{"id":32101,"date":"2013-10-02T17:29:54","date_gmt":"2013-10-02T21:29:54","guid":{"rendered":"http:\/\/www.smbtraining.com\/blog\/?p=32101"},"modified":"2023-04-27T06:06:04","modified_gmt":"2023-04-27T10:06:04","slug":"who-are-you-competing-with","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/who-are-you-competing-with","title":{"rendered":"Who Are You Competing With?"},"content":{"rendered":"

Have you ever contemplated who you are really competing with in the forex market? \u00a0Does it really matter? \u00a0You just want to make some money. Who cares right? It matters because you can gain great perspective from understanding why different market participants operate in the market.<\/p>\n

Contrary to what many of the retail trader conspiracy theorists believe, your broker is not your greatest problem in this environment. \u00a0Yes, they take the other side of your trade, but remember your broker is in the business of providing liquidity and balancing a book of buyers and sellers. \u00a0They are in the business of moving volume. \u00a0They are just one piece of the puzzle when it comes to the order flow in the forex market.<\/p>\n

The other participants consist of large banks and institutions, money managers and professional traders large and small, and then of course the retail traders. \u00a0Each participant trades the forex market for different reasons. \u00a0For example, banks and institutions may be using the forex market to facilitate business transactions or as a way to control risk. \u00a0A money manager may be using the market for hedging purposes or could be speculating on a global macro level. \u00a0Another money manager may be taking short term directional trades or using a proprietary portfolio of algorithms to take advantage of temporary inefficiencies that only a computer can see.<\/p>\n

Then there are the retail traders, the large group of mostly randomly motivated traders who are doing similar things for a whole host of irrational reasons. \u00a0As a group they provide a source of liquidity and profit potential for their brokers and broker\u2019s prime broker.<\/p>\n

Understanding how each group operates in the forex market can help you focus on what information and strategies to adapt and avoid. \u00a0For example, you won\u2019t be able to trade like a bank, and you cannot operate like a broker. That leaves you with either emulating a money manager or a retail trader. \u00a0Well we know retail traders mostly lose, and they all follow the same strategies and consume the same information. \u00a0So that leaves us with the money manager.<\/p>\n

Money managers who actually perform for their clients are traders who have found a way in the market. \u00a0These traders are usually highly observant, creative and flexible. \u00a0They evolve with the market and know what is working now may not work the same in the future. \u00a0So they continue to learn and adapt.<\/p>\n

You don\u2019t have to manage someone else\u2019s money in order to develop yourself as a money manager. \u00a0You are simply recognizing the ineffective habits and routines of the retail trader and avoiding them. \u00a0This also means you will be able to acknowledge that markets are random because of the countless forces from different participants acting on it at all times.<\/p>\n

Yes we know that professional managers and traders all have a lot of discipline and money management plans. \u00a0What do they do differently from the retail trader though? \u00a0What information sources do they rely on to make decisions? \u00a0Do you think it is the same free resources that you have access to? How do they evaluate their strategies?<\/p>\n

Most importantly, some of the best information you can glean from your competition is what their weaknesses are. \u00a0For example, the retail trader is probably the weakest link in this trading environment. \u00a0They are the most unstructured, impulsive and likely to over react frequently. \u00a0Understanding this can help you develop specific strategies aimed at taking advantages of such weaknesses. \u00a0Our entire methodology that we teach in our futures and forex program is based on such concepts.<\/p>\n

Many inexperienced traders seem to think trading is all about technicals and fundamentals. \u00a0This is what they are exposed to all day and conditioned to believe. \u00a0They fail to realize that trading is really more about understanding the actions behind the forces that move prices. \u00a0It doesn\u2019t matter why they act, but it does matter how they act and\/or react to information as it unfolds. \u00a0Valuable information is available all around you, you just need to develop your ability to appreciate it. \u00a0Analyzing your competitors and how they utilize the market microstructure can offer great insight into how you can better recognize and exploit market opportunities before they are obvious.<\/p>\n

—
\nMarc Principato, CMT,<\/p>\n

\"\"<\/a><\/p>\n

Risk Disclaimer<\/a><\/p>\n

*No Relevant Positions<\/p>\n","protected":false},"excerpt":{"rendered":"

Have you ever contemplated who you are really competing with in the forex market? \u00a0Does it really matter? \u00a0You just want to make some money. Who cares right? It matters because you can gain great perspective from understanding why different market participants operate in the market. Contrary to what many of the retail trader conspiracy theorists believe, your broker is … Read More<\/a><\/p>\n","protected":false},"author":1030,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2076,2051],"tags":[3434,3342,1390,2092,383,2833,3435,2877,336,56,18,80,2876,653,38,4690,3020,2060],"class_list":["post-32101","post","type-post","status-publish","format-standard","hentry","category-marc-principato","category-smb-forex","tag-competing","tag-currency","tag-forex","tag-forex-training","tag-futures","tag-market-context","tag-money-manager","tag-multiple-time-frame-analysis","tag-order-flow","tag-smb","tag-smb-capital","tag-stocks","tag-time-frame","tag-trader-training","tag-trading","tag-trading-education","tag-unconventional","tag-volume-analysis","no-post-thumbnail"],"yoast_head":"\nWho Are You Competing With? | SMB Training<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.smbtraining.com\/blog\/who-are-you-competing-with\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Who Are You Competing With? | SMB Training\" \/>\n<meta property=\"og:description\" content=\"Have you ever contemplated who you are really competing with in the forex market? \u00a0Does it really matter? \u00a0You just want to make some money. 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