How Select Groups Of Forex Traders Are Riding On The "Coat Tails" Of The Big Banks

When you treat the Forex markets as end-of-day markets, I’ve found they can offer far more profit potential than the minor swings many day traders kill themselves to capture.  And when you learn the right way to trade Forex as an end-of-day market, you can quickly jump from one big swing to another as they’re driven by the Forex market giants – the big banks and other financial institutions, including governments...

...but while these behemoths react slowly to market changes due to their sheer size, as soon as you learn to spot a big swing, you can get on and “ride their coat tails”.  And by the time they’ve turned to look over their shoulder, you’ll have already gone on to the next big swing.

For example, suppose several major financial institutions think that the Japanese Yen is undervalued versus the dollar and that the Japanese government will soon act to stop artificially suppressing the value of the Yen.  Collectively they might begin slowly building what will become very large positions in the market by selling short the USD/JPY pair.  I am talking about hundreds of thousands of standard lots.

Whether the Japanese government acts or not, the market might drop as expected, in part, due to the ever increasing short positions of these financial institutions.  If they are right, we small traders can apply trading methods that will spot these moves and jump on board at a moment’s notice.  We can protect our positions with initial stops and ride the wave to good profits if the market follows through on the downside.  And we can jump out just as quickly as we jumped in.  The big institutions simply can’t move that fast without damaging their positions.

The bottom line here is that we are prepared to ride the trend on the coat tails of the mega traders, but with a level of agility they don’t have. And by doing this, we minimize risk and maximize profit while they’re still trying to “unwind” their positions.

This is a BIG DEAL!  If those last few paragraphs didn’t make sense, please go back and read them again. 

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