What kind of strategies does banks follow?

<p><br>This is a great question! There is a lot to learn for most of the traders from the strategic point of view. Most of the time, banks succeed effectively in forex trading just because they have got an effective strategy in place. Strategic simplicity one of the most preferred strategy utilized by the banks for forex trading. Usually, I don't like the idea of using forex indicators whereas the banks use it to perfection on the strategic front. On the other hand, some banks determine the currency pairs that can be used to perfection using force price action. The main reason behind it is that price action trading is effective from a long term trading perspective. The banking professionals employed in this direction are deft analyzing price action and are also familiar with some efficient strategies for utilizing my forex trading strategies for entering trades and much more.</p>

<p id="isPasted">It is dependent on the function of the trade itself. If they entered a forward contract with a real multinational corporate entity that only wanted to shield corporate profit the banks are by laws are mandated to hedge the trade.</p><p>If the Bank lend their liquidity to retail brokerage, they will let the retail broker do their do best hedge winning traders and bet against loosing traders on their books.</p><p>When the bank performing Proprietary Trading role, they would trade based on the strength and weaknesses of global macro condition and economic performance of a country relation to the currency and their analyst would calculate them on their internal score card as fundamental price move direction.</p><p>When entering the trade itself banks use volume profile on determining entry point price then they are usually hold their position over two weeks to six-month period depending on market condition. then they would exit position in most cases after market news that retail broker published that make retail trader rushed into the market therefore providing additional liquidity.</p><p>Bank Trading desk employees are trained to forecast and predict what the market condition two years ahead looks like and then move backwards to find opportunity then creates Trade ideas.</p><p>On retail platform we always saw the movement when the chart suddenly breaking out then touch and go on the same price multiple times (mostly over three-five times) that we know as a proven supply and demand level over long periods of time (Daily timeframe or bigger).</p>

<p id="isPasted">Forex is by far the largest financial market out there. It outstrips the stock market by a couple of orders of magnitude.</p><p>Of course, banks are not going to stay on the side-lines of such a large amount of money. In fact, forex is largely driven by banks, more specifically central banks!</p><p>There is a lot more to Forex than just currency exchange for speculative purposes. And having a good understanding of this can help you be a more profitable FX trader.</p><p>Banks are the largest players in the forex world. Sometimes, they have enough power to directly affect the value of currencies.</p><p>The banks have to maintain a certain amount of assets to comply with regulations. But, when the value of those assets changes because the price of the currency changes, the bank has to buy and sell certain amounts of it to “trim” their assets to meet their balance sheet.</p><p>Banks will also trade their clients’ assets at their request. This is why you can get a Forex account in most major banks. However, they generally are interested only in large transactions. And most banks require initial deposits that are out of range of most budding FX traders.</p><p>Hence the existence of retail brokers who allow you to access the Forex markets without having to deal with the often onerous banking regulations.</p><p>In the end, though, whether you are trading with a Forex broker or with a bank, the vast majority of trading in the markets is done by banks. They are the ones who are responding to technical and regulatory needs, and not simply speculating on the market.</p><p>This causes the Forex market to be more “logical”. It makes it less prone to wide speculator swings than other asset classes. On the other hand, that means profitability is more down to diligent trading than finding some obscure trick to luck your way into riches.</p>

<p id="isPasted">There are two types of Institutional traders.</p><p>Banks take positions based on fundamentals such as Central Banks actions. They don't trade with SL but do take profit at supply and demands levels / fundamental changes. That's basically the big trend.</p><p>The second type are intraday institutional traders. I knew a guy who worked for a huge institution in England. He was basically trading the M15 and H1. He's accuracy was crazy and yes, he was using a SL.</p><p>And there's algorithms.&nbsp;</p><p>They dictate the direction and we as retail traders capitalize on the price fluctuations / price action / expectations of central banks next move)</p>

<p id="isPasted">Banks mainly supply liquidity (money) to the people / companies. Generally, banks are not speculating, they rather satisfy the demands for currencies by their clients.</p><p>The profit is achieved by the mark-up. Same way the shops make money. You get an item for 1 USD and you sell it for 1.05 USD, so you achieve the profit of 0.5 USD. With banks, they get EUR/USD for 1.15005 and they quote their clients a rate of 1.15010.</p><p>There are no substantial risks for the banks for 3 reasons.</p><p>1. Banks usually resale, not speculate</p><p>2. Banks do not trade on a margin</p><p>3. Large banks are usually backed up by the governments, so whatever happens to a large bank, it will always be saved by its country.</p>