No fancy indicators. No price action voodoo. Just do the opposite of the crowd. This almost certainly will work best for those who can hold their trades for days, even weeks.
If you go to the 'trades' section of the site you'll see that there is a section that outlines the positions of all the Forex Factory members who have trade explorers running for their live accounts. It shows the number of traders who are long/short an instrument as well as how many lots are in play for the bulls and bears.
The data is similar to what you'd see on Dukascopy's sentiment charts, and usually the bull/bear bias is about the same, with slightly different percentages. Unfortunately there isn't one for XAUUSD or OIL.
One thing you'll notice is that (apparently) most traders haven't heard the expression, 'the trend is your friend'. Or at least, they don't believe it.
The strategy is simply this - trade against whatever the majority of traders are doing over on the positions/live accounts section. Let's examine the current situation.
EURUSD
Right now about 60% of traders are short the Euro. This, despite the fact that it has been trending, strongly bullish since November last year, and before that, with only a couple of months dip, in December 2016. It looks bullish to me on MN, W1, D1, H4, H1, M30 and M15. Only on M5 is there any doubt. Sure, it might be headed for a dip soon, but so far the traders who have been waiting for it (according to FXFactory) are losing at a rate of -4.5%. Euro bears are losing their trades at almost 3x the rate of bulls. When the Euro spiked yesterday, as I was watching the bull/bear composition, the number of bulls actually decreased. In other words, the more painful the trade, the more people got into it. Human nature or trader nature?
Conclusion: Go long Euro.
GBPUSD
Pretty much everything I wrote about Fiber applies to Cable. Go long, as 60% of FF members are short. This time they are losing at a rate 4x higher than bulls.
USDJPY
The yen situation is a little more complicated as it hasn't been clearly trending on D1 and up. It's been in a bit of a range, but has been weakening with USD for the last few days. What do FF traders think? Well, they think it's a good long trade although it's a little closer than cable/fiber with only 58% bulls. Neither the bears nor the bulls are making any positive returns on this one as both are somehow losing -1.9 and -2.5 percent respectively while trading the yen. "Down for a week, and ranging for two weeks before that - yeah, let's buy me some of that", seems to be the thought process. Well, maybe they're right as it has been showing signs of life. Also, FF is only losing double the winning trades on this one, and they are actually out-winning the yen bears by a factor of 2. This strategy however calls for us to do the opposite of the crowd. Go short yen.
USDCHF
Even more certainty about this one - 65% dollar bulls. Maybe this is a reaction to the SNB statement saying that interference in currency appreciation is always an option. We all remember 2015, right? Let's look at the chart. Hmm, a tight range historically, with no clear bias on D1. On H4 though it's clearly bearsh and has been slumping strongly all month. Clearly FF members expect a reversal back to the top of the range, and they're probably right, that's going to happen. Not before they lose their shirts though. Go short USDCHF.
USDCAD
Here's an interesting situation where the ratio of bulls/bears is normal - about 56% bulls, but the money in play is outlandishly lopsided, with 80% of all lots being bullish USDCAD. Does anyone know why? It can't be a carry trade. It's a terrible carry trade. Please give me some learnings internet! So, how are the 80% of bull trades in USDCAD doing? Well, surprise surprise USDCAD has been strongly bearish since last Spring, and after a brief rally it's still going down. Loonie bears are losing triple what their bull counterparts are bringing in, although the bears are only breaking even on profits. I know what you're thinking. NAFTA! Trump! Hey, we get it. He knows the art of the deal. He's got a scary stare, and the CAD PM would fit right in with a Korean boy band. Nevertheless, we'll stay long the loonie, which means go short USDCAD.
AUDUSD
If you're short USDCAD, going long AUDUSD is basically the same thing and now you've got excessive correlation risk, but hey, FF members are such a strong (and fun) contrarian signal let's just say what the heck. Only 39% are bullish the Aussie, despite its crazy bullish appearance from M30 on up to D1. Aussie bears are losing 4x as much as the bulls, but oddly, they are winning twice as much as the bulls. I should have taken more stats courses to understand how that works. Maybe that's the carry trade effect? Bulls keep their trades open longer, hence winning less often? What matters is they are managing to make a meagre 0.2% profit versus the -2.0% of bears. Long AUDUSD.
NZDUSD
Same as AUDUSD except it's almost comical (or tragic?) what kiwi bears are losing. -8.3%!
GBPJPY
Obviously bullish since May 2016 so which side do you expect FF members to be siding with? You guessed it! Da Bears. Although it's pretty close to even, the bulls are winning an impressive 9.2% profit on this trade. Long GBPJPY.
So I guess I'll trade this in a demo account and update in a month or two. I wouldn't expect this to generate fast profits.
