Welcome to this week’s newsletter!
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In this week’s newsletter we are going to show you a tool that can improve your forex trading results exponentially.
If you are new to the markets or have been trading them for some time you are probably familiar with the saying “90% of retail traders fail”. This quote is often seen at the bottom of brokerage pages to highlight the risk of trading.
And it is true.
A large majority of retail investors fail, Can we use this information ?
But what if we could take that information and use it to our advantage?
For instance, EURUSD is a popular market to trade for retail investors. What if we knew that they were heavily long in the market? And they are more than likely wrong. Well, we could use this information and look to short the market.
We used this information this week in our members group to highlight a potential move on an asset.
The asset we looked at was USDCAD.
The information above is the retail sentiment data for USDCAD last week. The number highlighted in the red box is the Long positions held by the retail traders.
As you can see over 78% of retail traders were long. Let us check the chart and see where the price was at the start of the week.
If we were to look at this information with just technical analysis alone, we would probably say that the price has closed back above a support level and that the price action would suggest a long position due to the candle wicks rejecting the level.
However, let us see what happens to the price this week.
Price did the reverse to what the retail sentiment was showing. This is because retail traders are typically wrong in the markets.
Now you can see how you can take control of your forex trading decisions, by looking at the retail sentiment tool. If you find your position is inline with retail sentiment you may want to think twice about continuing with that trade.
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