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. |
