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Forex Bank Trading Strategy Revealed – Forex Day Trading Strategy

December 26
04:08 2011

Forex Bank Trading Strategy

Anyone successful in the forex market will hands down agree there is no greater career one could have. The ability to work your own schedule, the freedom, and income potential is hard to match with any other career. Having said that, what does it take to become successful in the forex market? Plain and simple we need the proper forex education to achieve success.

In a market with a success rate of 5% it is important that we search out and receive forex training that will allow us to be in that very small successful group of traders. How does one go about doing so? To put it simply if the forex trading strategy that is being used is one used by the masses, then how can one expect different results than the masses? 5% of retail traders succeed, which tells us that 95% fail and thus we have no other choice than to break free from the failing forex education system!

Enter You Enemies Head and Think Like A Bank

Before we begin I would like to give a preface to the forex bank trading strategy. First, it is common knowledge that the banks drive the forex market. It is not a hidden fact that they drive the most amount of volume on a daily basis and as a result they drive short term moves. If we understand that the banks drive, manipulate, and push this market then wouldn’t it be hugely beneficial to track when they are entering and what position they are taking? This is the very foundation of the bank day trading strategy we employ. If we can decipher when they are entering, and what position they are taking then we do not need any further information to make a profitable forex trading decision.

We must remember that this is the banks market, and not ours! Retail traders are simply figurative flies on the wall. Keeping that in mind, why then do most retail forex traders out there attempt to invent or learn forex trading strategies that have been created to try and fit a market we do not control? It is our strong conviction at Day Trading Forex Live that success in the forex market is only possible when we stop trying to fit forex strategies to a market we don’t control, but rather learn the trading strategy of the banks! This is their business, and they have a business model (aka forex trading strategy) that we must learn to follow to achieve consistent results! Every day the banks repeat the same 3 step process. If we learn to trade forex by following their model we will have a much greater chance of success…after all the banks are the ones moving the market.

3 Steps To Success

As we just mentioned the banks use a 3 step process day after day to profit from the forex market. We can think of this process as their forex trading strategy. It has rules that they follow, it is repeatable, and it consistently results in profit. In any market there must be a counter party to every transaction. If you are looking to buy the market someone must be willing to sell to you, and conversely if you are looking to sell the market then someone needs to be willing to buy it from you. This is the basis for how the market at its foundation works and therefore this is how we track how the banks trade.

Accumulation: As discussed above there is a counter party to every transaction in any market including the forex market. Therefore when a bank or group of banks desires to enter the forex market they must do so by accumulating a position over time. Unlike you and I, because of the sheer volume banks push they must enter positions during times most people would term as consolidation or range bound markets.

These periods of consolidation are what we call accumulation as they are areas where smart money (banks, hedge funds, ect) enters or accumulates their desired position over the course of time. By doing this through tight range bound periods banks are able to not only keep what they are accumulating secret to the rest of the market, but they are also able to get a much better overall entry price. This is the foundation to any trade made by the banks. Money is made by accumulating a long position they will later sell off at a higher price, or accumulating a short position they will later cover at a lower price.

This is one of the most essential keys to trading forex successfully, and yet it is always over looked or worse yet called consolidation which is viewed as useless times in the market that mean nothing. Our single goal should be to track when the banks are entering the market and what position they are entering and thus these areas of accumulation are critical to our trading decisions. As discussed above banks are the ones moving this market, and therefore if you can identify the position they are accumulating you can identify which direction the market will move next with a high degree of accuracy. What then comes after this period of accumulation?

Spotting Forex Market Manipulation

Manipulation: Over and over through my years of educating forex traders I’ve heard many forex traders say that it feels as if they are entering the market at exactly the wrong time. Many retail forex traders feel as if the market is just waiting for them to enter before it instantly turns the opposite direction. I’m here to tell you that it’s true! This is a critical idea that all must understand and come to accept. We all know the failure rate among traders, but what does this information tell us?

Remember above when we discussed that there must be a counter party to every trade? This is a well-known fact and it is indisputable. Because the mega banks position is so large they must essentially create their own market. For example lets say Bank X was looking to sell the EUR/USD. In order to sell the position size they desire there would have to be someone willing to buy an equal amount of the EUR/USD. This is where the retail forex trader comes in.

Forex traders are predictable. As a general rule of thumb all traders go through the same education, use the same trading strategies, and use the same software and indicators. While each strategy has its own small differences, the majority generate the same losing results and this is undeniable. If this weren’t true wouldn’t we see a success rate higher than 5%? Therefore while the strategies differ, the outcome and thus trades tend to be in large part the same which explains why the outcome of retail traders tends to be the same. Because of this the banks are well aware of how to get retail traders to enter the market.

Going back to our illustration if Bank X was looking to sell the EUR/USD then they would push the price up, which it turn would begin to trigger buying pressure from retail traders. At this same point they would begin to sell into all that buying pressure, and then the market instantly turns to the downside. This is the central reason many retail forex traders consistently enter the market at exactly the wrong time. The unfortunate part about this is the fact that this information is actually the most powerful thing the banks give us, but only if we open our eyes to it. The manipulation of price tells us what position they have been accumulating and thus tells us the direction they intend to drive the price. I urge you to look back at all large market moves. Before most every move in the forex market you will see a tight range bound period that is accumulation followed by a false push in the opposite direction of the trend.

