Major Player in the market

Every sensible trader knows that the volume of his orders is not big enough to shake the market and   to provide at least some effect on the currency exchange rate. For most of traders this is true, but for some financial organizations such a statement is completely wrong.

A typical example of an influential intervention in the market – is the work of national banks. Refinancing rates, intervention, and other instruments specially created for the regulation of indexes, successfully perform its function, often causing serious deviations in the technical picture. Do the banks themselves trade currency?

Yes they do. The volume of orders of the financial institutions (banks, funds) is so great that to enter the market with the total money supply is unreasonable. Warrants are opened gradually, from the same point. When a major player enters the market it causes a sudden jump up to a few dozen of points, and then, when there is a rollback to the point of entrance, opens another order, which, in turn, causes another jump. Situations like that are usually called the testing of the support level/ resistance (testing is not necessarily associated only with the appearance of large orders on the trading floor).

What kind of useful information from such events an average trader may get? First of all, usually the big players know much more than an ordinary trader and for this reason their entry portends great perspectives. Secondly, the intervention of U.S. banks during their sole presence in the Forex is aimed at pushing the rate to the accumulation of stop-loss, that provokes the reversal of rate so that is how large financial institutions, in fact, do make their profits. So, basicly one should either take the profit or wait until the heavyweights will take theirs and leave the market or wait until the plan of their actions becomes clear, so he can join them for his own benefit.

So how do we determine the moment when the authorities, that may affect the pricing, decide to make a little money? What to do in such moments? It can be defined only by such sudden jumps in rates, but on the background of the general price noise they cannot be seen. On the other hand, similar figures themselves may be formed by the noise. If you suspect someone big entering the market, it is better to secure your positions or even leave the market, if the technical picture suggests emergency change of trend. Against the tank there is no arguing, but if you decide to follow it…

Many respected analysts are aware of such phenomena of Forex and recommend to protect the positions and put pending orders above / below the point of entry of big player. In technical terms, this will be the point of breakage of support/ resistance. If the breakout takes place – the order will work and the trend will bring you profit, but if not - the order will not work and you will stay with what you had before.

The main thing – is to clearly define the distance between levels, so you would not go into the dangerous shadow. Usually, penetration is stated after one candle-established after him. In addition, there is a danger of sudden withdrawal of heavyweight from the market, which also entail a price reversal. Therefore, these games are considered heavyweight very dangerous for the deposit and the nerves.