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Five Things That Move the market

Discussion in 'Education Centre' started by ProTrader, Apr 22, 2012.

  1. ProTrader

    ProTrader Forex Supporter

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    Interest Rates
    The most important factor that moves the FOREX is interest rates. The FOREX interest rate for a country is based on that country's central bank interest rate, the rate at which the central banking institutions there lend money short-term to commercial banks. The central bank can move interest rates up or down, which determines which currencies at a given time are high-yield or low-yield. Interest rates also help determine how much money a trader gets from his broker. The currencies you buy via FOREX are not delivered to you personally, therefore brokers pay traders interest based on how much difference there is between the short, high-yield currency interest rates and the long, low-yield currency interest rates.

    The Fed
    The United States has a huge influence in FOREX, much more so than other countries. The central banking system of the U.S. is the Federal Reserve System, often referred to simply as the Fed. Many countries peg their currencies to the U.S. dollar, including the Netherlands Antilles, United Arab Emirates, Jordan, Barbados, Lebanon, Belize, Oman, Saudi Arabia and the Bahamas. The Fed has also sometimes directly intervened in the foreign exchange market, both to signal the view that the U.S. did not agree with the exchange rate and to slow down rapid exchange moves.

    Trade
    The amount of a country's gross domestic product and its balance of payments can affect the FOREX market as well. The gross domestic product serves are a general indicator of a country's economic health. The balance of payments, released monthly in the United States, shows the value of imports compared to the balance of exports. Exporting more than you import is also considered a sign of a healthy economy, and means that more money is flowing into a country than out of it.

    Mergers and Acquisitions
    Mergers and acquisitions, both domestic and international, can affect the FOREX market. International mergers allows traders to follow the path of currency from one country to another. If a large company in China buys out a company in Japan, it would have to buy the currency to do so in the FOREX. These kinds of changes are very time-sensitive and may have strong effects, but only temporarily.

    Politics
    Politics are one of the biggest influences on the FOREX. Politics can even surpass basic economics in determining the rate of foreign currency. Rates will fluctuate in countries where armed conflicts, scandals and elections are happening, usually pushing rates down until stable political climates return. Politics may also lead to the government of a country changing, creating or implementing different financial policies, which may also move the FOREX market.

    Source: http://www.ehow.com/list_7515760_five-things-move-forex.html
     
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  3. valexer

    valexer

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    Nice post! One thing though that really caught my attention is the politics. I am just new to trading in approximately 4 months but I never though that politics will affect currency that much before entering forex. I guess that's why the news is always a key part to be considered before opening up a trade. Truly the politics and conflicts between leaders of one nation will create a big impact om its economy and of coarse when we talk about economy, forex will be next to it.
     
  4. kasual

    kasual

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    good and informative article. it shows to me that trader is not the only one that make the market move. many aspect that make the market move or exchange rate become increase and decrease. maybe the aspect that make the market move more than five like mentioned in article above. this fact also explain me that forex is not zero sum game.
     
  5. ashik4u

    ashik4u

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    Awesome post. Very informative post. Politics influences a lot of Forex trading. In the politics part of your post you got the right point. Thank you very much for sharing this good article. I have learned something from your article. So, please keep posting so that we can gather knowledge about Forex trading.
     
  6. oemata

    oemata

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    This is why I want to join with this forum. I want to get many informative and helpful article for my business research. Excuse me, I copied this article to be based on my article about the fundamental analysis for market in forex. I also use it for my students.
     
  7. akufandy

    akufandy

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    i hope i am on the right track to earn success in this forex trading forum.. hope my senior and guru can teach me more about what i am doing
     
  8. stafyvis

    stafyvis

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    Oh thanks for it to share it with us.
     
  9. PROPENSITY100

    PROPENSITY100

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    Good post. Yes there are many factors that have an effect on the currency prices. There fore a good trader cannot sit idle and needs to be up to date with whats happening around him. To exploit the Forex market in a positive way a trader should keep himself up to date with the latest economic developments, Political influences and country's economic outlook.
     
  10. horatiobaby

    horatiobaby

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    as an active trader for over 9 years i think it is safe to say the most important thing above everything else commented on is control your emotions.
     
  11. kasual

    kasual

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    that make the market move actually is trader it self. retail traders and big players. but psychology behind the traders decision that make the market move could be many. but mostly related with fundamental economy, political decision and maybe natural and unnatural disaster.
     
  12. Daisy

    Daisy

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    Indeed a very good one. Of course, all of those will influence forex. I will always watch news for update on feds and economic news and politics and such. We need to understand fundamental in order to trade well. I think as soon as you realized that fundamental is the backbone of forex price movement you will be a better trader. I think so for myself.
     
  13. Pettyeve

    Pettyeve

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    You have some good lists there that are proven to be very effective. Forex has made me get used to something I never liked that much while I was still growing up and that is news. Keeping I I touch with news has turned out a good one for me since joining forex.
     
  14. Decub

    Decub

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    Sure they are. I always pick the news, the NFP at that as the major thing that determines how the market would be. Also, disasters which takes a toll on the nation's economy will always change the tide of the market when their currency is one of those being traded on. Social insecurity are some of the other factors that will contribute to this too.
     
  15. Ruchibhar

    Ruchibhar

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    thank you for this post. newbie like me will be helpful a lot.
     
  16. amit.neogi

    amit.neogi

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    I have just read your post now its just amaizing and also all the points are valuable and most is the last point am totaly agree with the last point because most of things are depends on that
     
  17. gkintl

    gkintl

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    Apart from the list you have provided, the most important aspect that contributes to the price movement is the imbalance between buyers and sellers. At any given point of time, there exists a tussle between buyers and sellers for control over the market. The news that is let out shifts the balance in favor of either buyers or sellers. This in turn results in a upward or downward movement of price. Thus, we can safely argue that news acts as fuel to the fire. It is the ability to interpret news and assess the sentiment of market participants that ultimately decides the outcome of a trade.
     
  18. fxapex

    fxapex

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    Yes these are some of the major factors which effect the market and a trader should be very aware in order to foresee any changes in these market movers.
     
  19. sindarin

    sindarin

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    Economic news for sure will give some big impact to the market itself. Something like FED or other economical policy should suitable to move the market but politic reason like instability for sure will affect the price movement.
     
  20. anosocialnet

    anosocialnet

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    Politics has a huge impart in country economy, and as well as in Forex Market.
    Then we have to be master traders, so those movement will not affect our trading seriously.
     
  21. sindarin

    sindarin

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    What kind of master trader you mean here? Politic will still have huge impact for sure you cannot deny it, those movement will affect our trading seriously but if you can minimize the risk or even know to make profit during that time you can reap bigger profit.