05/05/ · So, the trading against the crowd strategy is a trading method that implies opening trades in the direction opposite to the opinion of the majority of traders. A question arises at once: How shall we know or where can we get data on the opinion of the majority? 26/09/ · One of the best ways to trade against the crowd is to look at the data itself. The Commitment of Traders (COT) report is provided weekly by the CFTC (the US Commodity Futures Trading Commission) Estimated Reading Time: 5 mins 06/03/ · To put it in trading terms, a major player will drive the price to where there are clusters of the crowd’s orders. Therefore, the crowd affects pricing possibly not directly, but indirectly for sure. In addition, the “Trading Against the Crowd” strategy is almost the same as following a major blogger.comted Reading Time: 9 mins
How to trade against the crowd
People tend to treat something new with a grain of salt. Sometimes it comes to the point where new information is so incompatible with their firm beliefs that it results in a stream of ill-considered criticism.
This happens by reflex: a man finds the counterargument in own head that forex trading against the crowd undermines the essence of the theory and declares with complete confidence that it has been exposed.
None of you will argue that the price movement in the market occurs exactly due to the interaction of market participants but not because of various overbought conditions, divergences or crossovers. Yes, the latter might signal something, but as derivatives of the price, they will always be inferior to the primary market information in quality.
By the way, what is the primary information? This is the data that directly reflects both the past and the future expected activity of market participants. More often, this primary information is called the stock market information. It includes volumes in the form of a stock tape, which is then converted into a variety of tools and indicators, option levels, as well as all sorts of the tools built based on the data from the order book.
The only difference is that in the first case, we should seek for the crowd trading direction, and in the second, the trading direction of a conditional major player market maker. Both these directions are always opposite to each other, so we just need to know one of them to guess what the second one will be like. We can see all this activity in the order book or in the tools being derivatives of the order book.
Note the three tops of this pattern and the readings of the Profit Ratio at these points. Out of interest, we can go over other tools — there is an increase in the percentage of sellers as well as a large accumulation of Stop Losses, which has been eventually knocked out, at the very top of the pattern. The strategy is really sophisticated and it takes more than one year of practice to master it, forex trading against the crowd, but it will relieve you of the need to sort through many different trading systems.
It has long been known that various funds and banks come to the Forex market not only for currency exchange, but also for making an additional profit through speculation. Even large corporations are not above involving in forex trading against the crowd speculation related to a usual exchange of revenue.
In addition, these banks and funds may temporarily affect pricing thanks to their trading volume. The crowd is like chaotically moving plankton due to the lack of communication: someone moves up, and someone moves down. What do you think will happen to this chaotic mass if a whale a big player suddenly appears on the horizon? Therefore, the crowd affects pricing possibly not directly, but indirectly for sure. All successful day trading strategies are based on the following a major player.
No need to write in the comments that all the money remains inside the kitchen. Probably, you have heard about such a thing as exit poll where anonymous surveys are taken among the voters and thus the preliminary voting results are received in elections before the official results are announced.
In our case, the effect is the same. Assuming that 10, traders trade with some broker. Anyone who is familiar with the concept of a representative sample will understand the above.
We actually take data on a particular broker as a representative sample and project these data onto the entire market. In addition, we have data on several brokers but not on the one that further adds value to our data. Just look at the results of this backtest using the ratio of the positions of the Oanda broker:.
Forex trading against the crowd selected the value of 40 pips for the test to demonstrate the existence of regularity when there are a large number of trades, although the results of the study showed that the optimal values of TP and SL range from 60 to points.
Yes, they can, but so far nobody has done it forex trading against the crowd practice. What's the point? Are you saying that there is a global conspiracy against the poor retail traders? Look at the current ratio of positions :. All brokers are on the same side forex trading against the crowd the market. If some of them were tampering with data, we would have exposed it at once.
The same situation is true for the chart of the indicator of the ratio of traders' positions — it can be seen that brokers move in unison:. In this case, connection with the rest of the crowd takes place due to the behavioral stereotypes inherent in all small traders both of an A-Book broker and a bucket shop.
You can read about stereotypes in this article. Usually, opinions differ. They will not start. The propaganda machine advocating indicators, Fibonacci levels, forex trading against the crowd, Bollinger bands, etc. works much more effectively than our arguments. Moreover, brokers and some bloggers popularize these methods only because they methods are already popular and hence there is a chance to drive web traffic to their websites. None of the profit-oriented projects will promote new techniques of trading from scratch, since there is simply no profit in doing so.
The following history appropriate for this case. People are looking for easier ways out, but the strategy requires thinking, working and spending a lot of time. Most of the people, even of those who are reading it, will quit halfway through.
It doesn't make any sense. Publication of such data is a good PR stunt for a broker. There is reason to believe that almost every broker will provide such data on own website in the future, forex trading against the crowd, so we have forex trading against the crowd to worry about.
Honestly speaking, it sounds like a conspiracy theory. Even if we do happen to lose the data source, the previous experience of applying this technique will be a very valuable experience by then, because it helps to develop forex trading against the crowd correct perception of the market, forex trading against the crowd. If you do, then write it in the comments. March 6, Sentiment Strategy. Related Articles.
Profit Ratio: Percentage of Traders in Profit. May 5, Difference Between Classic Order Book and Extended Order Book. Sign In. With E-mail. What's Next? Learn basic Sentiment Strategy Setups.
Does trading against the \
, time: 17:47Crowd Behavior and Going Against the Public in Forex
05/05/ · So, the trading against the crowd strategy is a trading method that implies opening trades in the direction opposite to the opinion of the majority of traders. A question arises at once: How shall we know or where can we get data on the opinion of the majority? 26/09/ · One of the best ways to trade against the crowd is to look at the data itself. The Commitment of Traders (COT) report is provided weekly by the CFTC (the US Commodity Futures Trading Commission) Estimated Reading Time: 5 mins The concept of the market crowd has long been known by traders. For many, it is a symbol of inefficient and erroneous trading decisions. And if you have ever found yourself thinking that you are part of a crowd, it is time to leave this abstract society. Trading from home makes one feel independent from everything around
No comments:
Post a Comment