Hello Community. I would like to know what actually moves the forex market ? Couldn’t get much understanding after going through certain country’s economy yet the market moves in opposite direction though their economy is showing good progressivism.
1 Like
As I understand it, the forex exchange rates are driven by the international banks and funds - they are constantly moving capital for obtaining and paying for exports and imports, plus investment into business opportunities in other countries, plus some pure speculation both on their own behalf and for large corporate clients.
The positions taken by private retail traders are mostly outside this market and do not have a significant effect on prices.
4 Likes
How do I get to know the behaviour of such export, imports, funds investment to other countries etc. in real time chart?
You’re talking about a vast amount of information which would be impossible to obtain and analyse with enough speed and accuracy to take advantage of in trading short-term. But the charts tell you exactly what the majority of the big players are doing with the majority of their capital - they are so big they cannot hide what they are doing.
1 Like
It is very complicated and you will never get that type of info. It is so many things. For example, if US buys oil from Canada, that USD gets converted to CAD, boosting CAD. OR if US buys Soybeans from China, that USD is converted to CHN, boosting CHN as well as Soy. It is everyday transactions like that that move currencies.
This is just a layman’s explanation, and probably a bad one!
Some people will follow the COT report to find out where money is moving (non-commercial). It has proven useless to me, but some use it. More info on that here: Legacy Commitments of Traders Net Positions - Barchart.com
2 Likes
I know what you mean - why do for example US indices representing the general market fall when good economic news are published?..you are right, that seems to be unlogical, BUT:
In the actual situation we live in a state of “inflation fear”, that means prices are overheating and good economic news boost the price level cause of larger demand. To bring down inflation Central Banks all over the world raise interest rates, so less money is spent, demand goes back, and prices don’t rise. This affect (rising interest rates, or the market participants fear of rising interest rates) pushes down the general market (indices) and that’s the reason in the actual situation why good news hammer down indices.
1 Like
You obviously have an inquisitive mind ,I guess there isn’t difinitive answer that the complexity of the markets and trading.
I think it is a very complicated question and no one can give a exact answer of this.
What drives the market are humans, whether they are using Bots or not, or whether they are financial institutional traders.
And as we all know humans are not lemmings - although some trading days seems like they act like that - and why we’re not millionaires. Just open Trading View charts and look at all the contrary signal advice, with charts covered with potential price movements up or down several zones.
At best, being profitable is based on positive probabilities of being on the right side of a trade, and then emotionally manage it through to closure.
1 Like
FEAR 
AND GREED 
There are around 180 different currencies currently traded in the forex market, and the value and strength of each of those currencies are affected by the economic factors of the country to which a particular currency belongs. These economic factors include changes in the monetary policy (change in interest rates), exchange regime setting, and at times, currency intervention. There are other factors as well such as fear and greed, and news (for eg, non-farm payroll) that can drive the market in a particular direction.
1 Like
Central Banks their computers with manual interventions here and there. Everything in the market is based on this simple principle.
This is my understanding too and why interest rates have such a high impact as well. It’s the business of the central banks and we are retail try and hold onto the coat tails via CFDs.
1 Like
There are a lot of factors which combined contribute to driving that forex market and a few have been enumerated by other posters above. Personally though I dont need to know how the combustion engine works to be able to drive a car. Similarly I dont believe I need to know what drives the forex market for me to make some money from it. But then again I dont usually think like the majority so I expect many will disagree with me.
Incidentally has anyone been watching the USD/JPY pair? Seems like a record high of sorts. Nice pair for beginners to trade with small spreads and not many big surprises.
2 Likes
It not reached where it was in the late 90 s yet but would nt bet against it
IG platform 72 % Short USD/JPY
Might be worthwhile noting a few things that do not drive forex prices -
us
our brokers
journalists
MA crossovers
Twitter
having a big GDP
3 Likes
I see even my favourite gold has kicked some people in the balls real hard today. A whole lot of stop losses were breached whether you went long or short. There is a reason why I dont use them stop loss thingys but like I always say…dont try this at home.
2 Likes
The root cause is change in demand and supply, which is the outcome of various factors. These factors include, social and economical events, international trades, imports & exports, government policies, and other factors that can have direct or indirect impact on the market.