Often traders discuss the individual psychology of forex traders, but what are the factors that determine the market trend? How does the collective influence this market psychology as a whole?
In every market, buyers and sellers give conflicting opinions and positions. Conflicting opinions about the state of the flock or collective markets ultimately define trends.
Let’s look at some of the factors that influence and define market trends.
When looking at the Forex market in the eyes of the fundamental analysis, it is important to remember that a number of factors can change trends and affect the direction of the market. Anticipated economic or political events can shake up markets and immediately trigger trend changes.
For example, it may strengthen or undermine the confidence in the currency represented by government change in a country. Certain measures taken by the state or central bank, or directly reinforcing or amortizing its currency against others, tend to be lazy or fallacious in the interpretation of traders as a whole.
All traders are reflecting on price flow and its indicators, so that traders generally have expectations about what will happen. One thing is that the tendency can change, because everyone will have the same emotions. This creates a herd. Be careful because news releases or sudden news releases can also change the tendency of an instance.
Highly volatile investors are more vulnerable to this uncertainty and prefer hard currency or gold. People are willing and able to take greater risks in times of stability in terms of profitability.
It is also essential to focus on market makers and central bank policies, as they are rarely negotiated against them. Both market leaders, central banks, and smaller financial coalitions and hedge funds have the potential to become a fast-paced trend, and you don't want to get them wrong on this side.
Markets in common situations are usually associated with price action, media hype, and basic technical levels in the market. However, there is no choice if 9/11 or the currency of a country is rated overnight in Argentina or Russia. It is the collective attitudes and emotions that move the markets and the better understanding of the psychology of individual traders and groups in the market.
The Forex market is much more unpredictable and changing than it was ten years ago. The more information, the greater the chance of gaining a daily examination of the trends and factors that influence them.