Weak Hands

AAA

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.

INVESTOPEDIA EXPLAINS '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. Cash Commodity

    In futures trading, the cash commodity is delivered for payments. ...
  2. Commodity Futures Trading Commission ...

    An independent U.S. federal agency established by the Commodity ...
  3. Futures Contract

    A contractual agreement, generally made on the trading floor ...
  4. Large Trader

    An investor or organization with trades that are equal to or ...
  5. Underlying

    1. In derivatives, the security that must be delivered when a ...
  6. Delivery

    The action by which an underlying commodity, security, cash value, ...
Related Articles
  1. Getting Started In Foreign Exchange ...
    Forex Education

    Getting Started In Foreign Exchange ...

  2. Interpreting Volume For The Futures ...
    Options & Futures

    Interpreting Volume For The Futures ...

  3. Futures Fundamentals
    Insurance

    Futures Fundamentals

  4. Stock Safety: Top 3 Ways to Limit Your ...
    Options & Futures

    Stock Safety: Top 3 Ways to Limit Your ...

Hot Definitions
  1. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  2. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  3. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  4. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  5. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  6. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
Trading Center