Forex for a trader
How to trade forex like a banker

How to trade forex like a bankerHow to trade forex like a banker. In this article I will show you the way I look at the market now. At the very beginning when I started trading I was excited about all different kind of indicators and strategies. Time went by and I still could not figure out what am I doing wrong as I had read lot of text books and watched hundreds of videos. I studied candle sticks, price action , then combined everything together and still could not figure out what am I doing wrong. I have always wanted to know a reason behind everything what happens, including the forex. I started to ask myself what is really moving the price. Not having much trust in many things in this world, I also started to question all the information regarding financial markets and trading that is so easily available to everyone. Basically I started to think outside the box and sure enough, I started to see things the way I never did before. Forex and any other markets are manipulated 247 . You can see the same patterns over and over. Only few major banks control almost 80% of all Forex market. These banks have even admitted rigging markets and have been fined for that with billions of $, but all that is quickly forgotten and practically not covered by the mainstream media. This is how it works.

Price is always moved to the level with the most stop orders. Either stop loss, buy stop or sell stop. In order to move the price up someone has to sell at first so that they can buy and move the market up. Sometimes it may be harder to notice, but that is just because it can not be done in too obvious way and they have to accumulate the positions over the time. This will appear as a range bound market. In this article I will show you the examples of how those stop orders are hit and where they are most often placed by traders. In next article I will concentrate on how to use this to your advantage and how to place trades knowing what the market makers are actually doing. I will show you six most common setups that are used. Some of them you will see more often than the others. There are mainly two groups of these setups, first one is when the stop is used above the breakout candle, and the second one is when the stop is placed above the swing high. I have illustrated only bearish setups, opposite would hold true for bullish ones. Setup #1 Lets start with the most classic one. This is something that you will see very often. We have to look for an impulsive move first. It will mean that the smart money has made their initial move.

Now we have to wait for a pullback ( the less the better ). Once new swing high has been established many stops are placed above this level expecting for a further price decline. As we can see things don't go as planned and pair slowly recovers. It even manages to go above the swing high. Lot of buy stop orders are waiting to be executed as traders expect an uptrend once new high established. What happens next is obvious, price continues to fall after banks have successfully triggered all stop orders. Chart 1 Setup #2 Next one is one of my favorites. In the chart image that I have attached below we can see three different cases of stop loses being hit. It all happens when a candle closes below a previous low. Psychology behind this is really simple. Once we have a candle that closes below the low we anticipate continuation of a down trend. Therefore we place a stop above the high of this candle and wait for the market to continue to the downside. Banks see those stop orders and of course they go and take them out and then push the price back down again. This is happening across all the time frames. Whenever looking at H4 charts we have to take in consideration that not everybody is using the same charts and therefore H4 candle high on somebody's else chart could be at a slightly different level. Chart 2 Setup #3 Next setup is based on the same lower low or higher high principle. Mostly observed in trending market conditions, however it can also be seen when market is about to reverse.

What happens here is very simple. Traders place sell stop orders below current low expecting the price to go lower. And of course stop loss level will be just above recent swing high. It repeats itself over and over again. Sometimes stops will be taken out even two or three times. It can be few pips or more than that, it will always depend on how many stop orders are placed and at what level. After stop orders are hit, pair continues on its way to the down side. Chart 3 Setup #4 The rest of the setups will be similar to each other and will show few variations of what happens once the trend line is broken. This one illustrates the most common scenario. Price closes below the trend line and traders place stops above the high of this candle. What happens next is not hard to guess.

Price goes down a bit and then quickly shoots back up and executes all the stop orders. We don't want to see price to drop too far after the initial break out as in this case most of the positions are closed as a profit and price returns to initial SL level buy other reasons which we are not concerned about at the moment. Chart 4 Setup #5 In the chart below we can see how trend line is clearly broken. Does not matter how you draw them, here it is obvious that even two different ones don't hold as a support anymore. However this is not followed by a sell off and price continues to climb. It bounces off of the new resistance and goes down a bit before smashing through the recent highs on the chart. When these manipulation occur, very often you will see that price is definitely forced there with a reason. In this case we have both buy stop orders initiated by buyers who thought that uptrend will continue and by sellers who had their stops placed just above the newly established highs. And again we can see that pair steadily loses its value. Chart 5 Setup #6 And finally the last one. This is not as common as others, but knowing this would still be helpful. What happens here is simple. Prior to falling through the support, price slightly bounces up and only then breaks through. This creates a little swing high which is then used as a logical level for SL placement.

