Letâs forget currency for a moment and talk about any widely traded commodity thatâs bought and sold. Letâs say bricks to build houses.
Itâs an economic reality that buying pressure (which some people call âdemandâ, but that term isnât appropriate in forex and shouldnât be used) increases the price, and selling pressure (âsupplyâ) decreases it, isnât it? If lots of house-builders get busy and need millions of bricks, their price will increase a little. If loads have been manufactured and building slows down because thereâs less need for houses, then their price will go down due to âoverstockâ or whatever, wonât it (the wholesalers and buildersâ merchants donât want millions of bricks lying around unsold and filling the warehouse, so they reduce the price a bit)?
Youâre a builder and you want to buy bricks âŠ
So letâs say 100,000 bricks are for sale at 8 units each, and then some more are available, but at 8.5 units each (one pip higher, because the pip-size for bricks moves in half-units).
If you want to buy 10,000 or 20,000 or 30,000 or ⊠70,000 or 80,000 or 90,000 bricks, the price is 8 units each.
If you buy 50,000 bricks, you pay 8 units each. And the next builder after you can still buy 50,000 bricks at 8 units each.
To increase the price of the bricks, youâd have to buy over 100,000. Thatâs quite common, for bricks.
Now letâs imagine you bought 99,999 bricks (8 units each). Along comes another builder and he wants to buy bricks.
At this moment, he will only have to buy [B][U]one brick[/U][/B], to put the price up to 8.5 units, wonât he?
So, most of the time, you need to buy a large amount to put the price up 1 pip. But occasionally you only need to buy a tiny amount, to put the price up 1 pip. (In the case of currencies, even that âtiny amountâ is probably more than any retail trader will ever buy. Donât imagine that your trades will ever âmove the interbank marketâ. They wonât. But you might in any case be trading against a counterparty market-maker, not in a real market. And that makes it even harder to answer because then the answer depends on your own broker.)
Bricks are just like currencies. Theyâre traded in a free market. The prices are responsive to buying pressure and selling pressure. Buying pressure and selling pressure, whatever causes them, are responsible for [B][U]all[/U][/B] price movements. [I][U]Those are the mechanics of how the market works[/U][/I].
Do you see, now, why there isnât and can never be a [U]fixed[/U] answer to the question youâre asking? It depends on how much is for sale at that price. And that depends on who bought what, and when, and for what price, and what time of day it is, and which way the windâs blowing, and on a few other things as well.
No. It doesnât mean that. The interbank market is made up of lots and lots of different banks and financial institutions, just like the league of brick-suppliers is made up of lots of different wholesalers, and thereâs a âgoing rateâ for the price. But if you use a counterparty market-maker as a broker, then your own broker isnât [I]really[/I] a broker and can trade against you and fix the price [U]you[/U] pay. This post explains more.