Institutional Distribution

Institutional distribution occurs when large market participants, such as funds or market makers, systematically sell their holdings to retail investors. This usually happens after a significant price rally when liquidity is high.

Because these entities have large positions, they cannot sell all at once without crashing the price, so they distribute slowly over time. This creates a topping pattern on the chart characterized by high volume and range-bound movement.

Identifying institutional distribution is vital for avoiding the final phase of a bull market, as it precedes a major trend reversal.