps.

But here’s the truth:

Market Makers (MMs)

Not the villains — just the plumbers of the market

What they actually do:

• provide liquidity
• quote both sides
• hedge inventory
• manage spreads
• internalize retail flow
• respond to volatility
• trigger stop clusters indirectly when liquidity is thin — but not intentionally
• fake breakouts (only when forced by liquidity conditions, not intent)

What they do NOT do:

• target retail
• engineer traps
• push price directionally

Market makers don’t care about your chart.
They care about inventory risk and order flow toxicity.

They’re not evil — they’re mechanical.

Directional Players (Hedge Funds, Prop Desks, Large Swing Traders)

These are the real architects of trap‑like behavior

What they actually do:

• accumulate quietly
• distribute quietly
• sweep liquidity
• trigger stop clusters
• fake breakouts/breakdowns
• engineer volatility pockets
• exploit predictable retail behavior

Why they do it:

• to get filled at better prices
• to reduce slippage
• to mask their footprint
• to manage large positions
• to exploit emotional retail flow

These players have:

• size
• motive
• patience
• directional intent

They create the patterns retail calls “traps.”

Retail blames market makers for traps, but the real trap setting comes from hedge funds and large directional players. Market makers simply manage liquidity; directional players exploit predictable retail behavior.

Bottom line: Retail is predictable — and predictable behavior is what directional players exploit.

3. Retail Traders

Role:
Retail provides liquidity and volatility. Retail is the most predictable group in the market.

Behavior:
• Chase moves
• Panic early
• FOMO late
• Buy tops and sell bottoms
• Trade patterns without context
• React instead of anticipate

Footprints:
• Volume spikes at the wrong time
• Failed breakouts
• Emotional candles
• Late entries, early exits

Retail’s best edge is to think like institutions, not like other retail traders.

4. Scalpers (Special Case)

Scalpers operate in the one domain where market makers can’t fully control outcomes: micro‑inefficiencies.

Behavior:
• Trade reaction, not prediction
• Exploit volatility pockets
• Avoid overnight risk
• Focus on speed and execution

Scalping can be profitable because it lives in the cracks between liquidity events.

Why This Model Matters

Understanding who moves the market — and why — helps retail traders:

• avoid traps
• recognize institutional footprints
• stop fighting the wrong players
• choose strategies that match their timeframe
• adopt a mindset that aligns with real market behavior

This simple framework can save new traders years of confusion.

Summary

• Institutions: “They move the deep current of the market.”
• Market Makers: “They manage liquidity, not direction.”
• Retail: “They provide volatility and predictability.”
• Scalpers: “They operate in the cracks between liquidity events.”

A Quick Note on Indicators

As I move forward, I intend to focus and develop study sets around five main categories — no more, no less, and with no redundancies.

This doesn’t make indicators useless, but it does mean that stacking many of them often repeats the same information. What tends to matter more is combining different dimensions of information.

Choosing independent dimensions prevents redundancy and gives you a clearer picture of market behavior.

• Trend (directional bias)
• Momentum (strength of movement)
• Volatility (expansion/contraction)
• Volume (participation/confirmation)
• Price structure (context, levels, behavior)

 

[atcsam]

My Trading Journey (A Retail Perspective)

The Hook — My First Trade
My first dip into the markets was in the early 80s.
I opened a commodities account with Merrill Lynch and bought some silver.
A few months later, the position more than doubled. I took the money and ran — no idea the Hunt Brothers were manipulating the market at the time.
That was the spark.

The Journey Begins
Over the next 40+ years, I made just about every retail mistake possible — and then some.
I always traded with “mad money,” so the damage was never life‑changing, but yes… I’ve blown a few accounts along the way.
Every loss was tuition. Every mistake became a lesson.

The Reality Check
Any real long‑term funds I own are professionally managed.
Sometimes I think I can do better.
Sometimes I think they should do better.
But that’s part of the journey too — learning where you add value, and where you don’t.

Where I Am Now
These days I build tools — not to predict the market, but to understand it.
I replaced my old indicator‑heavy panels with clean, narrative studies that actually talk and help me see the market the way I wish I could’ve seen it decades ago.

I recently released Adaptive Trend V13 Plus, the latest evolution of my trend engine.
It’s the backbone of my ecosystem — modular, honest, and built around structural clarity.

I also retired my old Market Watch panel and replaced it with focused studies like the Market Snapshot, which gives a concise, operator‑grade read of market tone, leadership, risk appetite, and economic participation.

Everything I share comes from that perspective:
simple, clear tools shaped by 40 years of retail experience — the good, the bad, and the tuition.


(Overall, I’m still ahead)

Still learning, still trading.

I’m not here to impress anyone — just sharing what I’ve learned the hard way.
If any part of my journey or these tools helps another trader see the market a little clearer than I did starting out, then it’s worth putting out there.

Adaptive Trend V13 Plus, the Fundamental Snippet, and the Market Snapshot all come from that same place: 40+ years of mistakes, lessons, and refinement distilled into something simple, honest, and useful.
Take what helps, ignore what doesn’t — and keep going.

 

[merryDay]

@atcsam

Has earned the title:​

He provides clarity, discipline, and a level of structural insight that is almost impossible to find anywhere on the web.

To read all his posts:
https://usethinkscript.com/tags/structure/

 

[atcsam]

Thank you, MaryDay — truly an honor. Your work, and the guidance from the thinkScript staff and community, has shaped how I think about structure and trading. I’m grateful for the example you’ve all set.