And we don't have to wait too much to see this level violated. Most of the stops are cleared and pair continues its course. Chart 6 There are other opportunities out there, but once you understand this concept, those should become more obvious. I am talking about chart patterns and candle stick patterns. It is also very easy to spot this whenever there is some sort of a pullback to some price level after a break out, either from a pattern, price range or just support or resistance. But I will not explain that in detail. We can use this to enter the market safely with rather tight stop loss and potentially high reward. I am not saying that this happens 100% of a time, but it does so much that it is absolutely crazy to ignore this. It is hard to adapt to this kind of thinking and it is even harder to execute the trades at these levels when it looks like the market will go against you. Often it is also necessary to switch between the time frames to spot those levels. Thank you for reading my article and I hope that you all gained something valuable from it. The Bankers Way of Trading the Forex Market.

Trade forex like the banks. Our jobs as retail traders are simple: Know the banker’s way of trading the forex market. Join their trades. Remember, we are not trying to beat the bankers nor the market. We are simply trying to trade forex like the banks . This blog post shows the wrong and right ways of trading . The wrong and right ways of trading. TRADING THE WRONG WAY. Cluttering the chart is the worst mistake a trader can commit. The endless sea of indicators and tools removes all vision from the chart, blocks price action, and eliminates any sense of direction. The signals and analysis are overly conflicting with each other too (one tool could indicate sell but the other shows hold or buy) and causes paralysis of analysis. Some traders probably choose these tactics as a method to hide the insecurity about their approach and their trading.

Other traders feel comfortable with paralysis of analysis as it allows them to escape a decision and blame other third parties. TRADING THE RIGHT WAY. Trading the right way requires the right attitude combined together with a consistent and simple approach. The charts are clear and not overcrowded. The trading method is simple. Trading is approached with a probabilistic and open mindset which realizes that anything can happen with a trade at any time. It just boils down to a couple of items when analyzing the charts and you will be able to analyze the charts and find setups with a high probability of success just like the big traders, trading teams and banks do. Here You can see a funny video about trading levels. Point 1. TREND & MOMENTUM Traders must have a sense of the trend and momentum. The best setups are when both line up. The trend can be well captured with trend channels and medium to longer term ema. The momentum is best viewed by using candlesticks. Also, the fundamentals are an important factor in determining the larger trend (here is an example of the USD trend where I used technicals but fundamentals gave the needed direction).

Point 2. PATTERNS The market is full of patterns. Forex traders are looking for reliable and consistent ones that have stood the test of time, such as candle sticks patterns and chart patterns. The patterns have more value when they appear in areas with confluence. Point 3. SUPPORT & RESISTANCE A key component in understanding decision moments of the market is via support and resistance (S&R). The battle between trendmomentum and supportresistance always provides interesting potential setups for traders to capitalize. It is at the S&R levels where traders are able to take a bounce and break trade setups. The best tools for finding S&R are tops and bottoms, trend lines, and Fibonacci levels. Here is the Simple way of trading multiple time frames in forex. Although the above 3 pointers will help simplify your approach to trading and enable you to analyze like the pros, it is important to realize that other important work still must be done such as: An exact entry and exit strategy Discretionary: waiting for the highest probability setups Non-discretionary: taking setups with a smaller edge but consistently Risk and money management Trading psychology Testing, Evaluations. Do you think that analyzing the chart via the 3 points mentioned above (trend, S&R, patterns) could help your trading? Do you think that your trading andor analysis is too complicated? Do you have an idea why it is confusion? We hope you find time to learn the banker’s way of trading.

Remember, we are not trying to beat the bankers. We are simply trying to trade forex like the banks! Thanks for the feedback and sharing this post. And leave a comment below if you have any questions about The Way of Trading ! Also, please give this topic a 5 star if you enjoyed it! Wish you Happy Trading! ( 1 votes, average: 5.00 out of 5) Day Trading Forex Live – Learn To Trade Pro Forex Strategies. Forex Bank Trading Strategy Revealed – Forex Day Trading Strategy. Forex Bank Trading Strategy. Anyone successful in the forex market will hands down agree there is no greater career one could have. The ability to work your own schedule, the freedom, and income potential is hard to match with any other career. Having said that, what does it take to become successful in the forex market? Plain and simple we need the proper forex education to achieve success.

