Forex Training Blog

Commercial Traders Heavily Short the CAD 

The Canadian dollar achieved parity with the U.S. dollar
September 20th/07 - all the while the commercial traders
were heavily short the Canadian dollar. It then raced
all the way up to 1.1009 on November 7th/07 - again all the
while the ‘Big Dogs’ were heavily short. That was the peak,
and game over for the speculators. The Big Dogs trade
thousands of lots worth millions of dollars and, as such,
eventually have a profound effect on the currency markets,
as well as other asset classes. Inexperienced traders
sometimes get frustrated when the Big Dogs take a stand,
as they did to the short side on the Canadian dollar,
because they expect immediate results - i.e., that the
Canadian dollar should fall as soon as the Big Dogs show
their hand. But, the Big Dogs have deep pockets, and
position themselves far out into the future, with the
expectation that their sentiment will come to fruition
sooner or later (sometimes sooner, sometimes later).
They don’t really care, as their time horizon is different
from the speculators, in that they base their decisions
on deep-seated fundamentals in the economy, and are patient
enough to wait for the turnaround in price that they
anticipate will happen within a time span of upwards of
three months. It can take less time, and sometimes more.
But, make no mistake about it. They may be early with their
move - BUT, they are NEVER late! Speculators are impatient,
and want instant results when the Big Dogs move en masse in
one direction or the other. That’s because speculators have
limited funds, and want to make that profit NOW. Patience
is a virtue, my friend. There will be a lesson on the
Big Dogs this Wednesday in the members area at
www.forexmentor.com.

Peter Bain
forexmentor.com

See recent video AM Reviews at: http://www.forexmentor.com/sampler/