Category Archives: Forex: Retail Positioning

03.22.14
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22 MARCH 2014 ~ Retail Positioning in Forex

As part of an ongoing series, I’m keeping one eye on the relative Long and Short positions of retail Forex traders. Does this information provide any trading clues? Let’s try and find out.

Here are my latest observations:

EUR/USD
A generally rising market, in which the retail crowd are generally… short (?) !
The recent and sudden initiation of long positions and subsequent reversal to net short (the green/red cross-over) may signal a good buying opportunity below 1.38000.

Something interesting?

Something interesting?

AUD/USD
Did the Thursday/Friday green/red cross-over provide a reliable buy signal?

Possible signal?

Possible signal?

USD/CHF
Despite the recent rally, I’m still calling this a down-trend. Are we about to witness a red/green cross-over and potentially a reliable sell signal?

A clue from the retail crowd?

A clue from the retail crowd?

03.17.14
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17 March 2014 ~ Just another quiet Monday

Sadly, I found nothing to justify a video update today. A few bits and pieces released during the session regarding Russia (of little or no consequence) and a handful of lower tier data releases was about as exciting as it got. Check back tomorrow.

In the meantime, I’ll take the opportunity to review a few charts for my own amusement…

I periodically like to remind myself of the apparent madness of Retail (bedroom) traders:

Retailers have it wrong again!

Retailers have it wrong again!

Is now a good time to buy FTSE 100 futures?

Is now a good time to pull the trigger?

Is now a good time to pull the trigger?

Or are the equity markets starting to run out of steam at long last?

Are we nearing the end of this incredible bull market?

Are we nearing the end of this incredible bull market?
03.13.14
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13 MARCH 2014 ~ GBP:USD ~ Retail Positioning in Forex

I have to admit, I was surprised by the failed rally on GBP:USD over the last several hours. In earlier blog posts this week I revealed my interest in the temporary “cross-over” of retail long & short positions – in other words, the temporary cross-over from green to red highlighted in the screenshot below.
I’ve seen this pattern occur on several major currency pairs, on a number of occasions, and it has preceded a continuation of the prevailing trend.
This market has been experiencing a gradual upwards trend and, having already found support at 1.66000, the green/red cross-over flagged up a possible attack of the 1.68 highs. It wasn’t to be (yet?).

I was surprised by the lack of upward follow through

I was surprised by the lack of upward follow through

03.12.14
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12 MARCH 2014 ~ GBP:USD ~ Retail Positioning in Forex

As part of a running series, I’m interested to see whether there is any value in closely watching the positions of retail traders, in Forex Markets.

Taken from http://www.myfxbook.com/community/outlook/GBPUSD in this instance, this evening I’m openly wondering if we might have a good pull-back and buy opportunity arising on GBP:USD?
Time and again I’ve noticed Retail traders position themselves against the prevailing trend. I don’t know why they do it – my guess is they are determined to catch the tops/bottoms (which I’d argue is a fools game). But further to that, does it mean anything at all when they collectively switch from net Short to net Long (i.e. the green crosses above the red area, or vice-versa)?

Open to ideas…

Retail positioning in Forex. Does the long/short cross-over signal a buy opportunity?

Retail positioning in Forex. Does the long/short cross-over signal a buy opportunity?

03.10.14
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10 March 2014 ~ Forex: betting against the retail crowd

If you want to day-trade your way to a small fortune… start with a large fortune. Almost certainly this is the case if you are a “retail trader” battling it out with the markets from the comfort of your own home.
The old adage is that 90% of retail traders lose money. If there is more than a shred of truth to that, might there be value in closely monitoring how those retailers are positioned in the markets?

In recent months/years a handful of forex brokers and affiliated sites have made publicly available the breakdown of those retail clients who are long, against those who are short.
My personal favourite at the moment is http://www.myfxbook.com/community/outlook/
For a short while now I have been keeping my eye on the retail positions in the major currency pairs: I wonder if they can provide any clues as to what the market will do next?

Invariably the retail crowd tend to bet against the market trend.

Invariably the retail crowd tend to bet against the market trend.

One thing that is particularly striking about retail behaviour is the tendency to bet against the prevailing trend. The typical retailer, it seems, is absolutely determined to pick the top and bottom of the market.

Could the temporary "long/short cross-over" be a useful signal?

Could the temporary “long/short cross-over” be a useful signal?