In many Singapore Forex trading forums and discussion clubs we can hear that Forex market is not the market where the prices are influenced by traders and small investors but managed by different market makers and other market’s participants.
Very often Singapore Forex traders are advised to forget about the canons of classic trading like technical analysis, and start study the individual characteristics of the Forex market. Let’s see if it is really so and what are the real factors that move the Forex market.
If we look at the market dynamics from the side of technical analysis we know that a trend emerges and is determined by the actual flow of the investments made by Forex investors or traders. While the Forex brokers on the same time have different ways to place the trading orders in Forex market, realizing the trends. On the other hand, the famous B. Williams said that most of the market’s trends are defined outside of the Forex market.
Of course it is very naive to assume that trends in the Forex currency market are formed by the retail traders, that is, the Forex traders themselves. But on the other hand today a trend also can not be determined by the market makers and other types of Forex brokers. Most likely, the direction of the market’s movement is set by the cash flows in the economy as the main moving force. Financial transactions made due to the increased demand for goods of any state, will strengthen its currency that will be immediately reflected in the Forex market.
The movement of capital also plays a great role. A good investor should always be aware of the capital movement of different countries that is the best guarantee of the security of his investments. For example, if the nominal interest rate of one currency will be increased counting the inflation (i.e. the real rate of interest), then such currency will become stronger against the other. Some factors of the Fundamental analysis are very important for a good market analysis and its movements’ prediction.
And, of course, the psychological factor is definitely present in all price movements in Forex market. In many cases it is due to the direction of capital flows and trading. Forex traders usually have a definite opinion, when a currency going to become stronger or weaker. The phenomenon of psychology in Forex trading is reflected in the trends duration in the market. A Forex trend lasts a little longer than it would be without the psychological component.
Though Mustafa Forex Singapore is one of the world’s largest trading centers, a Singapore trader must not forget that all the participants involved in the Forex trading are a part of the market and influence its price moments in different measures.