Factors affecting the conditions of the Forex market

There are many external and internal factors affecting the price movement of the currency pairs. The experienced investors are well aware of the major factors and they scale their trade to adjust their open position with the dynamic changes of this market. Unlike them, the inexperienced Singaporean traders keep using the same old trading strategy and blow up their trading accounts. To protect your trading capital, you must learn about the major factors which have a high impact on the price movement. Once you know these key parameters, trading will be easier.

Global economic factors

Forex trading is nothing but speculating the price movement of a certain asset-based on technical and other various forms of market analysis. If the price stays still, you are not going to make any profit. Due to the massive global transactions, we are seeing volatility in the major currency pairs. Most of the time, the price movement is stable and you can predict the direction of the market based on market analysis skills. However, things are not smooth all the time. At times you will have some major news and this will cause wild spikes and swings in the market. Keep an eye on the major news factors to safeguard your investment.

Leading indicators

Everyone thinks indicators are nothing but technical tools. Do you know the fundamental data acts as leading indicators in the Forex market? Many experts execute precise trades in their Forex trading account based on fundamental analysis. If you trade the market based on the fundamental data, you must become a position or long term traders. Those who are having a tough time understanding how the fundamental factors act as leading indicators assess the following example. Let’s assume the USDJPY pair is in an uptrend. But after the FOMC meeting minutes, you notice the FED have cut their interest rate and it is causing extreme selling pressure on green bucks. This indicator, the price of USDJPY will fall for a decent period until the market gets convincing data for the U.S economy.

Artificial demand

At times you will have the best trade setups in the world. The naïve traders increase the risk factors to a great extent and think to become a millionaire from a single trade. But these conditions of the market are nothing but article demand created by big banks and investors. During this time we experience false spike and wild swings in the price. Whenever things become too good to believe, always remember, the market is going to become wild. Be prepared or stay in the sidelines and it will protect your trading capital.

Use your knowledge

Never think you can change your life by trading the market with emotions. Emotional traders are always losing money and they don’t know the key reason for which the price is changing its direction. You have to learn technical and fundamental analysis from scratch. Once you have sound knowledge of the major parameters of this market, you can predict the price movement based on sound data. Try to create a balanced trading strategy based on your knowledge and you will be able to make a huge profit.

Be prepared for the worst-case scenario

Being a financial investor, you need to prepare yourself for the worst-case scenario. Most of the time, new traders are always thinking about big profits. They ignore the global economy or major news and trade with emotions. This is one of the key reasons why the number of losers in the Forex market is so high. You have to think about the worst-case scenario before you execute any trade. Once you trade with the low expectations, following basic money management rules will become very easy. Go slow in the trading profession and it will save your investment.