BANK CURRENCY STRENGTH
Since some of you asked me to open a thread on how i use bank positions in my favour, welcome to my thread!
Here i will explain how i use bank positions to setup trades.
But first, i have to say that it is a challenge not mentioning any paid services. I was warned already. I do respect and understand that. This will keep the existing gap between retail traders and 'the rest' in stand, unfortunately. So, please keep in mind not mentioning any paid services in this thread. Sorry for this inconvenience.
Rules:
- Keep the thread positive. If you do not like my method or thread, just skip it. I am sure there are thousands of other strategies to look into that fit you more.
Let's get started!
About myself:
I am trading for about 12 years. I traded almost everything and used hundreds, probably like most of you, different strategies, indicators and expert advisors in my first years. Sometimes i actually made money. Not consistent and with too much risk though. All based on technical approaches. At some point i wanted a stable and consistent income. So i took some time off of trading. I used that time to think about how to do that. Actually, i was asking myself why i didn't want to study fundamental approaches. I already knew that fundamentals are the reason why markets move and in what direction. But it seemed all so complicated and so many different resources with different opinions. But i did it anyway. Started to learn how to read fundamentals and trade it. I studied it for a year. That was the time i gave myself to learn it. I did manage to trade successful. To me successful trading is simple; earn money with less risk than reward consistently. I opened an account at Citi and start trading with all my savings. I know, sounds risky but i calculated my risks though. After a year Citi approached me and proposed to join their fund managers program. So i did. 6 Months to prove that i am able to be profitable against low risks, awareness and understatement of fundamentals, correct money management and an iron psyche. I made it to become a fund manager and finally as an in-house fx trader. That changed everything. The things i saw, learned, heard... overwhelming. But time consuming. Never had time to do fun stuff. After a terrible accident on the road, i needed to rehabilitate. That gave me time to think about my future. I decided to make a plan to keep on trading but in less time. And i did. A simple one. Let the banks do what they are best in; leeching money. All i wanted is using their resources (positions) to easily see where their current focus are. Then i will make my own judgment what to do. Outcome; BCS, Bank Currency Strength ;-)
My trade-plan:
For every trader i have to say that it is important to operate like it is your business. Make a solid plan. Plan your trades and trade your plan.
to avoid any psychic influence, i study my interest of currencies every Sunday. I am not able to open or close trades. For me it is perfect. No active markets that distracts me. I open the chart or internet to see all summed bank positions. Than i will check if i see aligned interests of several banks for certain currencies. See below for an example.
In that picture i see that several banks are in agreement that the EURO is weak, USD is strong, JPY and CHF gained in strength by grow in interest (over the last weeks), NZD getting weaker. I only use the most convincing and logic interpretation of the bank positions. for example: AUD was strong for a while but some banks closed their long positions and some even opened shorts. So i exclude AUD in my trades. Too many mixed signals. In the end, this is my conclusion;
strongest: USD
weakest: EUR
getting stronger: JPY, CHF
getting weaker: NZD
Therefor i seek opportunities (pullbacks) in the following trades;
short EUR/USD
short EUR/JPY
short NZD/USD
short EUR/CHF
short NZD/JPY
short NZD/CHF
I open the H4 charts to see if i detect a good s&r level in first sight. If so, i set an price alert at that level. I do not use any indicator to detect possible s&r levels.
Just a quick view. As if i have only a couple seconds to tell where the most strongest s&r level is nearby a possible entry.
Trades:
When an alert happened during the upcoming week, i open the chart. Whenever i see that the RSI (period 5, levels 75/25) is reaching OB/OS, i open a trade. It is not needed that the RSI must be over/under 75/25 at all times. No need to wait that a H4 candle closes. For the charts that i didn't see a good s&r level on Sunday, i am watching those charts every day. But only a quick view. let's say 30 seconds per chart per day to find a nice entry.
RSI:
Why am i using the RSI indicator and why those settings? It has to do with the technical aspect. The way it calculates price/time. Using the H4 chart to trade from, i am trading mid-term. However, i need a certain sensitivity to spot early pullbacks before a trend settled out already. Most retail traders are using higher timeframes for their lower timeframe based trades. I use lower timeframe indicator settings in my higher timeframe chart. I need faster confirmation (not too old data) because i already know where the currencies are heading (likely).
Money management:
Every Sunday i calculate how many possible trades there are for the opening week and how many trades are still active at that time. I do not want to risk more than 5% of my balance (not equity) in total, ever. And within the 5%, the combined trades must be able to handle -1.000 4-digit pips. However, i leave some room to open 2 or 3 extra trades during the week. So i do not use my full capacity every time. Lotsizes are calculated using the convincing strength/weakness per trade. The more convincing the trade is, the more lotsize it gets over others. In above case, EUR/USD gets the largest lotsize. NZD/JPY and NZD/CHF the smallest.
