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. |