Learn To Day Trade Stop Run Reversals

Distribution/Market Trend: After they have accumulated a position through the standard tight ranging market, banks will often create a false push that we just discussed which is manipulation. This false push is an extension of the accumulation period as it allows them to finish entering the rest of the position they had been accumulating. This as we just discussed is the reason so many forex traders enter the market at exactly the wrong time. If however we know the tricks they use we can avoid being a pawn of the banks manipulation, and instead profit from it as they do!

If we have correctly identified which direction they have manipulated the market we can then understand which direction they intend to push the price. This is called the distribution phase of the market, and is seen visually as a market trend. Again this market trend comes only after the banks have finished accumulating their position through tight range bound price action as well as manipulation. Hands down this is the easiest area for us to profit from but only if we can properly identify the first 2 steps in the process. Through this article I have marked out this 3 step process on a series of charts. New concepts can be hard to understand with only words and therefore I believe the charts should serve you well in the learning process. As you examine these charts you should be identifying the 3 stages of the bank day trading strategy.

Putting Forex In Perspective

Bottom line is this forex trading strategy is no doubt very different than what you have heard before. Realizing the chart is a false manipulation of prices and learning to read the intention behind the moves will take practice. Anything in life that is new takes time to learn and this will be no exception. However, the potential reward of being a profitable forex trader is massive and in our opinion unmatched! Having the freedom to do as you like, and the money to support that freedom is something forex trading offers to all of us, but only if we are willing to work for it. Everyone reading this knows most traders fail. Everyone reading this knows the general ways most trade. Therefore if you are using a forex trading strategy used by the masses I strongly urge you to give some serious thought as to why you feel the outcome will be different for you? At some point we all need to realize that maybe it’s not the tens of thousands of retail forex traders that are failing, but rather maybe it’s the strategies that are flawed to begin with. Therefore I again urge you to take in this free information, give it some thought, and apply it in your trading! I say this not to offend anyone but rather in a sincere effort to get everyone reading this thinking about the facts. Either way I sincerely wish you all the best and I truly hope I can serve you in your progression as a forex trader.

Stop Run Reversal Day Trade Setup

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  1. Cornel Rusu
    Cornel Rusu March 05, 05:30

    Dear , Sti and Ch

    That is the most inteligent aproch to FX market –
    To learn the rules of the game , you have to climb on the tower platform
    and not through keyhole into door .

    Best Regards

    Reply to this comment
  2. Lila
    Lila March 25, 09:07

    THANKS. Verifies what I’ve known for a very long time. As I always say, trading is not rocket science. All sure wins are obvious patterns on the chart. There is a ranging period travelling in a well-defined channel, a retracement to an indicator (your broken line looks like the 21 SMA to me) and a sudden push forward as it breaks through a pivot line. You know it goes a long way when the resistance is broken. If you’re not sure where it’s going to end, employ a S/L to protect a small part of your profit. You can do this when you position yourself well. The worst that can happen is that the fluctuations will hit your S/L but you still exit at a profit. There are other patterns you can employ, but if you exploit this one thing over and over again, it’s not impossible to double your equity over and over, week after week! Ranging to breakout happens in the market ALL THE TIME.

    Reply to this comment
    • stersuhr
      stersuhr March 28, 23:11

      Hey Lila,

      Glad to hear you do well with this. Yes “ranging to breakout” does happen all the time…I would re word that as “accumulating to breakout” as someone is accumulating a position through these periods. The key is understand what is being accumulated…and thus which direction you should be looking for the manipulation.


      Reply to this comment
  3. Xyryx
    Xyryx November 01, 16:51

    very very useful information…i have started trading not so long ago… been trading using nothing but instinct so far…managed to get some good profit…these couple of days i have been reading the information here and i must say it really makes sense compared to all the other complicated things out there… i am still yet to fully understand this process.. i can recognize these trends, but unfortunately a bit too late…would love it if you can give some insight on how to recognize these effectively… 🙂

    -A happy newbie trader who likes what he is seeing on this website –

    Reply to this comment
  4. Olivia
    Olivia February 21, 19:16

    Hello there! I know this is kind of off topic but
    I was wondering which blog platform are you using for this site?
    I’m getting fed up of WordPress because I’ve had issues with hackers and I’m looking at alternatives for another platform. I would be great if you could point me in the direction of a good platform.

    Reply to this comment
    • Chad
      Chad February 27, 01:54

      Hi Olivia

      I sent you an email on how to improve your security with wordpress. Our site is a WP platform and since we have improved our security we haven had much problems with hackers. Good luck


      Reply to this comment
  5. Bobby
    Bobby April 15, 15:30

    This makes a lot of sense. You may have mentioned it somewhere, but what time frames were being used for the charts provided? Are there specific ones that the phases should be looked for using? Thanks

    Reply to this comment
    • Chad
      Chad April 19, 08:47

      Hi Bobby

      We use the 15 minute time frame for entries but also look at the hourly charts to build a bias for the day. If its clear we look mainly for signs in that direction otherwise we look for the clear manipulation at the high probability levels we als get from the hourly charts.