Actual trades:
As per my point of view, i opened a short EUR/USD again. Recently closed my short at 1.05. But banks increased their EURO short positions on multiple pairs. So entered a short on a nice s&r level and the RSI was even above 75 at the time i entered the market. See screenshot;
I opened a short position on EUR/JPY 2 weeks ago. EURO was very weak and the YEN got more buying interest from banks. I managed to enter at almost the same price as Citi which was a good moment.
It was in agreement with my own entry rules and BCS.
Shorting NZD/USD was my most recent trade. It hit the resistance and RSI was overbought.
Exit:
As i use no SL or TP, i am always aware of the fact that it could be dangerous. But i do use an indicator that sends me an alert when i hit -1000 pips. Never happened though. As for profit taking, i close trades whenever banks are pulling out or tighten their trades (TP, SL). For me that is a signal that banks oversee fundamental changes that could affect their positions and view. Every Sunday i check open positions again and look if it is still in line with my previous foundings. When i lose my confidence about trades, i'll close them on Monday morning.
Final notes:
I do not convince you to trade the way i do, just explaining how i trade for those who are interested in a same concept of trading. This is my first attempt to explain my setups and hopefully it makes sense. Some asked me about some stats, track records and capital used. I'd like to keep some info private such as capital used. Further, my track record is recorded at Barclay in the time i traded as a fund manager, prop trader and in-house trader. Draw-down was as expected: <6% and yearly yield: 21%. Since i am a retail trader again, my yearly yield is >100% and my draw-down <5%. As a retail trader i have less rules to follow, so it is easier to gain fast. But also riskier. I do not use leverage at all to keep myself away from danger. There are others (family and friends) that depends on my skill as a trader as well. So there is no room for careless behavior. I know that my stats doesn't look that impressive among some retail traders but for me it is enough. In the end; you do not trade against banks, institutions, brokers, market etc... but you trade against yourself, your ego, your fear, year greed and so on. So plan your trades when you are in peace and neutral minded. Execute them when a trade comes into your plan.
Hope you guys got some valued info from me!
Since some of you asked me to open a thread on how i use bank positions in my favour, welcome to my thread!
Here i will explain how i use bank positions to setup trades.
But first, i have to say that it is a challenge not mentioning any paid services. I was warned already. I do respect and understand that. This will keep the existing gap between retail traders and 'the rest' in stand, unfortunately. So, please keep in mind not mentioning any paid services in this thread. Sorry for this inconvenience.
Rules:
- Keep the thread positive. If you do not like my method or thread, just skip it. I am sure there are thousands of other strategies to look into that fit you more.
Let's get started!
About myself:
I am trading for about 12 years. I traded almost everything and used hundreds, probably like most of you, different strategies, indicators and expert advisors in my first years. Sometimes i actually made money. Not consistent and with too much risk though. All based on technical approaches. At some point i wanted a stable and consistent income. So i took some time off of trading. I used that time to think about how to do that. Actually, i was asking myself why i didn't want to study fundamental approaches. I already knew that fundamentals are the reason why markets move and in what direction. But it seemed all so complicated and so many different resources with different opinions. But i did it anyway. Started to learn how to read fundamentals and trade it. I studied it for a year. That was the time i gave myself to learn it. I did manage to trade successful. To me successful trading is simple; earn money with less risk than reward consistently. I opened an account at Citi and start trading with all my savings. I know, sounds risky but i calculated my risks though. After a year Citi approached me and proposed to join their fund managers program. So i did. 6 Months to prove that i am able to be profitable against low risks, awareness and understatement of fundamentals, correct money management and an iron psyche. I made it to become a fund manager and finally as an in-house fx trader. That changed everything. The things i saw, learned, heard... overwhelming. But time consuming. Never had time to do fun stuff. After a terrible accident on the road, i needed to rehabilitate. That gave me time to think about my future. I decided to make a plan to keep on trading but in less time. And i did. A simple one. Let the banks do what they are best in; leeching money. All i wanted is using their resources (positions) to easily see where their current focus are. Then i will make my own judgment what to do. Outcome; BCS, Bank Currency Strength ;-)
My trade-plan:
For every trader i have to say that it is important to operate like it is your business. Make a solid plan. Plan your trades and trade your plan.
to avoid any psychic influence, i study my interest of currencies every Sunday. I am not able to open or close trades. For me it is perfect. No active markets that distracts me. I open the chart or internet to see all summed bank positions. Than i will check if i see aligned interests of several banks for certain currencies. See below for an example.
