Practical Case Study of the "Institutional Trap" Pattern

Recently, some new members asked about a specific pattern called the "Institutional Trap." In fact, we have discussed this "trap pattern" multiple times in the "Multi-Bagger Dark Horse" section. To help more novice investors understand it, today, the editor of Winner’s Academy will provide a detailed explanation.

The "Institutional Trap" is a term coined by experienced traders. It refers to a situation where a dark horse stock experiences a sharp plunge before its major rally, followed by a rapid rebound that triggers an unstoppable uptrend—often doubling or more in price. The pattern resembles a "pit" dug before the surge, and since institutional players are usually involved, it’s called the "Institutional Trap."

Why does this pattern occur? The main reason is that institutions need to shake out weak hands (retail investors) before the rally. A sharp market downturn provides the perfect cover—institutions can aggressively suppress the stock without raising suspicion, capitalizing on panic selling to accumulate shares cheaply.

How should investors respond? During a market crash, carefully check if your holdings match this pattern. If they do, wait for the "pit bottom" and decisively increase your position.

That concludes our case study on the Institutional Trap. We hope you’ve grasped its key aspects. If you’d like to learn about securities lending ("zhuan rong tong"), click to explore further. Wishing you profitable trades!