In a market with a success rate of 5% it is important that we search out and receive forex training that will allow us to be in that very small successful group of traders. How does one go about doing so? To put it simply if the forex trading strategy that is being used is one used by the masses, then how can one expect different results than the masses? 5% of retail traders succeed, which tells us that 95% fail and thus we have no other choice than to break free from the failing forex education system! Enter You Enemies Head and Think Like A Bank. Before we begin I would like to give a preface to the forex bank trading strategy. First, it is common knowledge that the banks drive the forex market. It is not a hidden fact that they drive the most amount of volume on a daily basis and as a result they drive short term moves. If we understand that the banks drive, manipulate, and push this market then wouldn’t it be hugely beneficial to track when they are entering and what position they are taking? This is the very foundation of the bank day trading strategy we employ. If we can decipher when they are entering, and what position they are taking then we do not need any further information to make a profitable forex trading decision. We must remember that this is the banks market, and not ours! Retail traders are simply figurative flies on the wall. Keeping that in mind, why then do most retail forex traders out there attempt to invent or learn forex trading strategies that have been created to try and fit a market we do not control? It is our strong conviction at Day Trading Forex Live that success in the forex market is only possible when we stop trying to fit forex strategies to a market we don’t control, but rather learn the trading strategy of the banks!

This is their business, and they have a business model (aka forex trading strategy) that we must learn to follow to achieve consistent results! Every day the banks repeat the same 3 step process. If we learn to trade forex by following their model we will have a much greater chance of successa€¦after all the banks are the ones moving the market. 3 Steps To Success. As we just mentioned the banks use a 3 step process day after day to profit from the forex market. We can think of this process as their forex trading strategy. It has rules that they follow, it is repeatable, and it consistently results in profit. In any market there must be a counter party to every transaction. If you are looking to buy the market someone must be willing to sell to you, and conversely if you are looking to sell the market then someone needs to be willing to buy it from you. This is the basis for how the market at its foundation works and therefore this is how we track how the banks trade. Accumulation: As discussed above there is a counter party to every transaction in any market including the forex market. Therefore when a bank or group of banks desires to enter the forex market they must do so by accumulating a position over time. Unlike you and I, because of the sheer volume banks push they must enter positions during times most people would term as consolidation or range bound markets. These periods of consolidation are what we call accumulation as they are areas where smart money (banks, hedge funds, ect) enters or accumulates their desired position over the course of time. By doing this through tight range bound periods banks are able to not only keep what they are accumulating secret to the rest of the market, but they are also able to get a much better overall entry price.

This is the foundation to any trade made by the banks. Money is made by accumulating a long position they will later sell off at a higher price, or accumulating a short position they will later cover at a lower price. This is one of the most essential keys to trading forex successfully, and yet it is always over looked or worse yet called consolidation which is viewed as useless times in the market that mean nothing. Our single goal should be to track when the banks are entering the market and what position they are entering and thus these areas of accumulation are critical to our trading decisions. As discussed above banks are the ones moving this market, and therefore if you can identify the position they are accumulating you can identify which direction the market will move next with a high degree of accuracy. What then comes after this period of accumulation? Manipulation: Over and over through my years of educating forex traders I’ve heard many forex traders say that it feels as if they are entering the market at exactly the wrong time. Many retail forex traders feel as if the market is just waiting for them to enter before it instantly turns the opposite direction. I’m here to tell you that it’s true! This is a critical idea that all must understand and come to accept. We all know the failure rate among traders, but what does this information tell us? Remember above when we discussed that there must be a counter party to every trade? This is a well-known fact and it is indisputable.

Because the mega banks position is so large they must essentially create their own market. For example lets say Bank X? was looking to sell the EURUSD. In order to sell the position size they desire there would have to be someone willing to buy an equal amount of the EURUSD. This is where the retail forex trader comes in. Forex traders are predictable. As a general rule of thumb all traders go through the same education, use the same trading strategies, and use the same software and indicators. While each strategy has its own small differences, the majority generate the same losing results and this is undeniable. If this weren’t true wouldn’t we see a success rate higher than 5%? Therefore while the strategies differ, the outcome and thus trades tend to be in large part the same which explains why the outcome of retail traders tends to be the same. Because of this the banks are well aware of how to get retail traders to enter the market. Going back to our illustration if Bank X? was looking to sell the EURUSD then they would push the price up, which it turn would begin to trigger buying pressure from retail traders.

At this same point they would begin to sell into all that buying pressure, and then the market instantly turns to the downside. This is the central reason many retail forex traders consistently enter the market at exactly the wrong time. The unfortunate part about this is the fact that this information is actually the most powerful thing the banks give us, but only if we open our eyes to it. The manipulation of price tells us what position they have been accumulating and thus tells us the direction they intend to drive the price. I urge you to look back at all large market moves. Before most every move in the forex market you will see a tight range bound? period that is accumulation followed by a false push in the opposite direction of the trend. DistributionMarket Trend: After they have accumulated a position through the standard tight ranging market, banks will often create a false push that we just discussed which is manipulation. This false push is an extension of the accumulation period as it allows them to finish entering the rest of the position they had been accumulating. This as we just discussed is the reason so many forex traders enter the market at exactly the wrong time. If however we know the tricks they use we can avoid being a pawn of the banks manipulation, and instead profit from it as they do! If we have correctly identified which direction they have manipulated the market we can then understand which direction they intend to push the price. This is called the distribution phase of the market, and is seen visually as a market trend. Again this market trend comes only after the banks have finished accumulating their position through tight range bound price action as well as manipulation.