Wishing you prosperity.
If you go to the 'trades' section of the site you'll see that there is a section that outlines the positions of all the Forex Factory members who have trade explorers running for their live accounts. It shows the number of traders who are long/short an instrument as well as how many lots are in play for the bulls and bears.
The data is similar to what you'd see on Dukascopy's sentiment charts, and usually the bull/bear bias is about the same, with slightly different percentages. Unfortunately there isn't one for XAUUSD or OIL.
One thing you'll notice is that (apparently) most traders haven't heard the expression, 'the trend is your friend'. Or at least, they don't believe it.
The strategy is simply this - trade against whatever the majority of traders are doing over on the positions/live accounts section. Let's examine the current situation.
EURUSD
Right now about 60% of traders are short the Euro. This, despite the fact that it has been trending, strongly bullish since November last year, and before that, with only a couple of months dip, in December 2016. It looks bullish to me on MN, W1, D1, H4, H1, M30 and M15. Only on M5 is there any doubt. Sure, it might be headed for a dip soon, but so far the traders who have been waiting for it (according to FXFactory) are losing at a rate of -4.5%. Euro bears are losing their trades at almost 3x the rate of bulls. When the Euro spiked yesterday, as I was watching the bull/bear composition, the number of bulls actually decreased. In other words, the more painful the trade, the more people got into it. Human nature or trader nature?
Conclusion: Go long Euro.
GBPUSD
Pretty much everything I wrote about Fiber applies to Cable. Go long, as 60% of FF members are short. This time they are losing at a rate 4x higher than bulls.
USDJPY
The yen situation is a little more complicated as it hasn't been clearly trending on D1 and up. It's been in a bit of a range, but has been weakening with USD for the last few days. What do FF traders think? Well, they think it's a good long trade although it's a little closer than cable/fiber with only 58% bulls. Neither the bears nor the bulls are making any positive returns on this one as both are somehow losing -1.9 and -2.5 percent respectively while trading the yen. "Down for a week, and ranging for two weeks before that - yeah, let's buy me some of that", seems to be the thought process. Well, maybe they're right as it has been showing signs of life. Also, FF is only losing double the winning trades on this one, and they are actually out-winning the yen bears by a factor of 2. This strategy however calls for us to do the opposite of the crowd. Go short yen.
USDCHF
Even more certainty about this one - 65% dollar bulls. Maybe this is a reaction to the SNB statement saying that interference in currency appreciation is always an option. We all remember 2015, right? Let's look at the chart. Hmm, a tight range historically, with no clear bias on D1. On H4 though it's clearly bearsh and has been slumping strongly all month. Clearly FF members expect a reversal back to the top of the range, and they're probably right, that's going to happen. Not before they lose their shirts though. Go short USDCHF.
USDCAD
Here's an interesting situation where the ratio of bulls/bears is normal - about 56% bulls, but the money in play is outlandishly lopsided, with 80% of all lots being bullish USDCAD. Does anyone know why? It can't be a carry trade. It's a terrible carry trade. Please give me some learnings internet! So, how are the 80% of bull trades in USDCAD doing? Well, surprise surprise USDCAD has been strongly bearish since last Spring, and after a brief rally it's still going down. Loonie bears are losing triple what their bull counterparts are bringing in, although the bears are only breaking even on profits. I know what you're thinking. NAFTA! Trump! Hey, we get it. He knows the art of the deal. He's got a scary stare, and the CAD PM would fit right in with a Korean boy band. Nevertheless, we'll stay long the loonie, which means go short USDCAD.
AUDUSD
If you're short USDCAD, going long AUDUSD is basically the same thing and now you've got excessive correlation risk, but hey, FF members are such a strong (and fun) contrarian signal let's just say what the heck. Only 39% are bullish the Aussie, despite its crazy bullish appearance from M30 on up to D1. Aussie bears are losing 4x as much as the bulls, but oddly, they are winning twice as much as the bulls. I should have taken more stats courses to understand how that works. Maybe that's the carry trade effect? Bulls keep their trades open longer, hence winning less often? What matters is they are managing to make a meagre 0.2% profit versus the -2.0% of bears. Long AUDUSD.
NZDUSD
Same as AUDUSD except it's almost comical (or tragic?) what kiwi bears are losing. -8.3%!
GBPJPY
Obviously bullish since May 2016 so which side do you expect FF members to be siding with? You guessed it! Da Bears. Although it's pretty close to even, the bulls are winning an impressive 9.2% profit on this trade. Long GBPJPY.
So I guess I'll trade this in a demo account and update in a month or two. I wouldn't expect this to generate fast profits.
Wishing you prosperity.
Or market makers care about FF members decisions ? However might be you think most FF members don't know how to trade and take the wrong side most of the time =)
