4 Factors That Affect The Forex Trends
The basic concept of a trend is the tendency of price movement forex, either down or up, which is driven by several factors that influence it. If we combine the concept of the trend with the concept of candlestick then we can get factors that affect the trend. If both of these concepts you still do not understand, please take a moment to read the article about the concept of candlestick and the concept of trends on the web.
Trends are what enable traders and investors to make a profit. Both for short and long term. There are four main factors that cause long-term trends and short-term fluctuations.
The backdrop of market forces, where buyers and sellers strive for profit, is of course influenced by some market drivers. Now by studying what is the driving force of the market then we can know what factors are forming a trend (long term). What, why and how the trend is formed and continues or whether there is a trend reversal. Here are four key factors that determine:
The financial system on the financial market becomes the authority of the Central Bank, in this case being the representative of the Government. Fiscal policy and monetary policy have a direct effect on financial markets. With interest rate changes, the government and the Central Bank may slow down or attempt to accelerate domestic growth. This is called monetary policy, to control inflation.
If increased government spending, referred to as fiscal policy, can be used to help reduce unemployment and / or stabilize prices. By changing interest rates and the amount of money available / circulating in the market, the government can change the flow of investment into and abroad.
The flow of funds between States may affect the economic strength of a State and its currency. The more money that comes out of the country, it can weaken the economy of the country and also its currency.
The amount of export, whether physical goods or services, will provide income for the State which means there is money to enter the country. This money can then be reinvested and can stimulate the country’s financial markets.
Speculation is part of a market that also becomes one with the current financial system. Investors realize that their investments require profits to grow. To get there then many investors who do speculation in the market.
In addition to speculation, expectations or expectations are also part of the market drive. Consumers, investors and even politicians believe future action expectations depend on current actions thus forming the current trend to predict future trends.
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Supply and demand for goods, currencies and other investments creates price dynamics. Adopting the law of demand for quotes, prices and interest rates changes along with changes in supply or demand. If demand and supply begin to shrink, then the price will rise. If the supply increases beyond the current demand, then the price will fall. If supply is relatively stable, prices may fluctuate higher and lower with increasing or decreasing demand.