Hands down this is the easiest area for us to profit from but only if we can properly identify the first 2 steps in the process. Through this article I have marked out this 3 step process on a series of charts. New concepts can be hard to understand with only words and therefore I believe the charts should serve you well in the learning process. As you examine these charts you should be identifying the 3 stages of the bank day trading strategy. Putting Forex In Perspective. Bottom line is this forex trading strategy is no doubt very different than what you have heard before. Realizing the chart is a false manipulation of prices and learning to read the intention behind the moves will take practice. Anything in life that is new takes time to learn and this will be no exception. However, the potential reward of being a profitable forex trader is massive and in our opinion unmatched! Having the freedom to do as you like, and the money to support that freedom is something forex trading offers to all of us, but only if we are willing to work for it. Everyone reading this knows most traders fail. Everyone reading this knows the general ways most trade.

Therefore if you are using a forex trading strategy used by the masses I strongly urge you to give some serious thought as to why you feel the outcome will be different for you? At some point we all need to realize that maybe it’s not the tens of thousands of retail forex traders that are failing, but rather maybe it’s the strategies that are flawed to begin with. Therefore I again urge you to take in this free information, give it some thought, and apply it in your trading! I say this not to offend anyone but rather in a sincere effort to get everyone reading this thinking about the facts. Either way I sincerely wish you all the best and I truly hope I can serve you in your progression as a forex trader. Making money in forex is easy if you know how the bankers trade! How to make money in forex? I’m often mystified in my educational forex articles why so many traders struggle to make consistent money out of forex trading. The answer has more to do with what they don’t know than what they do know. After working in investment banks for 20 years many of which were as a Chief trader its second knowledge how to extract cash out of the market. It all comes down to understanding how the traders at the banks execute and make trading decisions. Why? Bank traders only make up 5% of the total number of forex traders with speculators accounting for the other 95%, but more importantly that 5% of bank traders account for 92% of all forex volumes. So if you don’t know how they trade, then you’re simply guessing. First let me bust the first myth about forex traders in institutions.

They don’t sit there all day banging away making proprietary trading decisions. Most of the time they are simply transacting on behalf of the banks customers. It’s commonly referred to as ‘clearing the flow”. They may perform a few thousand trades a day but none of these are for their proprietary book. How do banks trade forex? They actually only perform 2-3 trades a week for their own trading account. These trades are the ones they are judged on at the end of the year to see whether they deserve an additional bonus or not. So as you can see traders at the banks don’t sit there all day trading randomly ‘scalping’ trying to make their budgets. They are extremely methodical in their approach and make trading decisions when everything lines up, technically and fundamentally. That’s what you need to know! As far as technical analysis goes it is extremely simple.

I am often dumbfounded by our client’s charts when they first come to us. They are often littered with mathematical indicators which not only have significant 3-4 hour time lags but also often contradict each other. Trading with these indicators and this approach is the quickest way to rip through your trading capital. Bank trader’s charts look nothing like this. In fact they are completely the opposite. All they want to know is where the key critical levels. Don’t forget these indicators were developed to try and predict where the market is going. The bank traders are the market . If you understand how they trade then you don’t need any indicators. They make split second decisions based on key technical and fundamental changes. Understanding their technical analysis is the first step to becoming a successful trader. You’ll be trading with the market not against it. What it all comes down to is simple support and resistance. No clutter, nothing to alter their trading decisions. Simple, effective and highlighting the key levels. I’m not going to go into the ins and outs of where they actually enter the market, but let me say this: it’s not where you think. The trendlines are simply there to indicate key support and resistance.

Entering the market is another discussion all together. How to make money in forex? The key aspect to their trading decisions is derived from the economic fundamentals. The fundamental backdrop of the market consists of three major areas and that’s why it’s hard to pin point currency direction sometimes. When you have the political situation countering the central bank announcements currency direction is somewhat disjointed. But when there are no political issues and formulated central bank policy acting in accordance with the economic data, that’s when we get pure currency direction and the big trends emerge. This is what bank traders wait for. The fundamental aspect of the market is extremely complex and it can take years to master them. This is a major area we concentrate on during our two day workshop to ensure traders have a complete understanding of each area. If you understand them you are set up for long term success as this is where currency direction comes from. There is a lot of money to be made from trading the economic data releases . The key to trading the releases is twofold. First, having an excellent understanding of the fundamentals and how the various releases impact the market. Secondly, knowing how to execute the trades with precision and without hesitation.

