We know that most of the currency flows in the FX market are exchanged through the banks. This means the banks have a good understanding of where the big money is leaning. Multilateral trading facilities such as LMAX provide interbank liquidity, so they too have a good understanding of where the money is at.
With that said, it’s always a good idea to keep up with these flows as much as possible. One of the great ways to do this is by reading bank reports. These reports will often do a very good job of highlighting where the big money is positioned, which will give you another piece of information for your decision making.
The banks are also tuned into what big events might be on the horizon. Later in our risk management guide, we explain how a large institution cannot simply trade large blocks of currencies without drying out the liquidity pool and increasing spreads. Banks are therefore great anticipators, offering a good heads up for emerging themes retail traders can get a jump on contemplating.
Each bank will have it’s own report, so it’s important to read the ones that will affect the currencies you are looking to trade. Some of the smaller banks provide country or region specific analysis, whilst larger global banks like HSBC offer a much broader macro coverage.
In an effort to streamline this process for our PRO members, we download many of these reports and save them on an hourly basis for quick and easy access.