Factors which cause market fluctuation

Factors which cause market fluctuation

Factors which cause market fluctuation

One of the key qualities a trader looks for in the market is the potential for movement and 

never more so than in the world of foreign currency exchange, or forex as it is more commonly known.

If there were little movement in the price, it would be far more difficult to make a profit, 

so a volatile asset can be very valuable. In forex and other markets where it is possible 

to take a short position, it doesn`t necessarily mean the
value has to increase for a gain to be made. As long as the trade 

is placed, the right way, it is possible to make a profit even when the price drops.

However, if the market is prone to moving up and down too quickly, it can make it very 

difficult to predict, especially for less experienced traders. Therefore, in an ideal world, 

traders seek out an asset that has enough movement to be able
to provide a good return but not such a wild swing that it is too volatile to predict.

There is no doubt, however, that the greater up and down movement an asset is likely to have,

 the more potential profit there is to be made. This is, of course, a high-risk investment. 

However, to try to mitigate the risk, a trader can study  to learn more about the factors 

that create swings in either direction. By understanding why markets move up and down,

 it is much easier to predict when they are likely to move.

As a general rule, the changes in value in currency occur due to swings in supply and demand. 

When demand outstrips supply it can either be because the money is needed to use in a country 

on transactions or because investors are buying it because they expect it to increase in value.

The latter is one of the basics of forex trading and involves taking into account the various 

complexities that make up  an economy including the growth rate of the country, the employment

 and how quickly the money moves from one transaction  to the next. Future expectations also 

impact on the value of a currency. When supply is greater than the demand, the currency values 

decrease, which is one of the core principles of inflation.

For those who are less experienced or maybe have a very full portfolio, there are many companies

 that provide software to  help detect market fluctuations. 

These are very sophisticated programs that can be written for the individual 

requirements of the trader, taking into account attitude to risk and boundaries. 

These can act as an early warning system and prevent heavy losses on open positions 

by sending automatic alerts to the trader.

In forex there are many different systems available to get the best out of the market. 

Every broker offers their own platform that provides different features. 

Some are better for novices whereas others are more geared towards professionals. 

However, regardless of how experienced you are, forex signals

 and charting options are an integral part of working the market and no trader would be without either.

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