Factors affecting currencies
Your interest in what “factors” affect currenciy prices in speculative market has many answers….
most of which have been covered already.
there is ONE area however not mentioned here and I will try to be as brief as possible.
World Econonomic Events (Qrtly GDP, Mthly PPI, Trade Balance, etc. and Monetary policy (Fed Funds Rate, MPC Decisions…etc) are the most powerful events that help you “time” when the next most important “time” to sit in front of a screen and what for the next trend to form (some belive that the market is so fast these days and the level of insider knowledge is so pervasive that one can also look for some of the most pwerful trends to occur, actually BEFORE the actual news events, such as I have described above////that is a very probable occurence as it is observed very frequesntly that large “mystery” trends do in fact get baked into the speculative market well before a singificant event occurs. This also helps you to be prepared that at the time of such event does actually arrive, the market goes bonkers and becomes irrational…meaning the oppsoite outcome in the short term is often observed….completely out of whack with the “news” you here…This is commonplace in alsmost all markets…the cu7rrency commoidities market shows this feature for longer periods/..that is the big difference…as the econmic thoerist might explain…the currecy spot market has “long tails”....meaning trends tend to remain in force for long periods….What I am explaining is that these trends can start to take shape before the event even occurs and in some instances you will see the trend completed even before the event occurs…
how weird is the3 spot market…eh?
Anway, there is one other area that is also not mentioned in some of the clues provided by others…
thius has to do with game theory and outright competition…here is an explanation…
Everyione cannot be right about the market…it is competitive and only a small percentage of players can win…that is a fact…we must assume that the percentage is variable, but is never a majority of players…
Along those lines, one has to assume that the narture of “pre-baked” trades are placed well into the future based on specualti8ve outcomes of not just the news but also how the “herd majority” will respond to such news….
In this regard, you must often in order to be a successful trader, ignore events in a rational way and determine (AS PRECISELY AS POSSIBLE) how the majority will respond to the news.
This is bot necessaril;y being a contrarian trader at all…In fact, since we can assume that the majority traders are going to be wrong….then you have to fact the fact that the majority actually holds a real contrarian trade strategy at all times….No other way to explain how very few traders make a lopng term profit !
It is not a coin toss inh this area. The confusion begins when technical traders forgo such market behavior aspects of the herd pyschology that is so pervasive in the markets….They assume that this is the random nature of the markets…nothing could be further from the truth…The truth is that the market is made fo winners and lowers….common speculators insists that fundamental news coupled with their favorite tech tool will provide the “edge” over the competition, when alsmost all modes of techynical analaysi and findamental news inteerpretation are known by all players that use them…In this way, the ”*****” majority is attemtping to claim pips in the same fashion…with only money mangement and lots of false luck and hope to unwind the losses they experience.
So how do you presume to trade against the majority losers? The answers sho9uld be very simple and even my 5 y/o makes the connection….be different…Do the oppsotite of what you “think” is the rational thing to do with the “facts” that you have …..”facts that all majority traders have, by the way”..treat this information just the same as you would treat economic news release…you rationalize the position./direction that is most obvisous and then…trade agressively against that notion….
This is trader method series 1000….this is actually the first level….the other 9 levels take more time and money to discusss in this forum…but as you go along…and jhopefull survive this first semester of training…you get to advanced topics…even if you are not looking for them…be certain you will get an education if you pay attention to details….the things that are not popular and that are seldom discussed are your answers…and the best way to experience that is to live it.
One more random entry like a million others in the global FX market Positive interest