How to Manipulate the Forex Market

There are a number of different strategies and tactics that have been used by Forex dealers and currency exchange traders throughout the years. These many strategies focus on one or more points and most of the time it has to do with one of two things. The first kind of strategy has to do with quantitative figures. These types of strategies are either people who are interested in the way trends move and they use those trends as indicators as to how to place their trades or alternatively they are strategies that involve specifically the different mathematical indicators that people use. In other words, quantitative strategies utilize either trends or numbers.

The other kinds of strategies, the qualitative strategies, utilize information. This is somewhat similar to handicapping a sports game. If you were going to handicap qualitatively, then you would want to acquire as much information as possible before you actually make up your mind, and the same thing goes with Forex trading as well. More information is good information with qualitative strategies and whether you are using one or both of these, market manipulation is something you need to understand.

Forex Market Manipulation

In order to understand market manipulation there are certain things you need to understand first. The most important thing you need to understand is liquidity. When a market is very liquid, it means that the actions of people who are trading within it do not affect the market position that much. When a market is very liquid, it also means that people can’t really manipulate it very much. When a market is not very liquid, it means that the market is more prone to being affected, causing it to move in one direction or the other if an especially large order is placed.

What this effectively means is that you by yourself are not really going to be able to manipulate the Forex market that much. Banks, by virtue of trading upwards of billions of dollars in currencies every day, are going to be able to affect illiquid markets, but this will really only be very noticeable in very illiquid markets. You by yourself, especially if you are trading on a mini account with $10,000, are not going to be able to manipulate a market where literally trillions of dollars are traded on a daily basis.

Again, this can be a little like sports trading and moving a line or a spread. While you alone with a small wager on a spread will not move the line, however multiple large bets in quick succession will move that spread one way or the other.

Detecting Manipulation

While you might not be able to manipulate the Forex market yourself, you can certainly jump on the shoulders of those who are able to and make a lot of money in the process. Consider this: if you are trading in standard lots of Forex, which means that your few thousand dollars is controlling $100,000 which you use in every single trade. $100,000 into a market of billions or even trillions is not going to do much as we all know, but millions into that same market might. Understanding how to detect manipulation on the part of a large injection of funds is critical to the success of this Forex trading strategy and if you are interested in doing that then there are a number of great resources on the internet that can help you.