Weak Hands

Posted in Finance, Accounting and Economics Terms, Total Reads: 808

Definition: Weak Hands

Futures contract holders’ intention not to receive delivery of the underlying. Retail traders who deal in the forex market, stand by the straight wisdom that when a pattern is broken, you should get out. The Futures contract holders who have weak hands are normally considered to be very small speculators without any financial resources which are associated with the storage and delivery.

For an example, the retail traders with weak hands would be placing a stop at the top of a double top or at the bottom of a double bottom and once this pattern is broken, then they would be stopped out automatically. On the other hand, institutional traders and dealers would exploit the behaviour by remaining in when the pattern is broken, so as to force the weak hands out before letting the price to change directions and the pattern to correct itself.

Weak hands are not investing. Rather they are placing bets. They tend to be spooked easily by price changes and quite often they tend to sell at the trough and buy at the peak. In both the currency markets and futures, weak hands are frequently blamed for big price swings. However they also provide liquidity to the markets


Hence, this concludes the definition of Weak Hands along with its overview.


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