Forex – Order of The Pack

What is the order of the Forex Wolfpack?

The alpha pair commands the whole group, while the beta pair directs the mid-level wolves, and the adults take charge of the remaining pack members in the middle and lower ranks.

While searching the internet in a quest of finding the Best Keywords for Google, I have stumbled upon numerous articles explaining Forex, loads of conspiracy theories about it, even more kind of “ motivational Guru / Experts type “ theories…most of it -crap…

I have written who knows how many articles explaining Forex and how it works, but never really touched the real base of it – what is behind the trading in foreign currency exchange and who runs it.

So here we go….

On the top of the Pack we have Central Banks :

• They all have their foreign reserves funds , and constantly monitor the market
• These funds are held in “Baskets” of different currencies
• You can find info about what is the total of each CB fund held by them and percentages of different currencies in it on the net ( believe only in stats coming straight from those CB’s)
• Special attention of each individual CB goes for the currency of their own
• They NEVER – EVER Speculate with it – they follow the strict guidelines of their country and their own
• Their main goal is to maintain the stability of the system and their economies.

So how come they come into the market now and then and intervene ?

Let’s take BOJ as an example – from what you read on the net and explanations of numerous wise guys around , one can get the idea that BOJ is intervening because they are Short on USDJPY – NO they are not – they have some average price for it that is incorporated in all their calculations , and when the Market price moves too far away from it, or mostly too hectic they come in and calm down the feelings…

It doesn’t necessarily mean that they don’t like the exchange rate or that it is too high/low ( on contrary) but they don’t like the speed of change and daily/weekly/monthly ranges….

They need stability !

BOJ cannot decide on the fate of USDJPY on their own – there are US Feds to be asked as well ( and then everybody else )….

It is a geo political game played from the start of FX .

So CB’s are not your counterparty or enemy….they don’t even know you exist.

Try to “listen” more to what they really want and if you catch the drift you’ll be half way to success .

Second in line ( The Beta ) are Commercial Banks

• They have their own “baskets” of currencies, but they are based on real Daily/Weekly demand of their customers
• You can see market starting to move erratically early Europe morning – those are purchases of different currencies by the Commercial Banks – filling up their baskets and getting ready for yet another working day
• They do monitor the markets to be able to always have enough foreign funds to accommodate their clients in the best manner

Sub section explaining who the clients are and why they need forex  ( as an Example – only):

• Global Corporations that are working all over the globe like McDonalds for example
• They are selling their product in every single country on this planet ( ok, maybe not in Yemen…not sure…never been there )
• They are dealing with enormous number of different currencies
• They are purchasing raw material from different countries
• Potato from Idaho – USD ( yes, Idaho is one of US States ) , meat from New Zealand – NZD , buns from local producers , Mayo & Ketchup from Holland – EUR, and so on…
• Their income is coming from USD, EUR, JPY, GBP, AUD…name it
• So they have to be very careful with currencies as not to end the year in fat minus , even they made a killing in sales….
• When doing the purchases, they have to use their Commercial bank for transfer of money and to exchange the currency to one that has to be used.
• At the end of the year they have to do accounting and show their profits – in USD – they are USA based Corporation

I hope this explains a bit how it works…

Then there are The Funds – they are also Bank’s clients ( but very important and big 😀

• They need foreign currency to start with , as they are buying and selling different securities ( stocks, bonds…) in different countries and depending on each country’s currency of choice their Exchanges are using
• Also, they Do Speculate…but a bit…as FOREX is high Risk investment, they allocate only tiny portions of their funds to it ( or at least they should – sometimes they are not careful and then we have a Major scandal and sometimes even a Crisis )
• All that is covered by the dealings with Commercial Banks.

Then come the Brokerages

• Depending on their working policies , they should be closing every single position done by their clients out of the house – or at least any excess and difference that is made during the day
• Any data and stats that you can find in your dealing station like Percentages of clients that are Long/Short should be taken very carefully
• Never forget that absolute Majority of Retail Clients are plain WRONG and losing money
• Brokerages represent only tiny portion of foreign exchange dealings
• Your positions are not important

And then we have The Predator Funds – call them Hedge or Off Shore Funds, “Bleeding Edge Technology Funds” or “We are Too Tight to Let Your Mother In” Funds…

• They DO SPECULATE and a lot
• They are always present in the market
• They sometimes try to manipulate the market or at least to drive it where they want it
• They don’t care about you and your position
• They can get very active when supporting/protecting some of their Positions in Options
• You can find the data for Options and Futures on the net
• They are as much a Participant as you are – just Waaaay bigger
• They can be very wrong as well as right

So now when I laid it down in simple terms to you , it is clear that there is NO Conspiracy, No one is after  your Stop, and you just don’t matter.

Do not get offended – Use it for your own benefit and play the game within the given parameters.

If you really spend a lot of time learning training and understanding Forex Trade, you can come to the point of making some serious money.

But if you think that buying a Trading Bot will solve it all for you – you are dead wrong

If you think that you can Trade using your Mobile phone – you are wrong

If you think that you can just Trade whenever you find it comfortable for you – WRONG

You have to sit countless hours by the computer screen ,learn everything you can put your hands on and listen what some serious Veteran Traders are saying ( So not your average 25 year old Guru or a middle aged man with tremendous 3-5 years of experience – Crap ! )

Come Join our Trading Club and Learn the real way – It is FREE boys and girls…no hidden agenda , no hidden costs .

Use the opportunity till it still exists – We ain’t getting younger by the day….

Click HERE to Join the Club

Use the Opportunity to get a FREE Trial of The amazing Trader – Charting Algo System – Click HERE