If you can get a control of this aspect of trading and have the confidence to trade the events then you’re truly set up to make huge capital advances. After all it is these economic releases which really direct the currencies. These are the same economic releases that central banks formulate policy around. So by following the releases and trading them you not only know what’s going on with regards central bank policy but you’ll also be building your capital at the same time. Now to be truly successful you need an extremely comprehensive capital management system that not only protects you during periods of uncertainty but also pushes you forward to experience capital expansion. This is your entire business plan so it’s important you get this down pat first. Our stringent capital management system perfectly encompasses your risk to rewards ratios, capital controls as well as our trade plan – entry and exits. This way when you’re trading, all your concerned about is finding entry levels. Having such a system in place will also alleviate the stresses of trading and allow you to go about your day without spending endless hours monitoring the market. I can tell you most traders at banks spend most of the day wandering around the dealing room chatting to other traders or going to lunches with brokers. Rarely are they in front of the computer for more than a few hours. You should be taking the same approach.

If you understand the technical and fundamental aspects of the market and have a comprehensive professional capital management system then you can. From here it just takes a simple understanding of the key strategies to apply and where to apply them and away you go. Trust me you will experience more capital growth then you ever have before if you know how the bank traders trade. Many traders have tried to replicate their methods and I’ve seen numerous books on “how to beat the bankers”. But the point is you don’t want to be beating them but joining them. That way you will be trading with the market not against it. So to conclude let me say this: There are no miraculous secrets to trading forex. There are no special indicators or robots that can mimic the dynamic forex market. You simply need to understand how the major players (bankers) trade and analyse the market. If you get these aspects right then your well on the way to success. Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements.

It also does not guarantee that this information is of a timely nature. Investing in Forex involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. Error 521 Ray ID: 4509b42327fd841e • 2018-08-26 22:23:35 UTC. The web server is not returning a connection. As a result, the web page is not displaying. If you are a visitor of this website: Please try again in a few minutes. If you are the owner of this website: Contact your hosting provider letting them know your web server is not responding. Additional troubleshooting information. Cloudflare Ray ID: 4509b42327fd841e • Your IP : • Performance & security by Cloudflare. Forex Trading – How to Trade the Forex Market. Learn about the best forex trading strategies. How to Trade the Forex Market. Whether you’re an individual trader or a financial or investment professional, the foreign exchange (forex) market, also known as the currency or foreign currency market is where the money is. Forex trading amounts to approximately $5 trillion (yes, trillion, not billion) per day. By comparison, the approximately $700 billion a day bond market and $200 billion a day in stock trading worldwide appear relatively small in size. The total daily value of all the stock trading in the world equals just about one hour’s worth of trading in the forex market every day. Forex Players – Banks. There are several distinct groups of participants in the forex market.

The largest group of forex traders, in terms of the total dollar value of trading that they account for, is comprised of commercial and investment banks. Banks conduct a large amount of currency trading on behalf of their customers who are involved in international business and trade operations. They also serve as market makers in forex trading and trade heavily in their own accounts. (If a banker ever cautions you against forex trading, you might want to ask them why, if forex is such a bad investment, their bank invests such huge sums in the forex market.) Forex Players – Governments. Governments, through their central banks, are also major players in the forex market. The central bank of a nation will often adopt large positions of buying or selling its own currency in an attempt to control the currency’s relative value in order to combat inflation or to improve the country’s balance of trade. Central bank interventions in the forex market are similar to policy-driven central bank interventions in the bond market. Forex Players – Companies. Large companies that operate internationally are also substantially involved in forex trading, trading up to hundreds of billions of dollars annually. Corporations can use the forex market to hedge their primary business operations in foreign countries. For example, if a U. S.-based company is doing a significant amount of business in Singapore, requiring it to conduct large business transactions in Singapore dollars, then it might hedge against a decline in the relative value of the Singapore dollar by buying the currency pair UsdSgd (US dollar vs. Singapore dollar). Forex Players – Traders.

