HOW TO USE THE capital FLOWs TOOL
These charts are created by collecting historical movements and money flows of speculative and commercial positions.
What does it tell us?
Generally, if you are a swing trader, you can use these charts to open positions at peaks or bottoms, and to get confirmations of long term trends for your positions.
The cash flow tool can be used only for TIMING and DIRECTION, this tool is useful to know when a market tends to peak, when it tends to bottom, and when it tends to trend and in which direction, so you can’t ever rely only on this tool, you want to use it to have a further confirmation or to time your positions correctly, let me show you an example.
Let’s say on March 5 you watch the crude oil chart and you see something telling you to go long, might be technically or fundamentally or both, the capital flow tool here would save you some drawdown and would allow you to catch a better entry because it’s telling you that usually on the 5th of March, crude oil speculators and commercials tend to push price lower…
So you skip the entry and you want for a better entry the 15th of March where the cash flow toolr is telling you that speculators and commercials tend to buy Crude oil pushing price higher.
Here you can see the perfect example of how this tool would have saved you some drawdown suggesting you to wait for the 15th of March to buy Crude Oil
On August 5 you can soo how the cash flow tool announced the beginning of the GOLD uptrend that pushed GOLD from 1455 to 1555, and this tool predicted exactly the end of the move on September 5, BUT always remember that this tool is a further confirmation to your fundamental or technical bias and that it can help you to time your entries and exits, helping you catch tops, bottoms and avoid drawdowns.
So practically what this tool does?
This tool predicts, based on historical data, the flow of capitals into a specific asset, so the flows of money coming into and out of the asset, there are a plenty of of factors that can affect both trade and capital flows for a particular country, currency and asset, this tool predicts future flows based on decades of historical flows but conditions might change and external aspects can influence the flows of capital during a specific period, this is why this tool must be used as an extra confirmation to time the entries and exits and not as main decider factor for your trades.
For more active intraday traders, this tool will be less useful, but every once in a while it will allow you to catch the perfect top or bottom of the day and ride big trends, turning your short term trade into a long term swing position.
Plus it’s anyway always nice to know in what type of cycle the market is, are capitals flowing out or into the asset in this specific time of the year? are we reaching a peak or a bottom? etc…
Let’s see another real life example, you want to short NZDUSD for instance, it’s April 26th, you check the capital flows tool and you see that between April 26 and May 1 money tends to flow into the NZD pushing price higher, so you realize that it’s not safe to enter now but the best timing would be on may 1st…
Here is the outcome, and at the same time the tool is suggesting you to take profit on May 24 because a bottom could form, so you take your profits there and stop looking for longs until new conditions are met.
This is it...
This is what this tool is for, it’s a great extra confirmation and great to time perfectly entries and exits, we use it often for our trades in the network and by being part of it you are able to always be updated on the best opportunities available in the market.