The
banks, institutions and the specialists have all
the financial resources to move prices up or down.
Trillions of dollars are exchanged daily across
the world's stock, currency and commodity markets.
Hundreds of millions are spent analysing crop
reports, business sectors and economic figures.
All other activity, including the combined trades
of thousands of individuals like you and me, represents
only a tiny fraction of the money and resources
flowing in and out of the market on a daily basis.
You may think that's pretty obvious. But
...
Markets
don't react to professional activity the way you
expect them to.
In every
market, there's an undeclared understanding
amongst professional traders. It alerts
them to what the big money is doing. It's
based around observations surrounding volume activity
and the effect this has on the price and the spread.
To
us outside observers this activity normally goes
unnoticed - an insignificant and unexplainable
blip lost amongst the 'noise' of the markets.
If you've ever watched the Dow or a stock price
over any period of time, you'll know that prices
can fluctuate wildly. But there is logic behind
all this chaos and the professionals know the
key to understanding that logic.
They
know what the signals mean, yet only a tiny minority
of non-professionals know what's really going
on.
As
you'll see in graphic detail later, knowing how
to read the market will allow you to take the
professional's lead and boost your profits.
Understanding professional moves will allow you
to uncover the true market sentiment. It will
give you a clear indication of which markets you
should hold
positions in - whether buying or selling stocks,
or going long or short on futures.
You
see, no matter what they do, the professionals
can never hide their true intentions. They may
be leading the market, but they leave tell-tale
signs for anyone with the right knowledge to follow.
It doesn't take a great leap of logic to see how
you could use this information to your advantage...
Ultimately it means that all other factors - including
the fundamentals of a company, the management,
the strength of the dollar and interest rates,
simply aren't important in your analysis.
Ditto for newspaper financial columns, investment
journals, broker recommendations and television
coverage.
The
only truly important consideration for you is
what the professional money is doing - that is
the only thing that matters.
Here's
a famous example...
In
1992 the British pound fell so sharply that Britain
was forced to leave the Exchange Rate Mechanism
(ERM). What do you think was behind this famous
fall? Yes, you guessed it, professional money!
The money in question was the Quantum Fund, run
by the renowned speculator George Soros.
He and his analysts had spotted a potential weakness
in the ERM. During the weeks before the massive
sell-off of the British pound, George Soros was
busy exchanging seven billion US dollars for German
Deutschemarks.
When the time was right he moved in fast, selling
the British pound. As the pound fell the Deutschemark
rose, creating huge profits for Soros. As soon
as news of this got out the other professionals
followed suit. The onslaught was overwhelming
and too much for Norman Lamont, the then UK Chancellor
of the Exchequer.
In
an attempt to halt the slide Lamont resorted to
selling some of Britain's gold reserves. He put
up interest rates three times during one day,
but this was still no match for the professionals.
Now, if a government can't beat the professionals,
what hope do individual traders have?
It's obvious that there's no way to beat the
professionals or match their financial might,
but you can follow their moves. The professionals
can't disguise their true intentions. |