Last, but certainly not least, are individual forex traders, speculators who trade the forex market-seeking investment profits. This group includes a disparate cast of characters, from professional investment fund managers to individual small investors, who come to the market with widely varying levels of skill, knowledge, and resources. Learning Forex Trading – Currency Pairs. The forex market trades fluctuations in the exchange rate between currency pairs, such as the euro and the US dollar, which is stated as EurUsd. In the quoting of exchange rates, the first currency in the quotation is known as the base currency and the second currency is the quote currency. The exchange rate for a currency pair appears as a number like 1.1235. If the pair EurUsd is quoted as 1.1235, that means that it takes $1.12 (and 35100 th ) in US dollars to equal one euro. The most widely traded currency pairs are, naturally enough, those involving the currencies that are most widely used worldwide – the US dollar (USD), the euro (EUR), the British pound (GBP), and the Japanese yen (JPY). Learning Forex Trading – Pips. Generally, the smallest fluctuation in an exchange rate between two currencies is called a “pip”. With most currency pairs, which are quoted to four decimal places, a pip equals 0.0001. The primary exception is Japanese yen currency pairs that are only quoted to two decimal places so that a pip equals 0.01. Many brokers now quote to five decimal places, with the last number signifying a fractional 110 th of a pip. The value of a pip depends on both the currency pair being traded and what lot size is traded. For one standard lot, a pip commonly equals $10 (US); trading mini-lots, a pip equals $1; and trading micro-lots, a pip equals 10 cents. The value of a pip varies slightly depending on the currency pair being traded, but those figures are roughly accurate for all pairs. Advantages of Forex Trading – Leverage. One of the major attractions of forex trading is the unparalleled leverage that is available to forex traders.

Leverage is the ability to hold a market position with only a fractional amount of the market value of the instrument being traded. This fractional required deposit amount to hold a trading position is known as “margin”. Leverage is expressed as a ratio that shows the amount of margin required by a broker to hold a position in the market. For example, 50:1 leverage means that a trader only needs to put up 2% of a trade’s total value to initiate a trade. Some brokers offer up to 1000:1 leverage. High amounts of leverage mean that forex traders can utilize a small amount of investment capital to realize sizeable gains. For example, with an investment of only around $10, trading micro-lots with 500:1 leverage, a trader can realize a profit of approximately $20 (or roughly double his investment) on just a 20-pip change in the exchange rate. Given that many currency pairs often have a daily trading range of 100 pips or more, it’s easy to see how traders can realize substantial gains from very small market movements, using minimal amounts of trading capital, thanks to leverage. However, traders have to keep in mind that just as leverage magnifies profits, it also magnifies losses.

So a trader might only commit $10 of his total trading capital to initiate a trade, but end up realizing a loss substantially greater than $10. Advantages of Forex Trading – Liquidity. The extremely high volume of trading that occurs in the forex market each trading day makes for correspondingly high levels of liquidity. High liquidity makes for low bid-ask spreads and allows traders to easily enter and exit trades throughout the trading day. The bid-ask spread on major currency pairs, such as GBPUSD, are typically much lower than the bid-ask spread on many stocks, which minimizes transaction costs for traders. For large institutional traders, such as banks, high liquidity enables them to trade large positions without causing large fluctuations in price that typically occur in markets with low liquidity. Again, that makes for lower total trading costs and thus larger net profits or smaller net losses. Higher liquidity is also considered by many traders to make markets more likely to trade in long-term trends that can more easily be analyzed with the use of charting and technical analysis. Advantages of Forex Trading – Volatility. As previously noted, many of the most widely traded currency pairs often have a daily trading range of up to 100 pips or more. This daily volatility makes for significant opportunities to realize profits simply within the range of price fluctuations that occur within a normal trading day. The advantage of volatility is enhanced by the fact that in forex trading it is just as easy to sell short as it is to buy long. There are no restrictions on short selling such as those that exist for trading stocks. A wide daily trading range, with equal opportunities to profit from both buying and selling, make the forex market very attractive to speculators in general and day traders in particular. Forex Trading Strategies – Fundamental Analysis. There are two basic strategic approaches to forex trading – fundamental and technical.

