A brief rundown of the profit situation in the forex market; transactions worth about 5 trillion dollars on daily, yet only about ten percent of traders make profit from it. To many, this is not a surprising report considering that the forex market is full of people that know nest to nothing about currency business. Even those of them that have good trading skills and are persistent with their trading strategy still lose money sometimes, which they are fine with. But it does not have to be so. According to world class celebrated traders, it is possible to make regular gains from foreign exchange if you know how the bankers trade.
WHY MANY MAKE LITTLE OR NO MONEY IN FOREX
That some investors make little or nothing from forex is as a result of what they do not know. Failures have been attributed to the decentralized nature of the market and lack of oversight, but professionals are of the opinion that there is more to it that what people already know. Experts think that lack of oversight affects a lot of people. Anyone can invest in the market even when they do not have any trading skills, what can be devastating. However, knowing and following the bank strategy is a sure way of making steady profits.
THE BANK TRADING STRATEGY
How do they trade the forex market such that they are sure of steady income all the time? Usually, bank performances are evaluated at the end of every year. If the results are good, the bank gets additional bonuses. Asides from doing their jobs well, trading forex is one way banks get such bonuses. They trade for their customers every day, but for their proprietary book, the trade two or three times in a week; which is basically how long it takes for things to line up with their strategy technically and fundamentally. So, they are very methodological with their approach and trades only when they are sure they are not taking chances.
ECONOMIC FUNDAMENTALS, THE KEY ASPECT GUIDING BANK DECISIONS
Economic fundamentals inform every decision made by the banks. Politics and national economy as presented by the central banks are powerful factors that affect the forex market. If a central bank announcement, for instance, counters the political situation of a nation, the currency of that country becomes kind of disjoint. Trading in times like this can be risky and the banks try to avoid it. They wait for a time when all the factors agree with each other to place their trades.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.