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  1. #1
    Rookie nsawork's Avatar
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    Smile Bank Interventions and its Effects

    Hello traders,

    I would like to tell you about the Intervention of the Banks in the Forex markets and its Effects.

    What is a Bank Intervention?
    Each country has a Bank known as its Central Bank whose task is to oversee their country,s Forex rate and Forex reserves. In general a Central Bank of the Nation will hold large Forex Reserves which may be needed in the times of crisis like a Bank Intervention. There are certain times when the economy of the Country is not doing good and the Bank may plan to Enter in the Forex markets in order to Stabilize the Forex rates.

    The Sole Purpose of a Bank Intervention is to benefit its own country but in the Process it makes large movements in the Forex currencies and this causes lots of Gains/ Losses to the Retails FX Traders.

    What is the Catalyst for a Bank Intervention?
    The main Catalyst or the Triggering event that will make a Central Bank to Intervene in the Forex markets can depend on Many factors like the Natural Calamity in the case of Bank of Japan or the need to maintain a Floor rate in the case of the Swiss National Bank. The sole Objective is to Stabilize the financial situation of the country with the Forex reserves.

    How to Benefit from a Bank Intervention?
    When a trader is constantly in touch with the Forex markets and the news he will know that whether or not their is a Potential Catalyst which will cause a Bank to Intervene in the Forex markets. If there are some Indications then he can well plan his trade with a lot of Free margins so that in the case of a large move in the FX markets he will stand to gain a lot of money.

    Which Central Banks are more likely to Intervene?
    • Bank of Japan (BoJ)
    • Swiss National Bank (SNB)
    • European Central Bank (ECB)
    • Reserve Bank of India (RBI)
    • Federal Reserve (Fed)
    • Bank of England (BoE)
    • Reserve Bank of Australia (RBA)
    • Bank of Canada (BoC)
    • Reserve Bank of New Zealand (RBNZ)



    In the On-going discussions i will tell you more about Bank Intervention and its Effects on the Forex markets

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    Quote Originally Posted by techboy View Post
    Bank interventions just happen once in a while but the effects can be very significant and we cannot avoid or predict it when will it happen, we just have to be vigilant in monitoring fundamental news so that we can react accordingly as soon as possible and avoid huge loses or drawdown in our account.
    And its most powerful tool is interest rate. If they increase interest rate many investors will going to deposit their money in that particular country or exchange it to that country currency. So its end up getting stronger as their more supply than demands. That's why interest rate of each country varies because of their economic standing. Usually a more develop countries has lower interest rate than less develop countries.

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    Rookie nsawork's Avatar
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    Quote Originally Posted by budado View Post
    And its most powerful tool is interest rate. If they increase interest rate many investors will going to deposit their money in that particular country or exchange it to that country currency. So its end up getting stronger as their more supply than demands. That's why interest rate of each country varies because of their economic standing. Usually a more develop countries has lower interest rate than less develop countries.
    It is very much true that the Rates of Interest do have an effect on the traders and the amount of income that they are able to derive from such trading. If we can surely see this we will also come to know that Those currencies which have a very strong performance are the ones which are actually getting the most of attention from the traders and this may happen due to the recent Policy decisions by the Banks.

    This only outlines the simple fact that Banks have a Major Role to play in the Forex markets

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    Registered user lawners1791's Avatar
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    yes and good trader works accoording with the use as following the customs on nuance with the release on regulation of financial institution as to appeals with the best of chance with the strategy as defining decision on earning with the seggregation on running of the fundamental analytics with the world of the finance business.

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    Quote Originally Posted by nsawork View Post
    It is very much true that the Rates of Interest do have an effect on the traders and the amount of income that they are able to derive from such trading. If we can surely see this we will also come to know that Those currencies which have a very strong performance are the ones which are actually getting the most of attention from the traders and this may happen due to the recent Policy decisions by the Banks.

    This only outlines the simple fact that Banks have a Major Role to play in the Forex markets
    Buddy you are correct, that's why I think that we should not ignore fundamental analysis in this business. Many trader's think that only technical analysis or some other analysis could bring good result but I think ignoring fundamental analysis could blow our trading account any day because a trader don't focus much on news and if some time there will be movement like 700 to 800 pips or bigger then what trader will do at the time. If he is using stop loss then its good otherwise it could be very dangerous situation.

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    Quote Originally Posted by Earnperfect View Post
    Buddy you are correct, that's why I think that we should not ignore fundamental analysis in this business. Many trader's think that only technical analysis or some other analysis could bring good result but I think ignoring fundamental analysis could blow our trading account any day because a trader don't focus much on news and if some time there will be movement like 700 to 800 pips or bigger then what trader will do at the time. If he is using stop loss then its good otherwise it could be very dangerous situation.
    We should not ignore anything but learn everything. For instance now I know the usefulness of the pending order. Now I use it in most of my trades. Monst times I don't even open trades straight away, I just put a pending order and then watch the market move in my favour and then just make my profrts.

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    Rookie nsawork's Avatar
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    Quote Originally Posted by Earnperfect View Post
    Buddy you are correct, that's why I think that we should not ignore fundamental analysis in this business. Many trader's think that only technical analysis or some other analysis could bring good result but I think ignoring fundamental analysis could blow our trading account any day because a trader don't focus much on news and if some time there will be movement like 700 to 800 pips or bigger then what trader will do at the time. If he is using stop loss then its good otherwise it could be very dangerous situation.
    It is true that whenever we are looking at the Forex markets and we wee some of the Big moves that are coming into the markets we must become cautious because we will be unable to justify such kind of moves without the possibility if a Central Bank intervention. Now the main fact here is that some of the times it is open that a Country's Bank is going to Intervene in the Forex markets but then on the other hand sometimes it may not become clear.

    This is why we must always try to watch the markets and see what are the possible moves that are coming.

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    Registered user Azis Muslim's Avatar
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    Every Central Banks only affects their currency, except US. Dollar which affects almost all currencies around the world. That's why I always trade on USD pairs because of its high volatility movement. As we can see that couple days ahead in this week there's a FOMC news, let's see where the market will go with USD and commodities.

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    Quote Originally Posted by Azis Muslim View Post
    Every Central Banks only affects their currency, except US. Dollar which affects almost all currencies around the world. That's why I always trade on USD pairs because of its high volatility movement. As we can see that couple days ahead in this week there's a FOMC news, let's see where the market will go with USD and commodities.
    U.S currency is very important to follow because as you are saying that USD currency affect all currency pairs. That's why on news time we can see that U.S news affect all other trading pairs too. Yes FOMC coming this week sir, and hope all other trader's have noted that in their mind. Specially newbies because they are careless about that due to lack of knowledge and experience.

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  10. #19
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    Quote Originally Posted by Khimi234 View Post
    U.S currency is very important to follow because as you are saying that USD currency affect all currency pairs. That's why on news time we can see that U.S news affect all other trading pairs too. Yes FOMC coming this week sir, and hope all other trader's have noted that in their mind. Specially newbies because they are careless about that due to lack of knowledge and experience.
    Yes Usd is the main and the most important currency. Also Usa is the most powerful country and hence it news can affect entire Forex market. The reason i was attracted to trading forex in the first place was making money. i was very greedy when i started trading, but over time, i learned to trade properly and am fairly good at trading now.

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    Well, the big banks I know are the ones that provides brokers with liquidity that means we are trading with the intermarket at times though that means if the broker we are trading with is that truthful.

    Therefore, to make money from forex has been made possible by brokers that connects us to the big banks, the commercial banks as well are participants that trades on the market and they make money from forex as well.

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