Trading Forex trend and following the herd


Traders often discuss the psychology of the individual forex traders, but the factors that determine the trend in the market? Both collectively affect this market psychology as a whole?

In all markets, there are buyers and sellers who give conflicting opinions and positions. These conflicting views about the state of the market on the part of the herd or the collective – that is what ultimately determines the trend.

Now let's discuss some of the factors that influence and determine the market trend.

Looking through the eyes of Forex fundamental analysis of the market, it is important to remember that many factors can reverse the trends and influence the direction of the market. Any unforeseen events, whether economic or political, can shake the markets and cause instantaneous changes.

For example, a change of government in a country can reinforce or undermine confidence, which affects the currency, which it is. Specific measures taken by States or central banks or directly enhance or devalue its currency in relation to the other, leading to bullish or bearish trends according to the interpretation of traders in general.

All traders are watching the price of the entry and reflect it through the performance, so there are certain expectations of traders in general about what will happen. The fact that the trend could change, since all will feel the same emotions. This creates a herd. Also be aware of news releases or sudden unexpected news, as this could change the trend in the instance.

In times of high volatility, investors in this uncertainty become more adverse to risk and prefer hard currency or gold. People are willing and able to take a big risk in favor of greater profitability while stability.

It is also important to focus on market producers and the policies of central banks, as you rarely want to trade against these sides. And market makers, and central banks, and to a lesser extent financial coalition and hedge funds have the ability to quickly turn the trend and you do not want to get on the other side of this action.

Under normal circumstances, the markets usually operate price action, the excitement with the media, as well as fundamental and technical level in the market, but there is always the likelihood that an unexpected event such as September 11 or the country's currency will depreciate during the night, as in Argentina or Russia. Collective positions and emotions – that's what drives the markets, and the more you can understand the psychology of the individual traders and groups in general, the better your edge in the markets.

The forex market is now much more unpredictable and fluctuates, than a decade ago. The more information you get, including a daily analysis of the trends and factors influencing them, this implies a greater chance of profit.