What is ‘Weak Hands’
1. The intention of futures contract holders not to receive delivery of the underlying.
2. Retail traders in the forex market who abide by the conventional wisdom that when a pattern is broken, get out.
Explaining ‘Weak Hands’
1. Futures contract holders with weak hands are generally considered to be small speculators without the financial resources associated with the delivery and storage.
2. For example, retail traders with weak hands would place a stop at the bottom of a double bottom or at the top of a double top and once the pattern is broken, they would automatically be stopped out. Conversely, dealer and institutional traders will exploit this behavior by staying in once the pattern is broken, forcing the weak hands out before allowing the price to change direction and the pattern to correct itself.
Further Reading
- African weak states and commercial alliances – academic.oup.com [PDF]
- Weak efficiency of the cryptocurrency market: a market portfolio approach – www.tandfonline.com [PDF]
- Intermediate goods and weak links in the theory of economic development – www.aeaweb.org [PDF]
- Financial development and economic growth: the role of stock markets – www.jstor.org [PDF]
- The failure of the weak state in economic liberalization: liberalization, democratization and the financial crisis in South Korea – www.tandfonline.com [PDF]
