How to Trade Forex Like a Bank

– It's possible we are,it's possible we're not.

We're going to have amagnificent conversation today.

And it's going to be about bank trading.

But before we begin, I'mjust going to make sure that we're actually live, you know? Just make 100%, 1000% sure.

Because, well, I liketo actually make sure.

Hello to you if you're joining us today.

Nice to see you here.

It looks like I'm all connectedhere to the interwebs.

And if you're joining me live, I'm running the camera by myself today, so it could be a little bitof an interesting experience.

We're going to talkabout bank trading today, which is a super interestingtopic for a lot of people.

Oh look at this, we may actually be live but not have any audio.

Oh that's good.

All right, well as we go live here, just let me know thatyou can hear me okay.

And if you can hear me all right, that would be absolutely magnificent.

There's a lot of talk out there and a lot of peoplethat discuss or propose to teach you that youcan trade like a bank.

And I'm going to suggestthat there's a way to do it that maybe most people don't talk about.

And I'm glad that we can hear.

Thank you, Joel.

I really appreciate that.

Good morning from Conroe, Texas.

I'm Rob Booker.

This is the daily webinar on YouTube.

Like I said, I am runningthe show by myself today and it's going to be a little bit of an interesting experience.

And I'm going to see if I can flip this around and get this ready.

I can.

All right, we're going tobroadcast straight here to the old Chromebook this morning.

And I think this should work.

Get a nice little blue color here.

Preview this to the programand go live on my desktop.

It looks like that's working.

Okay, bank.

Whoa, that's really too,that's not going to work.

Let's do bank trading.

Okay, a lot of people propose that they're going to teach you howto trade like a bank.

And I'm going to suggest that there are some principles at work here that help you actually trade like a bank.

And they're not the same principles that maybe a lot of otherpeople would talk about.

So when people talk abouttrading like a bank, what most people will talk about is there are supply and demand levels.

And there are some really bigname trading education firms that would propose to youthat they can teach you how to draw, basically,support and resistance and that that's trading like a bank.

And my first proposition ormy first suggestion is that I could introduce you to Jason Smith in my family of lifetime traders and he can draw support and resistance better than almost anybodyI've ever met in my life.

That doesn't make him a bank trader.

I think it makes him oneof the best traders I know, but it doesn't make him a bank trader.

I could introduce you to Joel, who's here on the live broadcast.

Joel is one of the best traders I know.

He's one of the mostintelligent, creative, skilled traders that I know.

It doesn't make him a bank trader.

So what I want to suggest isas we talk about bank trading, I don't want to suggestto you that bank trading is something that you necessarilyeven want to aspire to.

It's not necessarily even something that you necessarily evenneed to know how to do.

But if you do want to know how to do it, I'm going to suggest to youthat this is how you do it.

Shonn Campbell, a friend of mine, wrote a book called InventoryTrading a few years back.

I was the editor and he wrote the book.

I need you to learn and remember the word inventory as we speak today.

And then I want you to alsoremember the word warehousing.

And Joel, I'm going to keep our chat open.

And if you need to tell me anythingduring the webinar here, I'll just be on telegram messenger.

I need you to also, ifyou're watching today, remember the word warehouse as we talk about bank trading.

So picture in your mind a giant warehouse.

You know, with those big doorswhere the trucks back in.

So here's a truck.

It's got some wheels.

And then, okay, so you've got in your mind a truck, a warehouse,and the word inventory.

If you truly want to trade like a bank, oh, and I want you to learn another word.

Specialization.

These are all the words thatI would want you to know.

Thank you, Joel, for being here.

It's a wonder that we've even gone live and that this is even workingand that you can even hear me.

Okay, so remember these words.

So step one, you will specialize.

You want to trade like a bank trader? You're going to specialize.

You pick and instrument and you're now going to be on that desk.

Remember that floortraders or desk traders who are also in some cases salespeople at the desk or floor traders in the pit, remember that they specializedin financial instruments.

There are two women, really smart women, really smart people, not just women, but there aren't a lotof women, unfortunately, in this industry, but Wendy and Liz I think are their names on Tastytrade.

Now I don't want Tastytrade,but I did meet them in person.

