Google actually couldn't help me!

I generally don’t ask questions when it comes to anything I read/see/question online, reason being you can usually google ANYTHING and eventually find either the right answer or a good general consensus that you can put faith in being correct. But I’ve been trying to find a solid answer to this question for a long time and I just can’t find one I’m happy with.

Why does the market move? What determines the exchange rate, because for something that effects EVERYTHING and ANYTHING based internationally I can’t think it’s decided by a portion of the population gambling on it. The general idea seems to be something as simple as; speeches, news, reports, crisis, anything of the like causing a/certain currency/ies to drop/rise accordingly due to buyouts/selloffs.

But this brings up my issue, if there’s always a buyer for every seller then shouldn’t things such as buy/selloffs not contribute to overall pricing? Or does it work like (over simplified) once all buyers (or sellers) have purchased from actual sellers (or buyers) and the market has to start taking orders then price starts to move in that direction?

Maybe I’m overthinking this and maybe it really doesn’t matter at the end of the day but is there an actual force moving the market, does some single entity somewhere determine pricing? Or is it just an algorithm of some sort that matches volumes.

If you can’t tell this is the main thing on my mind recently when it comes to this part of my life (income), so please if you have something to share even if it’s the simplest thing in the world and I’m just totally over-complicating it do so! Also if you do have something to share and you have something to read (book,website, article, anything) to share do so too.

Have a great holiday season.

Edit: After reading this back I don’t know if it’s clear, I mean minute by minute. Is it just a matter of price goes up if at that moment more people are placing buy orders than sell orders and vice versa?
I almost wanted to edit out my edit, I find it very hard to believe this is the case, because if so wouldn’t it work out to be in everyone’s best interest to just go in the same direction as everyone else? At that point the forex market would be able to knock the smaller countries out of existence financially speaking (after all small countries can’t keep up with a multiple trillion dollar a day beast even with their govt’s intervention).

The actual “mechanics”, you mean?

I’ve tried to explain it here (using “bricks” as an analogy for “lots” of currency). Whether it will help, or not, I’m not sure, but it’s probably the best I can offer, from the “mechanical” perspective … :33:

The long answer — would require a textbook.

So, here’s the short answer:

• [B]Over the long term,[/B] meaning weeks, months and years, currency values — and, therefore, the relative prices between pairs of currencies — are determined by [B]economic fundamentals.[/B] Fundamentals include such things as interest rates, GDP, levels of unemployment, etc.

• [B]In the short term,[/B] meaning seconds, minutes, hours and days, currency prices are determined by [B]market-makers,[/B] whose job it is to connect buyers to sellers in order to complete as many transactions as possible. The market-makers we are talking about here are the mega-banks which trade with one another (and with other very large entities) in that arcane arena we call the interbank network.

Market-makers literally move prices up or down to absorb the liquidity represented by resting buy or sell orders. They do this by adjusting their ASK prices to capture resting buy orders, and by adjusting their BID prices to capture resting sell orders.

There are constraints on each individual market-maker’s ability to push prices up or down in this way, because each market-maker has fierce competition from all the other players in the interbank network, who will pounce on BID or ASK prices which are grossly out-of-line.

Whenever you place a LIMIT ORDER or a STOP ORDER with an STP/ECN broker, your order becomes an offer — to the market, at large — of a certain amount of liquidity at a specific price. If the liquidity you are offering, together with all the other liquidity offered at (or near) that price, is attractive to a market-maker, that market-maker may absorb it [I]by moving price to swallow it up.[/I]

I hope this helps.

If you need more than this, you will have to look for that textbook I referred to, above.

.

No that’s actually perfect, sets a really nice picture of how it works if I’m understanding you proper.

We move it minute to minute by buying or selling (MM move it to meet our needs)
Politics/Economics etc move it long term (MM move it to where they’re comfortable given the information released)
Thank you to both of you! And thank you Lexys for your response in the other thread as well! Now I have another thing to google because of you :p.

I don’t know if this relate but, sometime ago I asked someone I know this question; why don’t those in charge of producing and managing money for each country not just make them abundant so that everyone would get enough?
The reply was; if there is too much in circulation, there would devaluation and unstable economy. I learned a lot from that, whether we like it or not, there would always be those monitor the way things are done. I feel it is same with forex, someone somewhere is monitoring the market!