So.. can we really follow smart money?

Seems like, one of the marketing pitches that’s now being going on for a while in the FOREX world, is to follow the Big players, Smart Money, Market makers, or whatever name you want to give it.

Many “gurus” are making money teaching supposedly how to do this. But my question is… does this really make sense? Can it be done?

You see, my conclusion looking at the market charts and news is that yes, there are big players in the Forex market, but, are they all in the same page? Can we really follow them when what’s actually happening is that they are on a battle among them too big for us retail traders?

The most famous example I can think on is the George Soros with the British Pound. We had 2 “market makers”, the British Government and the (Soros) Speculators; How are we supposed to follow Smart Money, when all of it is not in the same page?

This GBP news was a very mainstream case, but I believe that always something like this is going on:

  • Hedge Funds, Investement Banks, are in the market to make money.

  • Central Banks and governments are there to mantain the price at the most optimal rate for ther economy, so that their import/exports are healthy.

  • Big companies and even goverments are there to hedge themselfs on the long term.

Wont all this different mix of interests colide and conflict at all times? So next time you are reading or following some guy trying to sell the follow “Smart Money” idea, think twice. Is it even possible to do this when it’s not a single entity? What do this gurus have to say about this?

Please comment and share your opinions about this topic.

Thanks, Marry Christmas and a Happy New Year 2020 to all the community! :slight_smile:

It will be futile for a private retail trader to try to categorically distinguish smart money from big money. The only way we can see what any money is doing in forex markets is through its effect on price, and only big money can change price.

They are effectively the same. Anyway you must accept that the big players have better brains, more analysts, faster computers, more complete and more timely information than we have.

As for the Soros/ERM case, I’ve never looked at the 1992 charts before but I’m going to say that none of us should have been too badly hurt in that episode. Worst case scenario would have been that though GBP/USD suffered a 20% fall in price, traders should have only been exposed to the first few % before they should have got out, while they should soon have joined Soros in shorting and made their losses back with dividends.

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Of course you can - the COT data. Granted its not really a timing tool but being aligned with the Swap dealers is one of the best sentiment plays there is.

All backtestable over decades of data too.


we all want to be in the side of the one who wins that battle
that is the million dollars question

To win the battle, be on the same side as George Soros. Unless you know you can beat him.

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soros was a nine months fetus like you, me , and all of us
and he knows that

Soros is still a nine month fetus in the eyes of many.

you said that not me

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Simply put I believe the answer is yes because smart/big money is what drives price.

However this is easier said then done because of the forwards/backwards momentum in short term price regardless of the overall long term direction.

This is why timing is so critical for retail traders because our draw down capacity isnt enough to simply follow the big boys pip for pip.

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Always remember “The Trend is your best friend”