Forex Trading – How and Why Prices REALLY Move

How and why do forex prices move? The answer may sound obvious but most traders get the reasons wrong and lose. If you understand the following 3 points, then you'll understand more above currency movement and get a head start in your quest for currency trading success.

So how do prices move?

Well of course they move in reaction to all the supply and demand political factors such as: interest rates, government policy, economic health and a whole host of others and these are facts but prices are also influenced by people.

Now all the people who look at the facts see them and have opinions that differ and take positions.

The important point is:

They all draw different conclusions from the facts that they see and this causes prices to go in a different direction to where the bulk of traders think they'll!

A simple equation is:

Supply and demand factors + Human opinion (investor psychology) = market movement.

So you need not only to take into account the supply and demand fundamentals but also make a judgment on how other people are going to judge the facts and how they see them and then work out which way prices are going to.

This is why forex trading is hard and 95% of traders fail to win.

So how do you do it and make your forex trading strategy a success?

Here are some tips.

1. Use forex technical analysis as a basis for your forex trading strategy.

Technical analysis and looking at forex charts gives you a distinct edge in that it takes…

Source by Kelly Price

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