After studying the basics of how financial markets move it is important to know who are the strong hands in trading.
“In a poker game if you don’t spot the sucker that’s means it’s you.”
As a fan of Omaha and Hold’em, one day I met a poker star Bertrand Grospellier in Barcelona who said this phrase to me, I admit it made me think. From that day I focused more on players I had in front of me rather than on cards, with the same psychology I trade.
Strong hands is a term that refers to professional investors with large sums of money, able to condition performance of financial markets to their advantage:
- Institutional investors
- Hedge fund
- Investment funds
- Investors like George Soros, Warren Buffett, Ray Dalio etc…
Strong hands operate on all financial instruments such as futures, options, stocks, bonds without any limit because they have large amounts of money.
It is crucial to understand who the protagonists of game are, if you pay attention to disclaimers between 70 and 80% of investors lose money, so who is the remaining 30%?
Strong hands of course and all small investors who study the functioning of markets, following big investors footsteps.
Let me give you an example, when confidence indicators are terribly bullish or bearish, it means that small investors are on the wrong side of the market because strong hands are making the opposite choice. Consequence is that prices driven by a sharp rise may be hit by a price reversal, facilitating strategies of big players.
Knowing how strong hands move is difficult but not impossible, you have to use the best platforms and I advise you to focus on volumes by examining order flow (Ask/Bid). The analysis of order flow allows you to:
- Control supply and demand flow by focusing on price levels
- Examine quantities that are purchased and sold at different prices
- Predict important points to enter or exit the market
To all this, I have to add sophisticated technology like algorithms (I will make articles in the future), the use of powerful computers and ultra-fast connections.
This is a constructive article, I do not want to scare or demoralize you, as I always say, study and methodology are the basis for being profitable, do not be influenced by billions of dollars, each of us can have a place in the financial markets.