Making money in forex is easy if you know how the bankers trade!

I’m often mystified 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

Investment banking


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.

Bankers Investment

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. 

Wrong Analysis


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. 


Correct Analysis


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. 

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. 

Opportunities


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. 

I Am a Good Forex Trader; What Is My Secret?

I know myself as a good and successful trader, because I have been able to repeat my success every month for several years. I know many traders who started learning forex almost when I did, but they are still learning, testing different systems, and losing money. It is good that they are not disappointed yet, but I don’t know when they will start making money consistently. Why did I started making money after few months of learning and practising, but these people are still learning? Many of them know a lot more than me, but why they don’t make money? What is the secret of my success?

I am a good trader, because…

1. My trading system is simple and easy to use.

I have never tried to invent something new in forex trading. I did not want to invent the wheel from the scratch. We already have everything we need to trade and make money. All of the tools we need are accessible for free. Why should we make our lives too complicated?

I learned the technical analysis and candlestick signals and patterns. This is what I did as soon as I started learning forex. After a while, I almost mastered the technical analysis and candlesticks. I demo traded and came to this conclusion that I should stick to candlesticks and forget about the other things like support/resistance lines and levels, chart patterns, and… because they were somehow too hard, time consuming, and unreliable. I have explained it here.

So I kept everything simple from the first day, and I started getting good results very soon. I did not try different indicators, because I did know that if I wanted to do it, I would have to spend the rest of my life on it. There are zillions of indicators, trading systems, and… . But there are some simple and easy to use tools that are already tried by thousands of traders, from Japan to USA, and it is proven that they work. So I used those tools and forgot about the others.

2. I am disciplined.

I simply use what I have learned and the tools I have. I am not looking for anything else. I do not let any emotions interfere and make me decide wrongly. I check the charts and I place the orders if I see a strong signal. It is as simple as that. There is nothing complicated about trading. Everybody can do it. I have a car (my trading tools e.g. candlesticks and Bollinger Bands), and an address (the trading system/strategy). Every day, I turn on the car and follow the address. I reach the destination within 30 minutes. This is what everybody is able to do.

3. I wait for the best setups.

There are always some weak setups on the charts. Those setups are for the traders who want to lose money. They are not for the professional and experienced traders. So I leave those setups for the others. I wait for the best and strong setups, and fortunately they always form. There are always good opportunities in the forex market. If I don’t trade today, I will do it tomorrow.

4. I use a reasonable stop loss and I am loyal to it.

Stop loss is one of the most important things in trading. Those who do not set a stop loss will be out of the game sooner than later. You can easily wipe out a million dollar account with just one position, if you do not set a proper stop loss. I have seen someone who wiped out a 7 million dollar account, because he foolishly did not set any stop loss, and emphasized that his positions were correct and the market would finally turn around to follow his favourite direction. The market did turn around when his account was already blown up.

Your trading system should tell you about the best and most optimum place to set the stop loss. Otherwise forget about it. You should set a proper and reasonable stop loss which is not too tight or wide, for each of the positions you take. You should not widen your stop loss when the price goes against you and is about to hit the stop loss. Also, please note that a too wide stop loss is like having no stop loss. And a too tight stop loss causes you to lose money even when your position is correct.

To stay away from the emotions, I do not check the charts when I take the positions every day after the daily candlesticks close. Checking the charts when you have open positions can trigger the negative and harmful emotions that cause you to make mistakes. When you see your position is losing, you get emotional and you close your position not to lose more, or you will widen your stop loss because you are afraid of losing too early and you want to give your position more room. When your position is making money and you are watching it, your emotions can cause you to close the position, because you think it is possible that the market goes against you and you lose the profit you have in your hand.

I don’t get emotional so easily, however I prefer not to check the charts and my positions. I take the positions, set the stop loss and target and then I come back the next day.

5. I do not add to my bad positions (I do not average down).

Instead of trading and making money, some people always try to prove that they are right, or they try to break the others’ records. Therefore, when they take a position and it goes against them, they take more positions probably to hit the market turning point finally. However, in most cases the forex market keeps on following the same direction and these traders will lose all they have in their accounts. This is not trading. It is gambling.

6. I do not over-trade.

Over-trading is another syndrome I see among forex traders. Over-trading does not help you to make more money. It causes you to lose your money faster. It is possible that you double your account within a short time through over-trading, but you will wipe out your account the next day, because you are not going to be lucky every day. If you trade based on luck, one day you win, and the other day you lose all you have already made.

7. I do not risk too much money.

I am not greedy at all. I do not try to become multi millionaire and make millions of dollars every month. It is possible to make millions on the paper and with the demo account, but live trading is different.

I never open a big account to make my broker greedy and attract his attention. I trade with a small amount of money, raise it into some reasonable amount, and then withdraw most part of it and leave a small amount in my account again. I always do this.

I enjoy growing a small account. I do not like to have a million dollar account and make $50k every month, withdraw the profit and leave my capital there.

After several years of working and gaining experiences, my trading buddies and me came to this conclusion that we’d better to grow small accounts, instead of having a big account. This is much safer, and besides, it eliminates the harmful emotions, specially fear.

8. I do not compete with the other traders.

In forex trading, it is ridiculous to compete with the other traders, because any trader has a different style. Any trader looks at the market from a different angle, so traders can not compete with each other.

While a conservative trader makes only 100 pips profit per month, another trader makes 800 pips. Both of them are great, and one can never say which one is better, because the one who makes only 100 pips, follows his trading system and discipline, as well as the one who makes 800 pips.

I know myself a good trader, and I do not try to compete with a friend who trades more than me and makes more money. We are both good, but just our trading style is different. Trading style has a direct relationship with personality, and as everybody has a different personality, no one can compete with the another trader in trading.

 Lastly, Join me and let make it good with a reliable forex broker  www.Instaforex.com. Register here.