Fundamental analysis trading is generally more favored by long-term traders, those who buy (or sell) and hold a currency pair for an extended period of time. Fundamental analysis is analysis that is based on economic conditions, both within specific countries and globally. Throughout most trading days, various economic reports from the different countries in the world are released. The indications, positive or negative, coming from such reports are the main drivers of major changes in exchange rates between currency pairs. If, for example, several positive reports on the United Kingdom’s economy are issued within a three-month time frame, that is likely to increase the value of Gbp against other currencies such as the Eur and Usd. Among the most significant economic reports issued, those most likely to impact the currency markets, are gross domestic product (GDP), the consumer price index (CPI), the producer price index (PPI), various employment and consumer confidence reports, and the policy decisions of central banks. Fundamental analysis may also be based on global economic trends. For example, if the usage of cotton is rising worldwide, then the economies of countries that are major cotton producers can be expected to benefit, and the relative value of their currency may be expected to increase. Interest rates, which are set by a country’s central bank, are a major factor in determining the relative value of a currency. If investors can realize significantly higher gains from money held in interest-bearing accounts in the United States than from interest-bearing accounts in other countries, then that makes the US dollar more attractive and therefore likely to increase in value relative to other currencies. Forex Trading Strategies – Technical Analysis. Many forex traders favor technical analysis in determining the trading positions they adopt. Technical analysis – analysis based on charts of price movements in a market, with the aid of various technical indicators – is generally favored by speculators and short-term or intraday traders, although long-term traders may also utilize technical analysis. Technical analysis is simply analysis that is based on past price movement and market behavior (such as volume or volatility), Technical indicators include trend indicators such as moving averages, and market strength, or momentum, indicators such as the relative strength indicator (RSI). A basic technical trading strategy might be something as simple as buying a currency pair when the priceexchange rate is above a 50-period moving average, and selling the pair when it is below the 50-period moving average. Some technical traders utilize a single technical indicator for trades, while others apply multiple technical indicators as trade indicators. For example, the simple technical trading strategy just outlined, using a moving average, might be combined with a momentum indicator such as the MACD, with trades only being initiated when both certain price levels and momentum levels exist.

Technical traders analyze charts of varying time frames based on the trader’s individual trading time frame preference. Traders who make very quick, in-and-out of the market trades, may concentrate their analysis on a 5-minute, or even 1-minute time frame chart. Traders with a longer term trading time frames are more likely to apply technical analysis to hourly, 4-hour, or daily charts. The Forex Market – The Profit Opportunity Market. The forex market is one of the most attractive markets for traders. Forex trading has exploded in popularity since retail trading by individual small investors became more readily available around the turn of the century. The ability to open a trading account with amounts as small as $50-$100, and the possibility of then turning such a small amount into millions within just the space of a few years, is an almost irresistible draw. However, the lure of “easy money” from forex trading can be deceptive. The fact is that the majority of forex traders lose money, and only a small percentage of traders are consistent winners in the currency trading market.

The keys to success in forex trading include not just a good, sound trading strategy, but exceptional trading discipline, patience, and risk management. A number of super-successful forex traders have summed up the secret to their success as something like, “Just avoid taking big losses until you stumble into a huge winner. Most traders fail because they gamble away all their trading capital and don’t have any money left to trade with when a ‘million dollar’ trading opportunity finally comes around”. Corporate Finance Training. Advance your career in investment banking, private equity, FP&A, treasury, corporate development and other areas of corporate finance. Enroll in CFI’s Finance Courses to take your career to the next level! Learn step-by-step from professional Wall Street instructors today. How Does a Professional Forex Trader Actually Trade? Hi Traders, This article is going to provide you with detailed insight into how an experienced Forex trader thinks about and trades the market on a day to day basis. I have been around the markets for a long time; I’ve truly seen it all when it comes to trading, from sitting next to professional traders who manage large sums of money, to running live educational seminars.

What you are about to read is a “straight from the horse’s mouth” synopsis of what professional Forex trading is all about. So, grab your favorite beverage and enjoy this article about how professional traders actually trade the Forex market. • Time frames. Most professional Forex traders do not waste their time trying to trade short time frame charts. Instead, they spend their precious time taking in the bigger picture of the market, through careful and skilled analysis of the higher time frames. Higher time frame charts contain a more accurate and meaningful view of what is taking place in a market. Successful Forex trading is not about spending massive amounts of time staring at the charts until your eye balls burn. To succeed in the markets you have to develop a meaningful perspective that allows you to see the aggregate bias in a market, and higher time frames simply do a better job at this than lower time frames. Thus, most professional traders spend their time analyzing time frames of the four-hour chart and higher, the one-hour time frame can be useful for refining entries, but anything less than this and you are simply rolling the dice.

So, step one to trading like a professional is to fully accept that higher time frames display a much more accurate and useful view of the market than their noisy lower-time frame counter parts. The bottom line is that to fully develop your Forex trading skills you need to learn to trade the higher time frames before you do anything else. • Trading frequency. As a result of trading higher time frame charts, many pro traders are much more precise and efficient than their amateur counter-parts. One of the primary mental road-blocks that prevent so many traders from making the consistent money they desire, is erroneously believing that interacting with the market more, and trading more, will result in them making more money. The truth of the matter is that trading more frequently has no positive effect on your trading results. In fact, statistics show that traders who trade relatively infrequently consistently make more money on average than day traders and traders who trade very frequently. So, most professional traders trade higher time frames, and as a result of this they trade less frequently than what most people might think. • Precision trading. A common metaphor used in the trading world is that pro traders are like lions that lay in wait for the “easy prey”. The easy prey in the world of Forex trading only comes to those traders who know exactly what they are looking for, and who also can wait patiently until what they are looking for presents itself to them. One of the primary differences between amateur and professional Forex traders is that amateurs tend to jump into the game too early, before they really know what they are looking for or before they have truly learned to master one Forex trading strategy at a time. Whereas a professional trader never feels like he or she is guessing, they come to the market every day with a definable Forex trading plan, be it in their head or written down on paper.

