Does Technical Analysis Work in Commodities and FX?

maybe we're talking apples and oranges

the 2011 reports state 90% of all trades were made by small retail

 

maybe?i thought it would always be like that

 

Probably if we measure quantity of traders. But that's completely irrelevant to market action, because only those players who really move the market, matter. And in FX those are mainly top banks then corporations, which do a lot of international business, like VW and like that. Doubt retail traders altogether may move the Euro more than a few ticks any way during London session.

 

well, there's the trade, and then there's size of the trade

so a million 100k lots are bought and sold all day and all night then one 1 billion trade is made

I guess it just depends on how you want to do your math and calculate who you are trading against

 

I doubt VW is dumping Euros based on something they heard on CNBC, yet it happpens everyday, and more than just a few pips

 

SWFX pool alone has liquidity of like 150-200MM per side not further than a single full pip away. Now combine it with other pools and calculate how far 1B notional trade would push the market. Of course in reality it's never a million 100K lots going in the same trade exactly.

 

Of course not based on CNBC, but their own analysis. Which doesn't change the fact large players heavily dominate FX, not retail.

 

That's why TA is far superior to anything else (except inside from ECB/Fed maybe, but that edge is unavailable to most for obvious reasons). You see what really happens, what big boys do, buy or sell, not try to guess the actions of top players.

 

they dominate the big move, but not the day to day minute to minute crap

all that noise is just little itty bitty guys like me

90% of all those trades are made by small retail (or at lest it was in 2011, which was not much different from 2010, haven't seen what happened in 2012)

 

Nope.

Those small moves are mostly banks churning the volume (as their edge is not directional, but rather market-making mostly, they suck overall in directional trades) and algos.

Forget "retail traders" in major FX pairs.

We don't mean anything there, especially considering we all trade differently. And that's great, because liquidity is truly bottomless in the Euro, we can no way affect it so our edge remains.