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How the Banks Trade Forex - Article contest - Dukascopy Community https://www.dukascopy.com/fxcomm/fx-article-contest/?How-The-Banks...

Community Article contest How the Banks Trade Forex

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How the Banks Trade Forex
Armands posted an article : 24 June
Rules
News 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
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
Current Standings
books and watched hundreds of videos. I studied candle sticks, price action , then combined everything together and still cou
Article Library figure out what am I doing wrong. I have always wanted to know a reason behind everything what happens, including the fore
started to ask myself what is really moving the price. Not having much trust in many things in this world, I also started to ques
Recommendations the information regarding financial markets and trading that is so easily available to everyone. Basically I started to think outsi
Contest Results box and sure enough, I started to see things the way I never did before.

Forum Forex and any other markets are manipulated 24/7. You can see the same patterns over and over.Only few major banks
almost 80% of all Forex market. These banks have even admitted rigging markets and have been fined for that with billions of
all that is quickly forgotten and practically not covered by the mainstream media.
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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 or
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 n
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 w
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. I
article I will concentrate on how to use this to your advantage and how to place trades knowing what the market makers are a
VladaGarmash 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 main
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
Community Predictions above the swing high. I have illustrated only bearish setups, opposite would hold true for bullish ones.

Quotes Setup #1
Predictions Lets start with the most classic one. This is something that you will see very often. We have to look for an impulsive move firs
EUR/USD mean that the smart money has made their initial move. Now we have to wait for a pullback ( the less the better ). Once new s
182 high has been established many stops are placed above this level expecting for a further price decline. As we can see things
129 as planned and pair slowly recovers. It even manages to go above the swing high. Lot of buy stop orders are waiting to be ex
USD/JPY as traders expect an uptrend once new high established. What happens next is obvious, price continues to fall after banks ha
51 successfully triggered all stop orders.
121
GBP/USD
88
81
USD/CHF
34
82
USD/CAD
30
65
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Your Prediction:
Till 17:46 17.10.2015
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 b
hit. It all happens when a candle closes below a previous low. Psychology behind this is really simple. Once we have a candle
closes below the low we anticipate continuation of a down trend. Therefore we place a stop above the high of this candle and
the market to continue to the downside. Banks see those stop orders and of course they go and take them out and then push

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How the Banks Trade Forex - Article contest - Dukascopy Community https://www.dukascopy.com/fxcomm/fx-article-contest/?How-The-Banks...

price back down again. This is happening across all the time frames. Whenever looking at H4 charts we have to take in consi
that not everybody is using the same charts and therefore H4 candle high on somebody's else chart could be at a slightly diffe
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 i
also be seen when market is about to reverse. What happens here is very simple. Traders place sell stop orders below curren
expecting the price to go lower. And of course stop loss level will be just above recent swing high. It repeats itself over and ov
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 o
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
one illustrates the most common scenario. Price closes below the trend line and traders place stops above the high of this ca
What happens next is not hard to guess. Price goes down a bit and then quickly shoots back up and executes all the stop ord
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
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 ev
different ones don't hold as a support anymore. However this is not followed by a sell off and price continues to climb. It boun
of the new resistance and goes down a bit before smashing through the recent highs on the chart. When these manipulation
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
who thought that uptrend will continue and by sellers who had their stops placed just above the newly established highs. And
we can see that pair steadily loses its value.

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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
to falling through the support, price slightly bounces up and only then breaks through. This creates a little swing high which is
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 c
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
talking about chart patterns and candle stick patterns. It is also very easy to spot this whenever there is some sort of a pullbac
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

We can use this to enter the market safely with rather tight stop loss and potentially high reward. I am not saying that this hap
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
harder to execute the trades at these levels when it looks like the market will go against you. Often it is also necessary to swit
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.
Tags: Article Contest Banks Manipulation

+18 likes Translate to English 0 Tweet

Rank: 4

Points: 271

Views: 0

Total comments: 10

Total likes: 18

Created date: 24.06.2015

Comments

CharmingRimma 25 June
nice article!

pjazzopardi 26 June
Yes, it happens! FX trading is a zero sum game and sure enough the banks, with enough capital to manipulate the price actio
will go stop hunting, your stops. Which why I will never use an automatic stop and most times will seek a hedge instead.

pjazzopardi 26 June
Otherwise +Armands, excellent article!

Teo 26 June
nice article!

ductus 26 June
good work

Agnessa26 27 June
)

Stix 30 June
I read of possible manipulation often but have chosen to ignore it and concentrate on technicals. I feel that sometimes you ca
beat the system, so best to find a comfortable cushion and build your own castle around it. But I do agree that with money is
power and with power is probability. So really lovely Article, thank you. :) :)

WallStreet6 28 July

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How the Banks Trade Forex - Article contest - Dukascopy Community https://www.dukascopy.com/fxcomm/fx-article-contest/?How-The-Banks...

Interesting! The big fish inevitably have an inpact on the market.

alexandrugabriel 8 June
i dont understand why you call it manipulation ... because it's not , it's just banks who enter and exit positions simple as that ,
sometimes when we loose money that conspiracy theories who have been in our heads from all the crazy youtubers and the
"inactive" brains who have nothing to do than to imagine things ... in my opinion this is not manipulation , and its something
normal ... you can't expect the market to move just in one direction or to be simple as 2+2 to trade ... then everyone will be ric
and this is not good :)

pjazzopardi 4 July

Six Banks Pay $5.8 Billion, Five Guilty of Market Rigging - Bloomberg
Do the banks rig the game, well this article suggests they do. http://www.bloomberg.com/news/articles/2015-05-20/six-banks
pay-5-8-billion-five-plead-guilty-to-market-rigging

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