Top 10 Market Movers in Forex

Tue Apr 06 2021 16:53

XOSignals

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There are many factors that drive the direction of the forex market and investors need to know them all. Knowing about that moves the forex market can help to improve profitability. As we all know, the FX market has higher liquidity and volatility, it becomes vital to keep an eye on these factors.

If you are new to forex trading and know what these market movers in forex — we have you covered. In this article, we will check out what exactly are these and how you can take advantage of them.

Market Movers in Forex — Basic Overview

In simple terms, market movers are those critical factors that influence the market. The direction of the movement can either be positive or negative in the market. These kinds of news are often related to the economic condition and they become vital to track.

Traders who perform fundamental analysis have a better idea about these market movers. To understand these movers in a straightforward way, they fall into three categories. The first is economic indicators, the second is financial and the third is political. On this note, let's check out what these three categories mean to the forex market.

Economic Indicators

It consists of solid data figures of various economic sectors. Some of the sub-indicators include GDP data, labor market, inflation, and many others. These indicators collect data of the previous performance to gauge the future.

Financial Indicators

Financial market movers are high-power institutions that influence the currencies and markets. Some of the key catalysts are central banks, government, fiscal stimulus, and more.

Political Influence

These are the most unexpected types of moves that no one can predict. The market can go bearish or bullish in no time under this influence. Political influence on the forex market is something that traders wish would never happen.

Now, let's explore the top ten market movers that you need to keep track of on a regular basis. Even if you are into technical analysis, these will help you to enhance the strategies.

1. Demand & Supply

It is one of the major market movers in the forex exchange that can turn things upside down. The import-export and the demand & supply balance are vital for the forex market. For example, if you trade USD and GBP, if one of the country's demands or supply status changes, it will affect. Whichever currency pair you pick, always perform research of the demand & supply status.

Be it USD, GBP, JPY, or AUD — demand and supply will move the market either in a positive or negative direction.

2. Major forex brokers

Yes, it happens quite a few times that forex brokers become major movers for the currency market. As they have higher resources than retail investors and traders, they can influence. Be its futures trading, or any other trading strategies, they can control it very well. But, for making this happen, many brokers need to work together to bring a temporary movement.

It's a safer option to have a good stop-loss strategy to keep the capital safe from such activities. Whether you are a beginner or an expert, use stop loss to save your money.

3. Central banks

Central banks are powerful and their one update in the policy can move the market. It is the reason why the currency market is very volatile before major announcements. If there is any kind of announcement from central banks, you need to keep a track of it.

When it comes to trading currencies, the central bank has the highest impact on the movement. A slight change in interest rates or fiscal relief can bring a major change. So, if you want to start as a currency trader, always have your attention to these banks. If you trade more than one currency pair, you need to keep track of several banks.

4. Major Events

Any kind of major public event becomes one of the powerful market movers for forex trading. Be it the president's speech, budget updates, or any other news, these become movers. This falls under the category of political influence which is inevitable.

For example, when Joe Biden became the President, the forex market faced huge changes. Many people were in favor of the win and many were not. This type of temporary emotional sentiment plays a vital role in moving the market.

5. Retail sector

Retail traders and sectors both are very prone to market updates. Any type of major news changes the market sentiments and investors make their moves. This kind of move made in panic often becomes a leading market mover for forex.

To avoid getting into such a situation, always perform your core research. Once you plan your strategy, no market mover can affect or hamper your trading portfolio.

6. Market sentiments

Market sentiments, either positive or negative do affect the forex trading market. Any kind of sudden big news can turn into a market sentiment changer and change the direction. To stay safe from such a situation, never react to anything at the beginning.

Use a strong stop loss strategy and watch how the market is going. If you think that the market is stable at a certain point, only then start trading. These bullish or bearish sentiments can have a direct impact on your capital.

7. New policies

New monetary policies have a direct impact on the currency market and they act as a major market mover. Amid COVID-19, the government made a lot of new policies and it moved the market. Some of the policies are iterative that they will come each year. But, on the other side, to handle the emergency, some came from nowhere.

8. Banking situations

It happens quite often that central banks lend money from central authorities. This money-lending situation is also a significant market mover in forex. Whether you are a retail investor, a day trader, or a broker, these situations become market movers. Most banks are into international tie-ups and any change in their policy can move the market.

9. Technical indicators

Technical indicators are very popular among traders and they can move a direction. Yes, it happens quite a few times because of the copy trading system.

A major part of the traders uses these technical indicators to copy traders from top players. When most people start following the trends without any study, it becomes a mover.

10. Currency performance

Last but not least is the currency performance across many global markets. How the major currency pairs and other pairs are performing plays a vital role in moving the market. If a couple of major pairs performed bearish in the market, it can change the market direction.

That's why keeping an eye on the performance of currency pairs becomes vital in the market. Always keep a check on the ongoing news and fundamental data before trading.

Summary - Market Movers in Forex

These were the major market movers in forex that you need to consider while trading. You can make your trades profitable if you can prepare for them in advance. Doing fundamental analysis can help you predict the trends in advance. The faster you take action, the more profit you can earn from these market movers.

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