Weak Hands

DEFINITION of '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.

BREAKING DOWN '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.

RELATED TERMS
  1. Contract Holder

    An individual or organization who owns the rights to a debt or ...
  2. Delivery Price

    The financial value of the conveyance of the underlying commodities ...
  3. Delivery Month

    A key characteristic of a futures contract that designates when ...
  4. Physical Delivery

    Term in an options or futures contract which requires the actual ...
  5. Delivery Point

    In futures contracts, the delivery point is the place where the ...
  6. Double Top And Bottom

    Chart patterns in which the quote for the underlying investment ...
Related Articles
  1. Charts & Patterns

    Analyzing Chart Patterns: Double Top And Double Bottom

    By Chad Langager and Casey Murphy, senior analyst of ChartAdvisor.com The double top and double bottom are another pair of well-known chart patterns whose names don't leave much to the imagination. ...
  2. Forex Education

    How To Interpret Technical Analysis Price Patterns: Triple Tops And Bottoms

    Triple and double tops and bottoms may be tough to spot, but once you learn them, they can be powerful patterns.
  3. Mutual Funds & ETFs

    Introduction To Currency Futures

    The forex market is not the only way for investors and traders to participate in foreign exchange.
  4. Trading Strategies

    Technical Analysis: Chart Patterns

    By Cory Janssen, Chad Langager and Casey MurphyA chart pattern is a distinct formation on a stock chart that creates a trading signal, or a sign of future price movements. Chartists use these ...
  5. Chart Advisor

    Big Double Top Patterns On the Verge of Breaking (LOW, CME)

    These stocks have created big double top chart patterns, and are on the verge of breaking the patterns to the downside--a bearish signal.
  6. Charts & Patterns

    Continuation Patterns: An Introduction

    Those random movements in the charts actually form patterns. Learn the basics of what these patterns are.
  7. Chart Advisor

    Are These Stocks Topping Out?

    Are These Stocks Topping Out?
  8. Markets

    Crude Oil Prices: Comparing Future Price Vs. Current Market Price

    Discover the differences between oil futures market prices and oil spot market prices and what leads to the differences between the two.
  9. Chart Advisor

    These ETFs are Breaking Out of Chart Patterns Now

    Three buys and one sell; here are four ETFs breaking out of chart patterns right now.
  10. Chart Advisor

    Four Stocks Setting Up For A Move Lower

    With the S&P 500 very close to all time highs, not everything is a buy. These stocks have recently formed head and shoulder patterns; if the pattern completes it is a classic technical analysis ...
RELATED FAQS
  1. What does it mean to take delivery of a derivative contract?

    Find out more about derivative contracts and what it means when the holders of derivative contracts take delivery of the ... Read Answer >>
  2. What are common trading strategies used when identifying a double bottom

    Use simple, low-risk trading strategies to take advantage of a double bottom formation. Traders typically take one of these ... Read Answer >>
  3. How effective are double tops in spotting a change in the overall trend?

    Learn about the double top price chart pattern, a commonly appearing indicator used to establish resistance levels and possible ... Read Answer >>
  4. How do I learn technical skills for trading commodities?

    Learn what resources are available to learn about trading commodities, and understand some of the differences between stocks ... Read Answer >>
  5. What is a wild-card play?

    A wild-card play is a term related to futures contracts. A future is a financial contract obligating a buyer to purchase, ... Read Answer >>
  6. Why do futures' prices converge upon spot prices during the delivery month?

    It's a fairly safe bet that as the delivery month of a futures contract approaches, the future's price will generally inch ... Read Answer >>
Hot Definitions
  1. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  2. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  3. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  4. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  5. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  6. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
Trading Center