Many traders want to make money in the market but don’t really understand the mechanics of the market itself. There are many forex market participants around the world, not only individuals, but also large institutions such as banks and others. Well, to make it more effective to make money in forex, know how to trade bankers below!
How to Make Money on Forex?
Basically, we as traders are only a fraction of the market. For that, we must understand how large institutions such as banks work, which can play a major role in moving the market.
In fact, bank traders only account for 5% of the total number of forex traders, and retail traders speculators account for the rest or 95%. However, 5% of bank traders account for 92% of all forex volume.
So if you don’t know how they trade, then you will actually lose to the market. First, let us break the first myth about traders in the institution. They don’t sit there all day making exclusive trading decisions.
Most of the time they only transact on behalf of bank customers. This is usually referred to as “clearing the flow”. They may make several thousand transactions a day, but none of these are for their own company.
How Do Banks Trade Forex?
They actually only make 2-3 trades a week for their own trading account. These trades are the ones they value at the end of the year to see if they deserve the extra bonus or not.
So you should know, bank traders don’t sit there all day trading randomly ‘scalping’. They are very methodical in their approach and make trading decisions when everything is in line, technically and fundamentally.
Have you ever felt that when doing technical analysis, you use many indicators and all the indicators you use are contradictory? here This is called analytical disability. Trading with too many indicators is the fastest way to tear your trading capital apart.
The bank trader chart doesn’t look like that. In fact, they are the complete opposite. What they wanted to know was where the major critical levels were. This is where the support and resistance lines come into play. It looks simple, but that’s what they are referring to.
Move With The Market, Not Against It!
Understanding their technical analysis is the first step to becoming a successful trader. The key is that you have to trade with the market not against it.
A key aspect to their trading decisions comes from economic fundamentals. When you look at the political situation against the central bank’s announcement, the direction of the currency is a bit difficult to predict.
But when there are no political issues and the central bank’s policies are formulated to act according to economic data, that’s when we get pure currency direction and big trends emerge. This is what traders have been waiting for Market fundamentals are complex and can take years to master. There is a lot of money to be made from trading economic data releases. The keys to trading with data releases are twofold:
First, have a very good understanding of fundamentals and how various fundamental data releases impact the market. Second, knowing how to trade with precision and without hesitation.
If you can control this aspect of trading and have the confidence to trade with the release of economic data, then you are really ready to make your trading account grow. After all, it is these economic releases that really drive the currency.
Well, those are some pictures of how big banks trade. Basically, this is an open secret that traders often overlook.