SUBSCRIBE TO FEEDToday I will go over what I think drives price movement in the markets, why I hold these beliefs, and why I think it is important to understand the forces in price movement. Keep in mind the following theories are my opinions, not absolute fact. I believeWhat Makes Prices Move?
People often ask “did fundamentals trump technicals on that trade?” or something along those lines. No offense to anyone out there, but that is a ridiculous question. There are not two boxers names “fundamental analysis” and “technical analysis” slugging it out for trading supremacy. Sometimes a major news announcement will shoot the price past a strong technical level, but that’s why I don’t enter trades right before a major news announcement. How do we measure “fundamentals” though? Does that mean an announcement today, the overall economic scope of a country over the past century, or something in between?
The reality is that the only force that moves prices in any market is the buying and selling of the financial instrument. For our purposes, we will use currency trading as an example, but this is true in all liquid, openly traded markets. Currency prices don’t fluctuate on their own. They only move up when traders are willing to buy at a price higher than the current price, and the only move down when traders are willing to sell at a lower price. That sounds incredibly simple, but this is a very important fact to establish.
Full Story – FX360
