There are, probably around 75% that don’t make it as traders depending on who you ask. I would think it’s a matter of attitude towards speculation as trading is.
It looks easy when beginners study past price action, trending up and down, how can you lose after you did so well in demo trading?
It’s a different game when you are at the right hard edge with nothing but an empty chart staring at you and you will decide if you will put your money at risk.
Risk your money into the future that has not happened yet. A common trick in trading is painted bars. The market makers who have the software that print the price bars manipulate it to arrange the price bars in a way that the chaos is replaced by bars that show predictable price action like there is nothing to it.
They even add a bar that doesn't exist in the first place, by painting one into the future and make it appear at the present to make room for the next, genuine bar. Then you have fake moves, stop loss hunting, liquidity traps that stop you out with losses.
The big money needs your money to create the liquidity they need when the market opens and liquidity can be low. Without it their enormous positions will move the price to their disadvantage and reveal at what price they are buying or selling which will attract others and the price will move.
Essentially, given what we know about the power of institutional order flow as discussed in the BIS report it makes sense that we would look to trade in the same direction as these major institutions and essentially piggyback their order flow.
The chart above shows the Non-Commercial positioning in GBPUSD going back to 2012 with the Yellow line representing price and the shaded blue region tracking positioning. When the blue shaded region (positioning) crosses above the center line, it represents a net-long position, and when it crosses below the center line it represents a net-short position. The red circles highlight periods when positioning flipped from long to short and the green circles highlight period where the positioning flipped from short to long.
Of the eight times positioning crossed over 6 resulted in the development of a significant trend. This is incredibly valuable information to have, and the opportunities it can afford should be clear. Looking to trade in the same direction as Non-Commercial players can help individual traders catch major trends.
Another chart that clearly demonstrates the power of this data is the USDJPY chart showing the JPY positioning. This time, the data is inverted so the positioning tracks JPY but price shows USD movement. So if JPY positioning is going down, as shown by the first red circle, then USD should be going up and vice versa.
COT Data
Fortunately, The CFTC compiles weekly Commitment of Traders data reports on the positioning of participants in the currency futures markets, data which translates directly into the spot FX markets.
The data tracks the positioning of Non Commercial players (banks and institutions) as well as Commercial players (Corporates) and Private clients. The weekly report released each Thursday/Friday references the positioning of these players over the weekly period from the Tuesday of the previous week to Tuesday of that week.
The report is long and complicated for new traders, though fortunately many websites now present the data taken from those reports in neat visual graphics updated each week.
We all like the concept “buy low, sell high” - “sell high, buy back low”(when you short the market) and the big players are no different. The only way to solve it used to be to play in the same direction as the big players, then you win. Trading against the big players via all the traps they arrange for you is a dead end.
But with the coming of AI and the bots that are already here, HFT-High Frequency Trading is no longer available only to the pros.
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