I’m sure you know by now that more than 90% of retail traders are overall losers in the market. Why is this so? Is the Forex market really that difficult to profit from?

Unfortunately, the answer is yes.

However, it’s not just the dynamics of the market that makes it hard for retail traders to make money. One aspect of Forex trading that many amateur traders don’t pay enough attention to is the role of the institutional traders. These are the ‘sharks’ of the market and they prey on unsuspecting (and ignorant) traders.

Who Are These ‘Sharks’?

Generally, these ‘sharks’ are traders of international banks and large financial organizations such as hedge funds. Since most of the daily Forex trading volume is transacted between speculators (as opposed to hedgers and central banks), this allows for plenty of opportunity for the ‘sharks’ to pick off ignorant retail traders.

What Advantages Do These ‘Sharks’ Have?

They have the most advanced technology and experienced traders that money can buy. These institutional traders have the brains AND the resources to flush you out of the market when you least expect it. With the large volume of funds at their disposal, these traders have the capacity to influence market prices in the short term, forcing your stop losses to trigger.

How Can I Avoid These ‘Sharks’?

Although there are no hard and fast rules, you’d generally want to avoid placing your stop orders at obvious support or resistance points. Many experienced traders also recommend widening your stop placements, provided your money management rules are still intact of course.

Another way to avoid feeding your money to the ‘sharks’ is to trade exclusively during periods of high liquidity such as the London trading session or New York trading session. The high liquidity of the market during these times make it more expensive (thus harder) for the institutional traders to manipulate prices.