Precision trading is what every trader should aim for, and it is how the pros trade; waiting for the “perfect” trading conditions to spawn a trade setup that they have been sitting and waiting patiently for. Most pro traders are looking for established trends andor significant levels in the market, and then they watch closely for their edge to appear, providing them with “confirmation” that the time is right to risk some money in the market. The key point to take from this topic of precision trading, is that pro traders know exactly what their edge in the market is, and then they execute it with flawless precision and confidence. There is no haphazard second-guessing or over-trading in the world of professional Forex trading. • Harnessing the power of the market There is no doubt that the Forex market makes some significant moves almost every week. Professional traders know this fact and they use it to their advantage by taking significant chunks out of these moves each week. They aren’t trying to get the entire move, just a sizeable chunk that will cover any losing trades they may have had and leave them with a nice profit. A professional trader knows that it is more efficient and effective to take a sizeable position on a “perfect storm” trade setup, and hold it for multiple days or multiple weeks, than it is to enter a plethora of smaller positions by dodging in and out of the market each day. There are also pro traders who look for multi-hour moves, who perhaps aren’t looking for multi-day or multi-week positions, this is fine too, and it all comes back to what your Forex trading plan is and whether or not you truly know what your edge in the market is. • What strategies do pro traders use? First off, most experienced traders will have their favorite markets, for me it’s the EURUSD and the AUDUSD, and also the Dow mini-futures occasionally. The bottom line is that pro traders know what Forex currency pairs they prefer to trade, as well as the best times to trade Forex, and these factors contribute to their overall Forex trading strategy. Perhaps surprising to some, is that most pro traders do not rely heavily on economic news or other fundamentals to enter and exit the market. Instead, they rely primarily on price action, because they have long since figured out that world news events are “priced in” to the markets. What this means is that financial markets operate on “future time” and on the expectations that traders have about what the value of a particular trading instrument will be if XYZ happens. This is typically why when XYZ actually does happen, price tends to react opposite from what common sense would suggest; because there is now nothing to expect from the event. Professional Forex traders thus operate on a framework of understanding price dynamics and basic market mechanics.

They factor in these “core” trading elements to every potential setup, meaning things like trend analysis and awareness of significant levels in the market, combined with some sort of “edge” of course. The edge that I use is simple price action trading strategies, these strategies have served me well over my years in the markets, and it is what my Forex trading training focuses on. Any trading strategy or trading system can only be enhanced by having an intimate understanding of price action strategies and basic market mechanics, if you want to learn more about these trading methods then check out my Forex price action trading course and member’s community. How to Trade Forex With the Big Banks. FOREX trading account that routes trades to Currenex Minimum account founding. Foreign exchange, Forex and FX are all names for the same thing: trading currencies. The Forex market is the largest in the world, trading over $3 trillion every day, according to ForexTrading. com. Trading within the intrabank network allows for the narrowest spreads and highest liquidity (the spread is the difference between the best buy and sell price). Banks trade within Electronic Communication Networks, or ECNs, which connect the world's leading banks together. Currently, Currenex was voted by Global Finance as the best FX Bank Trading System. It won the award as it offers prices from 70 of the world’s biggest banks. To trade within this network, all one has to do is open an account with a FOREX firm where its trades are all routed to Currenex.

Create and Fund Account, and Start Trading. Visit the Currenex website to find Forex firms that use the Currenex network (see Resources). Research "White Label Partners" and request an account that trades directly within the Currenex network, or with Currenex itself. Choose a broker by evaluating their demo platform product and reviewing their commission structures. Forex brokers offer varying platforms. Some offer more robust charting software than others, and the appearance of their price quotes and order entry systems may differ. Basically, you get what you pay for; brokers with low commissions tend to have low-end platforms as well. Check account minimums and fund your account accordingly. Use trading platform to place trades within the intrabank network. ECNs offer floating spreads. This means that the spreads of each currency pair will change. During times of increased market action, liquidity will increase and spreads will tighten, allowing for the best order executions. During times of important economic news releases, spreads can widen and move rapidly. Trading during this time may lead to receiving filled orders at unexpected prices.


  • How to trade forex like a banker