Supply & Demand
Moving average lines, charts etc are much crucial in analyzing how currency prices will move in Forex trading. Economic data, present events, all fundamental analysis is helpful in predicting how a currency value will change. The basic principle of supply & demand are fundamental and technique method. Prices can change easily in free market place.
As there is less or more demand the currency price will change. The increased demand for currency is the economic data mentioning a strong economy in case of demand for the currency could decline along with the lower interest rates of central bank either prices are set for the demand and lower prices for which is having less demand. Currencies rally if the demand increases.
As the level of supply rise and fall the currency value also change. A currency will diminish value and price when there is a great demand for supply. Likewise, a currency value and price will increase when there is over demand for it.
Concentrate on the Demand-Supply
The demand level for a currency, based on this the trader have to remember how the real price moves. This makes currency prices unpredictable. There are many factors which affect the demand and supply of currency. Even weather and current events are also can make changes in the supply and also demand for the currency.
Long Term versus Short Term
A time duration which is more than one year is called as Long term supply & demand. Both factors could affect currency prices in both factors. The trader should take note of the time the trade is being made. Those two times can run parallel and they can diverge causing an inconsistent movements of price. Because of that be aware of the trading time and environment when Forex trading.
Determine which factor affect supply & demand
Technical factors can influence the supply & demand but most of this are fundamentals. Knowing more about those factor will keep you stable and gives you less distractions that could higher forecasting skills. This will enhance you to analyze and interpret any type of event in the long term and the short term price of currency.
Supply & Demand