And Mark Sebastian, anotherformer floor trader, introduced me to them.

And they are formerfloor traders from, like, the CBOE or whatever, andthey used to specialize.

I can't remember, was itOracle or Hewlett Packard or whatever, they used to specialize on the floor on options on those stocks.

I remember going to amajor investment bank, Deutsche Bank, I'll justtell you who it was.

And I remember that eachof the traders at the desk, they each had their own deskand they were sitting there.

This guy was a euro trader, this guy was a Swiss franc trader, this guy was a British pound trader.

Or floor traders were specializingin HP options or whatever but they picked a financial instrument and they specialized in it.

And this is the first thingthat I want to share with you is this concept that if youwant to be great at something, you're going to learn to be good at it.

And then you're going tolearn to be great at it.

But you're not going to switch what you do or change up what you do or do50 million different things.

You're going to learn to do great and you're going to learn to become great at one thing and you'regoing to specialize.

So the first thing that you would do is you would specialize.

And I'm just going to giveyou an example of this.

I'm going to give you oneexample from the stock market, I'm going to give you oneexample from the currency market.

So let's, if you likeoptions or you like stocks or whatever, we're going tomake you a specialist in Tesla.

And if you like currencies, I'm going to make you a specialist in the euro and in particularly, in particularly, in particular-ry, I'm going to make you aspecialist in the euro/US dollar.

So that's your choice.

And once you've made that choice and you're sitting at thatdesk, that's your job.

That's your one job.

That's the one thingthat you're going to do.

And you can consider yourself hired to only specialize inthat financial instrument.

Now this is what you're going to do while sitting at the desk.

By specializing in Tesla or theeuro, you are going to amass an inventory.

I know this is going to strike some people as absolutely ridiculous,but I'm 100% sure that, I mean you can follow theinstructions in this video alone and something magical couldhappen in your trading.

Because you are specializingin a financial instrument and you are amassing aninventory, your job is to buy low and then warehouse it.

What this means is you'regoing to buy the euro and you're going to beon the buy side only.

You're only going to buy euros.

That's it.

You're no longer going to speculate on the price of the euro falling.

Or you're only going to buy Tesla.

In small amounts, or ifyou're a dummy, large amounts.

And then you're going toput it in the warehouse.

And of course, your warehouse is actually your trading account.

Now I'm not saying thistechnique is for everyone.

It's not necessarily for my friend Joel, it's not necessarily rightfor my friend Jason Smith.

I'm just saying, if you wantto do it, here's how you do it.

And you're going to warehousethis financial instrument and you're going to buy it in waves.

You're going to buy it and you're going to put it in your inventory.

You're going to buy a little bit at, let's say that the price is 100, then the price drops to 90,then the price drops to 80.

And you're going to buy a little here, a little bit here, and a little bit here.

Now your job as you bringit into your inventory is to prepare to sell it and sell off.

Sell off your inventory.

So that's number three on the list.

Clear your inventory.

Or as Shonn Campbell said inInventory Trading, turn it.

Turn your inventory as often as possible.

That means if you've made 0.

5%, 0.

2%, 1%, 2%, you're goingto clear your inventory out.

And your entire job as a trader is going to be to bringthings into your inventory and then get them out of your inventory.

So let's say that youspecialize in the euro.

I'm actually probably going to start up an account that does this.

I may even teach a classabout this if anybody cares.

You're going to bringstuff into your inventory.

So let's say I'm a specialist in the euro.

And I'm going to think ofthe daily range for the euro.

And when it gets to thebottom of its daily range, I might pick some up.

If the euro is going up all day long, that would be a day that I'mclearing out my inventory and offloading it onto other people.

On days where the euro is falling or weeks where the euro us falling or months where the euro is falling, like it has been lately,I would start accumulating and bringing stuff into my inventory.

I'm going to prepareanother diagram sketch here and I'm going to get tothe heart of the issue.

And I think this is reallyimportant and it's something that most people nevertake the time to learn.

You could specialize in two currencies or two stocks.

You could be on the buy side only and you could set a goal toturn your entire inventory every seven to 10 days and you could make 2% to 5% a month for the rest of your life.

Now I know that this sounds, like I said, this sounds absolutely ridiculous.

