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Traders often say ‘’follow the smart money’’ or follow the big money. But how are you supposed to do that? The closest we have to knowing what the ‘’Smart Money is doing in forex is the COT report. But that report comes out late on Friday and only includes the positioning as of Wednesday. So by the time we get to trade on this information on Monday, we’re already five days late. Plus, the COT report shows positioning in the futures currency markets, not spot FX. No doubt there’s a lot of overlap and the same players are probably trading both markets but a better indicator would be forex positioning.
Bet Against the Dumb Money
The ‘’Smart Money’’ can be in the markets for various reasons other than taking a directional bet. These include hedging by large multinationals, arbitrage or just old-fashioned market making by banks and high frequency firms. In my experience a better course of action is to bet against the ‘’Dumb Money’’ instead.
Who is the ‘’Dumb Money’’ in the forex market? In large part, retail traders are the proverbial ‘’Dumb Money’’. Before we go on, let’s see why betting against retail forex traders is a good strategy.
Cut Profits, Let Your Losers Run
A large US r…
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PipPoint avatar
PipPoint 3 June

yes very useful information

romakoksa avatar

interesting article!)

romakoksa avatar

а well done

iiivb avatar
iiivb 17 June

i am not that prone into the use of sentiment index for my trading but indeed was useful and insightful your explaination! thanks for the time and effort! wish u best of lucks!

mcquak avatar
mcquak 28 Sep.

If only I was reading it at contest time. You would definitely had my like. Strategy "going against crowd" has got rationale behind it, and with some additional filter added it can work. Good article.

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Risk disclosure Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. It is highly recommended to maintain the Use of Leverage at normal levels. The client must always keep in mind that leverage increases potential loss, as well as potential profit, and invested funds can quickly suffer losses in situations where the market prices exhibit strong volatility, potentially creating an adverse environment for the highly leveraged participant. The client shall be solely responsible for maintaining sufficient margin in relation to the existing positions.

First and foremost I'd like to state I regard myself as a forex winner . I had a live account (small and humble) that I doubled then withdrew my original “investment” (gamble) and was left with the profit to trade with . When I lost 25% of that ,common sense kicked in over greed and I made for the hills with my hard to withdraw earnings ( the longer your cash sits in your brokers account the longer they can make interest on it ) ...Just a little heads up boys and girls .Now come along it's time for class ...

Pick a pair, any pair

Go on a demo account or your real accou…
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500nm avatar
500nm 7 Dec.

Its not very easy to manipulate fx market. But If you keep stop losses carefully, you wont be killed by a volatile move. Stop losses are the most important tool of a forex trader, retail traders use leverage, a 2% move in the other direction will wipe up out if have leverage of 1:50 ( many beginners use more than this )

JockPippin avatar

Yes stop losses are needed by retail traders ...But if you have 6 or 7 zero's after at least a 1 and you only use a fraction of your account ,You won't be called out . They don't need stop losses (as in the big boys ) .We the plebs can't do what they do .
          HA HA It's not easy to manipulate the FX market ,Ok good luck with that ... If  I had $100 million  and  I put it in the market  at the same time on EUR/USD ,would that not affect the price movement ? .

JockPippin avatar
JockPippin 13 Dec.

Yes I am knocking brokers ...But the fact  I am in a contest to win money for a live account speaks volumes about Dukascopy .  Never had a live account with them ... But they are ranked high in review after review .

fullmoon avatar
fullmoon 17 Dec.

You too can make use of "no stop losses". just trade very very very VERY small. What they really make you do is use as much leverage as possible.

JockPippin avatar
JockPippin 17 Dec.

Yes you are right Fullmoon but I won't be trying this live with  Dukascopy LOL .

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