This page has been archived and commenting is disabled.
Daily FX Retail Trader Contrarian Analysis 4th Oct
Retail Traders as a herd are wrong…most of the time (sorry guys its true).
This daily report is designed to help traders find opportunities to trade against this group. The premise is very simple we are looking for 66% of retail traders to be trading either long or short a currency pair, we then look for opportunities to fade (trade against) this group. For example if 72.99% of traders are long the USD/CHF we look for opportunities to short that pair.
The pairs that we feel offer the highest opportunity for success are described in the Shortand Long Zones.
What’s New Today? USD/CAD has crept into the short zone, we've seen a strengthening of the USDJPY longs to a massive 82.29% long!
Provided by Pivotfarm - The Home of Support of Resistance Trading
»
- advertisements -
Anyway you could start this report with something other than:
Retail Traders as a herd are wrong…most of the time (sorry guys its true).
Just the facts....
Lol.
Anyway you could start this report with something other than:
Retail Traders as a herd are wrong…most of the time (sorry guys its true).
Just the facts....
"You all suck at trading so read this bitchez".
It's true and factual, isn't it?
There's an (in-)famous quote from the owner of one of the big retail FX brokers where he said that "I'd be surprised if 10% of our customers turned a profit".
There's also a study of the taiwanese day-trading order flow from a few years ago which showed that only 3% of all retail traders turned a consistent profit. 90% lost consistently and 7% won only statistically. (roughly - I'm quoting it from memory)
Biggest lie I ever read was an IG spokesman saying that 50% of their clients won and 50% lost. Talk about sitting on the fence.
Ok thanks. I find it interesting that brokers are providing this now as a contrarian approach.
Eventually it will be self fulfilling in that the retail crowd will then go the opposite way to their brokers stats because they want to be contrarian - looks like it's setting up for a double bluff situation.
They don't actually provide it as a contrarian approach, they just provide the information and we provide our own analysis/take on the info. Much like the COT, its just numbers we try and give those numbers context and meaning for traders.
Hope that helps
I beleive FXCM provide it under the title "contrarian trading/SSI".
http://img21.imageshack.us/img21/6357/dailyssiupdate.jpg
That ought to show up as either a 50%/50% stat (which PivotFarm is not counting as a stable indicator), or as some wild volatility on a daily basis, as retail traders switch over from one position to another.
Chances are that a third behavior might arise: retail stupidity will cover the case of "not reading easily accessible and reliable sources of information" as well.
I answered in the comments section of this article http://www.zerohedge.com/article/daily-fx-retail-trader-contrarian-analysis-3 We use data from a bunch of brokers to create an average.
We have found the data to be quite a reliable contrarian gauge.
My friend, you keep avoiding the question - where is this data from?
The CFTC do not provide it. I know some brokers are providing the data but this is for their own clients. The FX market is not centralized so it would be impossible to get hold of this type of data unless it was a closed system like a single broker.
The answer is in the title: the data comes from Daily FX.
As long as the data correlates smoothly with the weekly COT data it should be reliable, even though Daily FX does not represent the totality of the FX space.
Due to the smaller sample size the data will be noisier - but whether there's any systematic skew can be determined from the COT numbers.
Btw., the COT numbers do not represent the whole FX position spectrum either - just a tiny fraction of it.
We dont use Daily Fx, but if you have a link to where it is on their site, we can have a look and maybe include it in the average.
One source of information (which I'm sure you are aware of) is a histogram of Oanda's book:
http://fxtrade.oanda.com/analysis/forex-order-book
Sorry, I thought you used it and even remember someone having answered so in a past thread on ZH. Thanks for the correction.