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Forex Training - Supply And Demand Basics

by Binaryoptions Talk Consultant

A popular method of trading Forex is to use fundamental analysis to make decisions about the direction a currency is likely to go in. This article will provide you with an introduction to how you can use the basic concept of supply and demand to improve your Forex trading results.

The foreign exchange (Forex) market, works like every other market in the world, it’s driven by supply and demand. Understanding the concept of supply and demand will make a huge difference to your Forex trading results. To be successful trading Forex you need to be able to sort through all the daily news to determine those messages that are important and likely to have an impact on the market


Supply is a measure of how much of a currency is available at any particular point in time. The value of the currency is linked to how much of it is available. As the supply of a currency increases, it becomes less valuable and as the supply of the currency decreases, its value declines.

Demand is a measure of how much of a currency people want at any particular point in time. As demand for a currency increases, it becomes more valuable and as demand for the currency decreases it becomes less valuable.

To understand how demand and supply can effect something’s value, think about the Nintendo Wii. When the Wii was first released, there was a high demand for the toy and it sold out quickly. The only option for parents who weren’t fast or aggressive enough to buy the Wii when it came out, was to either wait for more toys to be made or pay ridiculous prices on eBay. High demand made this toy much more valuable than it would have been if nobody wanted it.

Applying this example to the Forex market, if we can determine when supply and demand are increasing or decreasing for a currency, we have a good idea of whether the currency is going to increase or decrease in value.

When you are analyzing a currency to determine whether you think it will increase or decrease in value in the near future, you should consider how all the fundamental factors will affect the demand and supply of the currency. As you consider more and more fundamental factors, you should notice that one side of the seesaw will begin to tip up or down.

Using the concept of a seesaw for supply and demand can help you to understand complicated economic information. It is far easier to look at each individual factor to determine how it will affect the currency’s value than it is to try and weigh them up all together.

Once you have analyzed a factor, put it on the appropriate side of the seesaw and move on to the next one. Once you have finished this process, you should begin to see which side is more heavily weighed. Using this information you can form a decision on whether you think the currency’s value will increase or decrease.

Related Resource: Learn the Secrets of Binary Options Trading (www.BinaryOptionsSecret.net)


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Created on Dec 31st 1969 18:00. Viewed 0 times.

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