Currency trading is one of the most popular professions in the world. Although millions of people are losing capital, it does not stop the ongoing flow of enthusiasts. In a simple context, the market seems pretty easy to analyze as there is no mystery. What the traders need to find out is the future direction of the price trend. To assist, the terminals comes equipped with hundreds of pre-installed tool to get them set on track. However, still many contemplate trading is a random decision. The winners and losers are based on their quantity rather than the quality of the performance. Think of a situation where the trend was moving in the desired direction. The volatility was stable, the news was normal and there was no unprecedented movement. As soon as any order has been placed, it seemed everything was falling apart. After a few moments, the investor was found sitting in front of his terminal regretting his decisions.
This is the classic example of what happens afterward after taking the industry for granted. Read this post if similar events have been done to you. In this article, we are going to debunk why these seemingly sporadic movements cannot be random. There is a very logical explanation behind every price trend which experts use precisely to set the strategy. The only difference between making a profit or not is whether is someone can take advantage of this information. It hides in plain sight which makes it even more difficult, less convincing for investors.
Examine the historic price data
You should study the historic price data to get a clear overview of the market. Usually, the traders don’t spend enough time analyzing the critical market dynamics and after losing the money, the come to the conclusion that this market is rigged. But if this so, you should never find any rhythmic pattern in the historic price data. Try it out here and get the best demo account from Saxo for examining the historic price. Soon you will come to a conclusion everything that moves the price is nothing but the result of cause and effect.
Financial news influences the prices
This is the first factor that contributes to volatility. As this sector is involved in finance, and global news related to the economy might unstable the prices. For instance, there is a concept of currency correlation. It implies how the price valuation of one changes the other. Professionals know these elements and have a keen eye for any sharp movements. Sometimes, people use this formula to verify whether the predicted movement will take place. Decisions made by the global financial authority also impact the trend. If there is a news release that the government of the US will no longer be solely using Dollar as legal tender, the price will fall immediately.
Do not worry as it will not happen but we are only explaining with imaginary examples of how they affect the prices. Before getting excited that the price is moving upward, know what factors are driving this momentum. It is crucial to identify dominant patterns as well.
Every volatility is logical
After trading for a few months, traders notice everything is interconnected in the forex. We are not talking about the mind-boggling series “Dark” but perceiving the mechanisms behind price volatility is no less than mystery. There is a solid explanation of why a pattern remained dominant in the past month. If there is an emerging trend, verify the news and you are certain to find information. Trend lines do not exhibit upward directions if the currency is not becoming stronger. Never trade with a hunch as it will result in disaster. Do not get deceived as the sector may look appealing but hidden dangers are lethal. Place one trade by guessing the trend direction and you will find the answer soon.