Once you get involved in the world of forex investing, you will start to predict movements in the market just like any pro International Broker. For some, this is quite a job. That’s because no one can say for sure what will happen next in the forex market. Sometimes, they move in ways that investors don’t expect them to. That’s a big obstacle especially if you don’t have plenty of time to spend in predicting forex market movements. However, a lot can be learnt from expert ECN Broker Review.
Now, we’ll list down the factors your can consider in forex movement prediction.
This one’s arguably the biggest factor to consider in the forex market. The economies of the major players in the forex market are constantly checked and monitored because changes can impact not only forex but also other markets. Basically, the economy dictates the chances of a country’s central bank raising its interest rates.
#2 Interest Rates
As a rule, when a country’s central bank raises its interest rates, that country’s currency will strengthen. Shareholders will move to this country’s asset in order to generate better returns. Different countries have different economy performance. Thus, different countries will set their interest rates differently. Aside from the economy, another factor that central banks consider is the internal and external conflicts at hand.
#3 Geopolitical Conflicts
Geopolitical conflicts, including news about the relations of one country to another, are another big factor to consider when it comes to forex movement prediction. This can be thoroughly observed with the exchanges between the US and North Korea in 2017. On the other hand, some countries actually benefit from such conflicts. For instance, the Japanese yen is considered a safe haven. It means that the currency doesn’t get negatively affected if geopolitical crises happen. Other safe havens are the Swiss franc and gold, the latter being tagged as the “ultimate safe haven.”
#4 GDP (Gross Domestic Product)
This is quite an extension of the economic factor. This is one economic indicator that is, in a way, similar to a country’s currency’s interest rate. If the GDP is higher, optimism for good returns also rises higher for any forex pair. Aside from the GDP, there are other economic indicators that directly or indirectly affect forex movement.
A good forex investor also uses trends to predict the forex market’s movements. The trend is the general direction of a market or asset price. Trends also vary in terms of their length, which can be short, intermediate, or even long term. They can also be classified as uptrend, downtrend, or sideways trend. Basically, uptrend means that the currency appreciates in value, and downtrend means the opposite. Sideways trend suggests that the currency neither appreciates nor depreciates, which means it’s in a stable condition.
If you may have noticed, these factors are intertwined. That means you cannot observe and take into account one factor without considering another, and then another. When attempting to predict the forex market’s movement, it is necessary to do it holistically. This is because one bullish movement indicated by one factor may be contradicted by a bearish movement in another. You as an investor should find ways to consider these things in a systematic and methodical way.