Forex Trading Information

By: Kelly Price

Do the opposite of what they do! This may sound obvious but most traders like to follow accepted market wisdom and trade in the direction of the crowd. If you want to win at forex trading you need to step away from the crowd - and that's what this article is all about.

In terms of following accepted market wisdom like day trading, buying low - selling high and predicting the market, these are 3 examples of how to lose when devising a forex trading strategy and if you don't know why read our other articles!

Here we want to focus on taking trades that the majority take and see their equity slaughtered and how you can trade in the opposite direction at the right time.

FACT:

If you buy into extreme bear markets and sell into extreme bull markets, as greed and fear blinds the participants to the reality - you will win.

Not only that - but you will trade with low risk and high reward.

It's a fact that humans push both bull and bear markets too far and if you can spot these extremes and hit the turn you will rack up fantastic gains with low risk.

But How Do You Spot Them?

There are of course forex charts, where you can use technical analysis to look for price spikes - but this does NOT tell you how bullish or bearish the participants are - it just shows you price spikes and trends.

What you need are some sentiment indicators that show how much emotions are moving prices and when the turn is coming.

The best one of all is the CFTC Net Trader Positions and their FREE!

Not many traders use them, but this bi-weekly report is essential for all forex traders.

They show the breakdown of the futures forex markets - but these positions are just as useful when trading cash.

What do they do?

Quite simply they break the position into three main groups:

-Hedgers: These guys are the real pros and are simply hedging a cash position. There not trying to make money so are not influenced by greed or fear.

-Large Speculators: These are large funds who are mostly trend followers

-Small speculators: Everyone else

So why is the above breakdown so relevant?

Quite simply, you can look for extremes either bullish or bearish in speculative positions - with commercials holding and opposite position and moving the other way.

History shows us that the commercials are the right way around at EVERY major top or bottom and the speculators get slaughtered as the market turns.

Be careful!

You have to look for extremes. Once you see speculators heavily net long and commercials moving to the short side - a turn is coming - Prices are to far from fair value and its time to look for a position.

Watching these positions and spotting extremes in sentiment will allow you to:

Trade against the majority when everyone else thinks you are crazy!

You will have the confidence to do this, as the commercials are right about market extremes time after time and you can then look to enter your trading signals, knowing your trading with the smart money.

A Word of Caution

Net Traders positions alert you to the fact a big contrary trade is coming against the herd - but they should not be used on their own - they are not a timing indicator.

You need to use your forex charts and your normal indicators to enter a trade when price momentum turns in your favour.

Trade With the Pro's

Want to know what the real pros are doing?

Then that's what following the commercials via Net Trader Positions gives you.

If you want to trade with the smart money and catch the big profits from the big moves - trade with the commercials for bigger forex profits!


Top Searches on
Foreign Exchange
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 

» More on Foreign Exchange
 



Share this article :
Click to see more related articles