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 exactly
how to profit from it.
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. |