However, it's totally possible.

You would watch for, and here's a list ofthings you might watch for.

You might watch for theRSI on the four hour and the daily to go oversold.

You might watch for fib extensions.

I might even do a littlemember video about this.

I might even do a little member video about this today or tomorrow.

Fib extensions, when it drops into these extension areas,you might accumulate a little bit or pick up a little bit.

You might use Bollinger Bands with really, really long-termsettings like 800 dash 2, 400 comma 3, or whatever.

You might use those for the extensions.

And you might use these techniques.

You might take any tool in your toolbox that you can think of.

You might wait for adownward spike after news.

And your goal is to accumulatestuff into your warehouse or your inventory and sit on it.

Now you're going to have tokeep your trade size small because you're going to haveto keep it in your inventory.

You can't blow your entire possible amount of capital in ashort period of time.

And your job is just simply to turn over that inventory for small gains.

Some of you may say, well that sounds a lot like Martingale stuff,that sounds really dangerous.

That sounds like holding onto a loser.

What do you think a bank does? If you look at the COT report, the Commitment of Traders report, there are speculators andthere are commercials.

Or whatever you want to call them.

And on the bank side of this equation, as the euro has been dropping, and you can just see it in theCommitment of Traders report.

You want to look that last oneup, I guarantee this is true.

The institutional moneyhas been accumulating euros as it has been droppingbecause institutions must be the other side of the trade.

So Deutsche Bank has tobe on the other side.

There has to be a final resting place for all the trend traders.

For all the trend traders thathave been selling the euro, they have to get it from somewhere.

And they're getting itfrom an investment bank.

And that investmentbank ends up warehousing all of this euro stuff.

That's where it ends up.

And eventually as the eurobegins to climb again, these investment banks aregoing to get their traders, this is for those of you that are under the age of 30, this is a telephone.

They're going to pick upthe telephone, ring ring, and they're going to calltheir customers and offload euros as it rises back up.

And then the whole processis going to begin again.

If you want to truly trade like a bank, you're going to think aboutwarehousing and inventory and getting things at thelowest price you possibly can.

Accumulating, sittingon top of a position, turning over inventory.

You could try to turn your inventory over every day, but it's not going to work.

That's just short-term daytrading and that's ridiculous.

I'm talking about something alittle bit more longer term.

Position trading.

I'm talking aboutaccumulating and specializing.

Now this may not be for you.

This may not be the right path for you.

But what I like about this, what I even could saythat I love about this, is it encourages you to specialize in a financial instrument,become really good at accumulating that financial instrument.

My friend Joel, to just give more props to my friend Joel today,has begun the process of absolutely specializingin a financial instrument.

And by so doing, has enjoyedsome recent, I would say increased success as he testsand builds and specializes.

And you start to get a feelfor that financial instrument as you are on the desk or on the floor and you specialize inthat financial instrument.

What did market makers on the floor of the New York StockExchange ever really do? They were the buyer of last resort.

And when the market wasdropping, they would accumulate and then they would hopefully offload it.

And they would accumulateand then they would offload.

They would accumulate, andthen they would offload.

And if someone needed to buyit, they would go get it.

And they would accumulate itand then they would offload it.

You can do this as a retail trader, but it requires specializationand the willingness to inventory or warehouse your trades.

And last of all, andonce again, to do this, you need to buy in very,very small amounts.

Say if you had a $10,000 account, you might buy a fewshares of Tesla at a time in a no commission accountlike a Robinhood account.

Or if you're specializing inthe euro in a $10,000 account, you would never buy morethan one mini lot at a time.

And your goal would be toturn over that inventory for a half a percent gainas often as you could as frequently as youcould and you would just keep trying to turn that inventory over.

That's what it means to trade like a bank.

My name is Rob Booker.

I love you all.

Thanks for being with me as I started this whole thing up by myself.

I love you all.

I will see you again tomorrow.

Thanks for being here, everybody.

Bye for now.

I'm not really exactlysure that this ended, but I wanted to justmake sure that I kept it on long enough that it could end for real.

And so I'm going to actuallycut myself off from talking.

But that's fine, I mean.

Source: Youtube

How to Trade Forex Like a Bank

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