In that picture i see that several banks are in agreement that the EURO is weak, USD is strong, JPY and CHF gained in strength by grow in interest (over the last weeks), NZD getting weaker. I only use the most convincing and logic interpretation of the bank positions. for example: AUD was strong for a while but some banks closed their long positions and some even opened shorts. So i exclude AUD in my trades. Too many mixed signals. In the end, this is my conclusion;
strongest: USD
weakest: EUR
getting stronger: JPY, CHF
getting weaker: NZD
Therefor i seek opportunities (pullbacks) in the following trades;
short EUR/USD
short EUR/JPY
short NZD/USD
short EUR/CHF
short NZD/JPY
short NZD/CHF
I open the H4 charts to see if i detect a good s&r level in first sight. If so, i set an price alert at that level. I do not use any indicator to detect possible s&r levels.
Just a quick view. As if i have only a couple seconds to tell where the most strongest s&r level is nearby a possible entry.
Trades:
When an alert happened during the upcoming week, i open the chart. Whenever i see that the RSI (period 5, levels 75/25) is reaching OB/OS, i open a trade. It is not needed that the RSI must be over/under 75/25 at all times. No need to wait that a H4 candle closes. For the charts that i didn't see a good s&r level on Sunday, i am watching those charts every day. But only a quick view. let's say 30 seconds per chart per day to find a nice entry.
RSI:
Why am i using the RSI indicator and why those settings? It has to do with the technical aspect. The way it calculates price/time. Using the H4 chart to trade from, i am trading mid-term. However, i need a certain sensitivity to spot early pullbacks before a trend settled out already. Most retail traders are using higher timeframes for their lower timeframe based trades. I use lower timeframe indicator settings in my higher timeframe chart. I need faster confirmation (not too old data) because i already know where the currencies are heading (likely).
Money management:
Every Sunday i calculate how many possible trades there are for the opening week and how many trades are still active at that time. I do not want to risk more than 5% of my balance (not equity) in total, ever. And within the 5%, the combined trades must be able to handle -1.000 4-digit pips. However, i leave some room to open 2 or 3 extra trades during the week. So i do not use my full capacity every time. Lotsizes are calculated using the convincing strength/weakness per trade. The more convincing the trade is, the more lotsize it gets over others. In above case, EUR/USD gets the largest lotsize. NZD/JPY and NZD/CHF the smallest.
Actual trades:
As per my point of view, i opened a short EUR/USD again. Recently closed my short at 1.05. But banks increased their EURO short positions on multiple pairs. So entered a short on a nice s&r level and the RSI was even above 75 at the time i entered the market. See screenshot;
I opened a short position on EUR/JPY 2 weeks ago. EURO was very weak and the YEN got more buying interest from banks. I managed to enter at almost the same price as Citi which was a good moment.
It was in agreement with my own entry rules and BCS.
Shorting NZD/USD was my most recent trade. It hit the resistance and RSI was overbought.
Exit:
As i use no SL or TP, i am always aware of the fact that it could be dangerous. But i do use an indicator that sends me an alert when i hit -1000 pips. Never happened though. As for profit taking, i close trades whenever banks are pulling out or tighten their trades (TP, SL). For me that is a signal that banks oversee fundamental changes that could affect their positions and view. Every Sunday i check open positions again and look if it is still in line with my previous foundings. When i lose my confidence about trades, i'll close them on Monday morning.
Final notes:
I do not convince you to trade the way i do, just explaining how i trade for those who are interested in a same concept of trading. This is my first attempt to explain my setups and hopefully it makes sense. Some asked me about some stats, track records and capital used. I'd like to keep some info private such as capital used. Further, my track record is recorded at Barclay in the time i traded as a fund manager, prop trader and in-house trader. Draw-down was as expected: <6% and yearly yield: 21%. Since i am a retail trader again, my yearly yield is >100% and my draw-down <5%. As a retail trader i have less rules to follow, so it is easier to gain fast. But also riskier. I do not use leverage at all to keep myself away from danger. There are others (family and friends) that depends on my skill as a trader as well. So there is no room for careless behavior. I know that my stats doesn't look that impressive among some retail traders but for me it is enough. In the end; you do not trade against banks, institutions, brokers, market etc... but you trade against yourself, your ego, your fear, year greed and so on. So plan your trades when you are in peace and neutral minded. Execute them when a trade comes into your plan.
Hope you guys got some valued info from me!
