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Chapter 24, Part II. Trading Sentiment. Page 2

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 26, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

    Aug 28, 2009
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    Large traders’ position could be used as a trend indicator

    Of course, you will not catch a wolf for ears, and will not be able to enter the market right at extremes, but moves after this so significant, that even if you will enter on some retracement, you will be pretty happy with your profit.

    Of course, this indicator should be combined with other tools of technical analysis, such as reversal patterns on long-term charts, trend shifting etc. In other words, it should be wisely built into an overall context of trading.

    Also, very often large traders’ position starts to change a bit ahead of price action, at least before the major move in new direction. This is very useful.

    Now let’s shift to commercial positions. You, probably notice that they are opposite to large traders’ one. Hedgers try to protect themselves from the current trend, while speculators want to join it, that’s why their positions are opposite. As you remember we’ve said that commercials are extremely bearish at tops and extremely bullish at bottoms. Hence our first task is to find such areas. I’ve marked them with yellow rectangles. You can see that when commercial positions have reached extremes, the market reverses very soon. So, commercial positions could be used as a potential reversal signal:

    Commercial positions could be used as reversal signal
    #1 Sive Morten, Dec 26, 2013
    Lasted edited by : Oct 1, 2016
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