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Chapter 20, Part III. Trading Fakeouts. Page 3

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 22, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

    Aug 28, 2009
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    Pipruit: But commander, why we should trade or deal with fakeouts – maybe it’s better to skip them? And why they happen even more often than real breakouts?​

    Commander in Pips: The answer on both of your questions is simple and it comes from a major market law. We’ve discussed it some times in different chapters of our school.

    Once we’ve said that market has finite amount of money. There are two different sides on the market – winners and losers. Since winners make more money than they have had initially, they need some constant inflow of money. This is just where their profit comes from… Maybe you’ve heard some business news from time to time – such as on Bloomberg or on CNBC or other channels about profit of major world banks on currency markets. Don’t you think that they hold 70% of overall turnover accidentally?

    Pipruit: I guess not. I think that I know about what you want to tell me…​

    Commander in Pips: So, if this was a loss market – they do not deal with it, right? Hence – they are winners there. And how many of these are there? Not many, in fact they are few – 10 major banks and then, as we’ve said in the Forex structure, smaller and smaller banks and companies. But who provides all this money for their winnings?

    Pipruit: Crowd…​

    Commander in Pips: Right. 2-5% of participants win, while others 95-98% lose or provide money – that’s the same. You can imagine how many retail traders would be needed to guarantee big banks their profits…But how, and why? The difference stands in the way of trading and the predictability of crowd action. The difference also stands in public’s mentality.

    Pipruit: Tell me more, Sir.​
    Hamza Samiullah likes this.
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