Top 10 Market Movers in Forex
There are many factors that determine the direction of the forex market, and investors need to know them all. Knowing what moves the forex market can help improve profitability. As we all know, the forex market has higher liquidity and volatility, it becomes vital to keep an eye on these factors.
If you are new to forex trading and know what these market movers in forex - we have you covered. In this article we will review what exactly they are and how you can profit from them.
Market Movers in Forex — Basic Overview
Put simply, market movers are those critical factors that influence the market. The direction of movement can be either positive or negative in the market. These types of news are often related to the economic situation and they become vital to track.
Traders who do fundamental analysis have a better idea about these market movers. To understand these movers in a simple way, they fall into three categories. The first are economic indicators, the second are financial and the third are political. With this in mind, let's find out what these three categories mean for the forex market.
It consists of solid data figures from various sectors of the economy. Sub-indicators include data on gross domestic product, the labour market, inflation, and many others. These indicators collect data on past performance in order to assess the future.
Financial market movers are powerful institutions that influence currencies and markets. Some of the major catalysts are central banks, governments, fiscal stimulus and more.
These are the most unexpected kinds of movements, which no one can predict. The market can become bearish or bullish under this influence in a very short time. Political influence on the forex market is something traders wish would never happen.
Let's now examine the top ten market moves that you need to keep an eye on regularly. Even if you are into technical analysis, these will help you improve the strategies.
1. Demand & Supply
He is one of the big market movers on the forex exchange that can turn things upside down. Import-export and supply-demand balance are crucial to the forex market. For example, if you trade USD and GBP, it will be impacted if the demand or supply status of either country changes. Whichever currency pair you choose, always conduct research on the demand and supply status.
Be it USD, GBP, JPY or AUD, demand and supply will either move the market in a positive or negative direction.
2. Major forex brokers
Yes, it happens all the time that forex brokers become major players in the forex market. Since they have greater resources than retail investors and traders, they can exert influence. Be it futures trading or other trading strategies, they can control it very well. But to achieve this, many brokers need to work together to create a temporary movement.
It is a safer option to have a good stop loss strategy to protect the capital from such activities. Whether you are a beginner or an expert, use stop loss to save your money.
3. Central banks
Central banks are powerful and their one update in policy can move the market. This is why the currency market is very volatile before big announcements. If there is any kind of announcement from central banks, you need to keep an eye on it.
When it comes to trading currencies, the central bank has the most influence on the movement. A small change in interest rates or fiscal easing can make a big difference. So if you want to get started as a currency trader, you should always keep your attention on these banks. If you are trading more than one currency pair, you need to keep an eye on several banks.
4. Major Events
Any kind of major public event becomes one of the most powerful market moving factors for forex trading. Be it presidential speech, budget updates or any other news, these become movers. This falls under the category of political influence which is inevitable.
For example, when Joe Biden became president, the forex market faced major changes. Many people were for the victory and many were not. This kind of temporary emotional sentiment plays an important role in the movement of the market.
5. Retail sector
Retailers as well as sectors are very vulnerable to market updates. Any kind of major news changes the market sentiment and investors make their moves. This type of move, made in panic, often becomes a leading market mover for forex.
To avoid getting into such a situation, always do your core research. Once you plan your strategy, no market mover can affect or hinder your trading portfolio.
6. Market sentiments
Market sentiments, whether positive or negative, affect the forex trading market. Any kind of sudden big news can become a market sentiment changer and change the direction. To be safe from such a situation, you should never react to anything at the beginning.
Use a strong stop loss strategy and watch how the market develops. If you think that the market is stable at a certain point, only then start trading. These bullish or bearish sentiments can have a direct impact on your capital.
7. New policies
New monetary policy measures have a direct impact on the foreign exchange market and act as important market movers. In the period of COVID -19, the government took many new measures that moved the market. Some of the measures are iterative i.e. they come every year. But on the other hand, to deal with the emergency, some came out of nowhere.
8. Banking situations
It is quite common for central banks to borrow money from central authorities. This money lending situation is also a major market mover in Forex. Whether you are a retail investor, a day trader or a broker, these situations become market movers. Most banks are in international linkages and any change in their policies can move the market.
9. Technical indicators
Technical indicators are very popular with traders and they can provide direction. Yes, this is quite common because of the copy trading system.
A large portion of traders use these technical indicators to copy traders from top players. When most people start following the trends without any study, it becomes a mover.
10. Currency performance
Last but not least is the performance of currencies in many global markets. How major currency pairs and other pairs perform plays an important role in the movement of the market. If some of the major pairs in the market turn bearish, it can change the market direction.
For this reason, it is important to keep an eye on the movement of currency pairs. Always keep an eye on the latest news and fundamentals before trading.
Summary - Market Movers in Forex
These were the main market movement factors in forex that you need to consider when trading. You can make your trades profitable if you can prepare in advance. Performing fundamental analysis can help you identify the trends in advance. The faster you trade, the more profit you can make from these market movers.
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