What Are The Main Factors That Impact on Forex Market Trading?

17-02-2016 | Anne Seymour |

The last two years have seen currency-trading volumes soar, peaking at an estimated $4.8 trillion each day. While this underlines the popularity of the market, it barely scratches the surface in terms of the challenges facing those who hope to succeed in this sector.

After all, not only is Forex trading margin-based and extremely volatile, but it is also susceptible to a number of external, economic trends that have a direct impact on what you earn from your trades.

3 Factors that will impact on the success of your Forex Trades

These economic trends are also exacerbated by other factors, which may be central to your personality and unique trading strategy.

With this in mind, here are three of the primary trends that impact on your Forex trades as an individual:

1. The time that you invest into Trading and the real-time nature of the market

A recent study suggested that there was a tipping point in terms of salary when it comes to achieving the ideal work-life balance, with individuals who earned more than £37,000 per annum more likely to sacrifice free time and suffer from stress and anxiety over time.

This is a huge consideration for part-time traders who have an existing source of income, as it can be difficult to invest time into the endeavor without compromising your personal life.

The real-time, 24-hour nature of the market only exacerbates this issue, so it is important that you create a strategy and portfolio that allows you to make the most of your time and cultivate a professional and recreational balance.

2. Macroeconomics and Capital Markets

Interestingly, the Forex market is primarily driven by a number of macroeconomic factors that influence the decisions of traders and real-time price movements.

The individual health of each nation’s economy is integral to determining the value of its currency, meaning that capital market performance, key data releases and interest rate fluctuations will all have an impact on the value of trades.

You must strive to understand this relationship, as otherwise your portfolio could be ambushed by external economic factors that sit outside of your control.

This explains why partnering with a reputable online broker is such an important consideration, as service providers like ETX Capital provide in-depth market analysis in response to breaking news and data releases.

3. Geopolitical relations and conflicts

While a nations’ economy is influential in determining trends within the Forex market, it is also important to consider the role of geopolitical conflict and tensions.

Such issues have a huge impact on fluctuations within the Forex market, particularly in terms of the perceived value of individual currencies. This is why Forex traders consistently monitor breaking political news, while often tailoring their strategy to adapt to real-time trends.

It is even more important in the current political climate, where terrorism and civil conflicts are creating greater volatility and uncertainty.

About Anne Seymour

Anne is a young webpreneur, interested in all things related to money: earning, investing, saving. She's paid off her student loans and now is looking forward to doing a lot of writing and traveling.

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Recent Comments

  • Scott Schink

    April 11, 2016 at 3:32 am

    It has taken me 6 years of book study and 2 years of live trading to become a profitable trader. This is not something you get into just because you were good at being a doctor or lawyer and think your smart and you can do this to. Many hours of frustration with no pay. Hard work for the money you make. Very satistying once you get it.

  • tabby

    May 6, 2016 at 8:15 am

    The online platform for FOREX trading maybe easy as click as a button. But definitely the factors are work in FOREX trading is something that one should know about. The previous comment is right that not because you are good at your job, you will be good at FOREX trading, too. You need to study market indicators and whole lot more in order to be successful at FOREX trading. I only used a demo account once, and I tried it for at least four months without really studying things. Before I know it, I lost most of money. It was then that I decided that FOREX trading may not be for me. If I want to be successful at it, at least I have to understand the factors mentioned in the article and how their relationship to each other affect currency rates.

  • rz3300

    August 16, 2016 at 7:18 pm

    Well hearing from Scott above is certainly not really giving me much confidence in terms of my chances of making a profit. Of course I cannot pretend to not know that it takes a lot of time to learn the markets and know what you are doing. These are certainly some good tips though, and therefore a good place to start. I actually regret not really focusing on stocks more when I was just getting started, but maybe it is not too late. Thanks again for sharing.

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