      Take care


      Reply to this comment
  6. timmy
    timmy March 02, 15:13

    what moving averages do you apply on charts? and what do they do with regards to your trade confirmations?

    Reply to this comment
    • Allen Henn
      Allen Henn March 04, 19:26

      It is the 200 EMA (Exponential Moving Average) on the M15 time frame. There is also the 800 EMA showing us where the H1 200ema is on the 15 minute chart.

      Reply to this comment
      • sreeram
        sreeram October 17, 11:03

        ok, where to book profits, is there any concept of booking profits ? and similarly when 200 ema breaks above then what we have to do ? sell on every candle high breaks ?

        Reply to this comment
        • Sterling Suhr
          Sterling Suhr Author December 07, 14:29

          Just watching the course would do you no good. This is why traders fail. Its like learning to fly an airplane by reading a course or learning to do brain surgery by reading a course and watching some videos. When I learned to fly an airplane I had an instructor that spent the first 20 hours of flight time with me before I was able to solo. This is the same in forex. The course is important just as it is in learning to fly, but the most important part was having the instructor sitting in the right seat actually SHOWING me how to do everything. This is the same when learning to trade…you need someone in the “right hand seat” actually teaching you how to do what was taught in the course.


          Reply to this comment
  7. Gerarfx
    Gerarfx August 27, 21:19

    really good article !! very interesting…
    how much trades do you usually find per day /week ??

    thank you !!

    Reply to this comment
    • Sterling Suhr
      Sterling Suhr Author December 07, 14:47

      The amount of trades we have each week varies. If you go look under the Recent Trades tab on the site you will find the last 6 months of trading results. Each post has a video for every month. Remember this is on just the EUR/USD and GBP/USD…the strategy can however be traded on all other pairs and in fact other markets as well. Therefore the amount of trades you can get each month can vary wildly based on the amount of pairs you trade.


      Reply to this comment
  8. Nazeer
    Nazeer November 06, 14:01

    Any particular time to track the movement?

    Reply to this comment
    • Sterling Suhr
      Sterling Suhr Author November 06, 16:00

      We only trade from 2-6:30 AM Eastern and 8-12:30 AM Eastern. Since we are looking to track banking activity we want to trade during the most active times when the highest liquidity is being traded.


      Reply to this comment
  9. Blott
    Blott December 10, 16:03

    Look for the first close outside the Asia range on the M15 time frame. Put on 2 lots/minis/micros and take one off at 20 pips, letting the rest run. If the first move was a fake, you nearly always get 20 pips in the fake direction, before price reverses into the intended direction. Same method with 2 lots.

    If the initial move was the right one (which sometimes happens), then you get 20 pips + the rest:-).

    Happy hunting!

    Reply to this comment
  10. Sipo
    Sipo January 05, 11:59

    Is your strategy suitable for intraday trading

    Reply to this comment
  11. ChrisKalt
    ChrisKalt January 06, 10:42

    The 3rd chart in this article, the one with the 120 pip downward market trend, shows two boxes labeled “accumulation”. Between those two boxes is a price dip and then the price returns to the accumulation range. The second time it leaves the range it is a price spike and this article labels that as the “manipulation” signal to take a short position. My question is how is the first dip not to be miss-interpreted to be a manipulation that would represent a buy signal? Is there something obvious in the chart I’m missing that I should use to rule that out?

    Reply to this comment
    • Sterling Suhr
      Sterling Suhr Author April 06, 00:59

      If the retrace is less than a 70% retracement of the previous push then the cycle is still considered valid.


      Reply to this comment
  12. Foremost
    Foremost April 29, 16:41

    Thanks a lot sir for your magnanimity in this handout. You are one of the few most sincere and great Forex teacher I have came across on the internet in the recent times. The information you provided here is equal to none and we appreciate you for that and remain eternally grateful to you!

    Reply to this comment
  13. Aiman
    Aiman August 03, 01:57

    Greetings sir , Is this still applicable ?

    Reply to this comment
    • Sterling Suhr
      Sterling Suhr Author September 15, 10:53

      Applicable to what, forex? If so then yes, that is the market we trade. If you have any other questions, feel free to send them via the ‘Contact Us’ page in the main menu.


      Reply to this comment
  14. Olayink
    Olayink March 27, 06:22

    Hello sterling, I need a guide to tutor me in force, am new here

    Reply to this comment
  15. Don
    Don April 30, 02:36

    Speak for yourself 1st you didnt know that was going to happen 🙂

    Reply to this comment
    • Sterling Suhr
      Sterling Suhr Author May 01, 07:54

      Haha…Well, technically you are right. There is no such thing as a ‘sure thing’ in trading or knowing ‘for sure’ something is going to happen. Then again, no one is right or knows what the market is going to do at all times which is why we don’t look for perfection, just a statistical edge. All the best!

      Reply to this comment

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