When Supply And Demand Influence Big Moves In The Markets

Many traders find themselves concentrating on the minutiae of day trading, following the small moves of the market and making large numbers of small trades, each for a comparatively small profit. There is nothing wrong with this as a form of trading, of course, and perhaps a majority of traders indulge in it to a greater or lesser degree. It must be admitted, however, that there is a considerable appeal behind the idea of carrying out fewer trades for larger profits each time. In terms of economy of activity, this is after all the practice that is the most effective. It may sound like a counsel of perfection and you might think that it would be trying on the nerves. After all, with smaller, more frequent trades you are definitely making profits from your short term deals. The longer term strategies referred to would require patience and also confidence. They would also seem to require a method of predicting how the markets in question will behave. How is it possible to achieve any degree of certainty about such a factor? Or rather, since certainty is not available when it comes to predicting the future, how can you become better at predicting the market and knowing when the big moves are going to come?

Of course, there is no simple one size fits all strategy that can be employed in all circumstances, but you will not go far wrong in your trading if you remember that big price changes occur when supply and demand of a particular currency fall out of balance. The market will adjust and the mechanism for doing this will be a price change. You will be looking to maximise your profits by trading at the right time. When is this? To discover when you should buy and when you should sell requires some hard thought and some analysis. You must identify the real, objective supply and demand levels, and this is not always easy since the charts which you can find often seem to display many different levels of these two vital factors. The secret to maximising the profit made in your trades is to identify those times when supply and demand are seriously out of balance. These, after all, are the times when the ensuing correction will be most significant and thus the times when it is possible to trade for large profits as the big market moves ensue.

You might baulk at the fact that you will be trading at extremes at times like this, but those are the times when the profits are at their most extensive. If the prospect of this sort of trading does not appeal then there are always the safer and smaller day trades for smaller profits to which we have already referred. Remember though that you are essentially deciding on smaller profits before larger. You might wonder if this is the way you want to continue to trade in the forex markets. Ultimately the decision is always yours alone to make.

Spread betting, CFD trading and Forex are leveraged. This means they can result in losses exceeding your original deposit. Ensure you understand the risks, seek independent financial advice if necessary. The value of shares and the income from them may go down as well as up. Nothing on this website constitutes a solicitation or recommendation to enter into any security or investment.

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