I have recently finished your book “Drain the Banks”.
I have one question on how the banks cause a reversal.
Is there any point in which the banks are not in a trade at all. I ask this because at the end of a trend when a reversal is caused, are the banks taking profits and causing the reversal at the same time?
Thanks for everything.
My Response:
The strategy truly hinges on the scenario…
At times, the banks take profits before a trend concludes, positioning themselves for the impending reversal while the trend is still active.
In such situations, the first swing against the trend typically arises from their initial position. This could be mistaken for a regular trend retracement, but when price swings back to the source, it either kickstarts another swing or breaks below in case of an upswing.
This bait tricks more traders into shorting as it gives the illusion of trend continuation, thereby providing the banks with more buy orders to reverse the price.
But remember, there might be some consolidation after this…
In other scenarios, the banks may secure profits, the trend may end, and enter a consolidation phase. They then might take more profits during this phase and later set trades to set off the reversal.
So, in a nutshell, it’s rather situational…
The banks do halt profit-taking prior to entering, but the sequence and timing can vary depending on the trend and the overall market conditions.
Hope this helps…
PAN.