Call me nuts but this is what really happens: FX dealers have ALL your information, regarding average position size, price entry and SL levels. This information is given to the liquidity providers (Deutsche Bank, JPM and so on) and they can easily push the price until you all get stopped out.
If you have traded FX for some years I don't think this information is too surprising for you.
Price goes in the direction where it can cause maximal pain.
(Let me add, this is not true for all the markets for eg. bond market but FX because here are the most small fish.)
Just think about it. All the banks have "perfect knowledge" of the markets, meaning they have all the information available about them. They all know EXACTLY what is the fundamental story, how they should be positioned, how the technical picture looks, so where they should add positions to their long-term trades (remember, they cannot trade short term profitably due to their size unless there is someone to SKIN) so my point is, there is not much room to compete against each other in the mid-term, they rather keep long term trades AND f*** all the small traders in the short run. This is how they make money.
If you have more insight on this topic please don't hesitate to share this knowledge!
With regards:
Yuri57
If you have traded FX for some years I don't think this information is too surprising for you.
Price goes in the direction where it can cause maximal pain.
(Let me add, this is not true for all the markets for eg. bond market but FX because here are the most small fish.)
Just think about it. All the banks have "perfect knowledge" of the markets, meaning they have all the information available about them. They all know EXACTLY what is the fundamental story, how they should be positioned, how the technical picture looks, so where they should add positions to their long-term trades (remember, they cannot trade short term profitably due to their size unless there is someone to SKIN) so my point is, there is not much room to compete against each other in the mid-term, they rather keep long term trades AND f*** all the small traders in the short run. This is how they make money.
If you have more insight on this topic please don't hesitate to share this knowledge!
With regards:
Yuri57
Yeah?! Well.. you know, that's just like.. your opinion man! - Big Lebowski