How BP Got Insider Tips Through A Secret Chat Room

Currency market is the biggest financial market with daily volume of $5.3 trillion. Daily millions of retail traders try to beat the market. Most of them fail. Very few succeed. Why? The markets are rigged. Big banks and big corporations have the upper hand. They know when a big currency transaction is about to take place. Just place your trade before that time and make almost risk free profit. In a recent article published on Bloomberg, it has been revealed how BP has been getting insider tips through a secret chat room. Below are a certain excerpts from that article.

As a company with global operations, BP is a major user of the $5.3-trillion-a-day foreign-exchange market. Dollars earned from the sale of crude oil are converted into local currencies to pay the salaries of employees and fund infrastructure projects from Azerbaijan to Trinidad. Refined products such as liquefied natural gas and kerosene are sold for yuan and reais.

The trading unit’s primary role is to manage the firm’s exposure to financial risks, including fluctuations in interest rates and foreign exchange, according to the company’s website. Unlike at most corporations, it also is run as a profit center, which means that in addition to hedging risks, traders can place their own bets on the direction of markets. The company doesn’t break out how much money the treasury unit makes….

In an undated message seen by Bloomberg News, a trader at a bank told BP he would be buying U.S. dollars against Australian dollars at the WM/Reuters fix at 4 p.m. in London, the one-minute window during which traders around the world exchange billions of dollars of currency on behalf of pension funds and asset managers. The message was received at BP about 30 minutes before the fix. By tipping his hand, the sender was telling BP about a potential fall in the Australian currency.

At about 3 p.m. in London on a different afternoon, BP traders were informed that banks were selling dollars against the yen at 4 p.m. In a third message, this one arriving as the oil company’s traders drank their first coffee of the morning, a trader at a bank said he had just sold a quantity of an emerging-market currency, to whom and the price he received.

The four banks in the Cartel controlled about 45 percent of the global spot-currency market, according to a survey by Euromoney Institutional Investor Plc, so information about their plans was valuable. Some days they worked together to push around the 4 p.m. fix, settlements with the banks show…

As a retail trader you should understand how the big banks and the big corporations rig the currency market. So how do you become successful against these big sharks? Simple! Use strict money management when trading. When you have a winner try to increase your position size while keeping the risk as low as possible. Always be ready for a surprise. You don’t know when a new big currency transaction is about to take place like the BP traders. Keep this in mind BP is just one MNC. There are many MNCs that are much  bigger than BP.

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