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Trade Against The 90% That Lose Money
Retail traders are notoriously wrong at picking market direction/tops and bottoms. Most retail traders very naturally seem to adopt a counter-trend stance and this offers very accurate signals for individuals looking to trade against this group. This daily report is designed to help traders focus their efforts on higher probability pairs.
So what are the signals?
Strong Short 66% Retail Longs
Short 60% Retail Longs
Long 60% Retail Shorts
Strong Long 66% Retail Shorts
We are looking for 60%+ (Ideally for best opportunities 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 Strong Short and Strong Long areas.
What’s New Today? Some Major shifts in the Retail positioning across all the brokers that we analyse. GBPUSD has fired into the Strong Long zone, followed by EURUSD making a pop up to sneak into the long zone. The USDCAD joins the GBPJPY in the Short zone, USDJPY retail traders strengthened to the long side as the pair hovers over 15 year lows.
Provided by Pivotfarm - The Home of Support and Resistance Trading
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This is better than the previous diagram, but digitalhermit's idea is a good one. I would still love to know where the raw data is coming from - apologies if you have answered this elsewhere.
Unfortunately this diagram is not very helpful. Rather than looking at the long/short ratios at a point in time what would be really helpful is to graph the sentiment of each pair over the last month or two, so that the trend in sentiment can be easily seen and possible inflection points noted. It's when the sentiment switches direction or is about to switch direction that one should consider taking the opposite side of the trade.
exactly. Take for example USD JPY.... how will the ratio change once the bottom is reached and an uptrend starts?
Probably not very much... I believe the ration of 80/20 was here for some months now, and will even stay when we are some months into an uptrend...
meaning I do not see much value in this retail indicator...
also keep in mind retail traders are like fleas on the back of dogs...
they probably outnumber the dogs... but have much lower mass and possibilities.
I agree with DH. This would create an opportunity to plot out trend lines as stated.
Yup, like pairing bull and bear ETF's and seeing how much "drift" occurs between them.
If you want an example I have some old spreadsheets I used to use to map entry points using FAS/FAZ/RIFIN to determine strike values. The pivot tool would have been handy though when I was feeling lazy and looking for a flag if I was trading that day or not.
https://spreadsheets.google.com/ccc?key=0AlcjUXwfgidwcHFtbnlFVFNzcHJLMjJ...
Anyone can grab it btw. problem now is the Russell indexes have taken a bit of a shit and some have been publically removed so the x3 ETF's are "floating" around .
Have fun
That's an interesting idea and something i have been thinking about.
God forbid anyone was short dollar swiss the whole time it's been a strong short, they'd have a long way to go to reclaim the loss.