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How do we understand the market? And by the way, what does ‘understanding the market’ mean?
over 2 years ago
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To "understand the market" is to have an understanding of what factors influence the price movement of currency pairs. For example, everyday, economic data is released and currencies values fluctuate in response to these releases. Understanding this relationship, how currency prices react to economic data, is one way to understand the market. If for example, the central bank decides to cut rates, what will this mean for the local currency? This type of analysis can help a trader have a better idea of how the currency markets work and will move in the future.
over 2 years ago
Answers (3)
That's a very vague question but let me try to answer... I guess when one pertains to "understanding the market" it means getting a feel for it....Getting an idea on how economic news affects the current market. The reason behind this is that each economic release affects the market differently depending on the time. For instance, unemployment information is watched at the moment because of the global recession. Given say, at a moment of growth, this type of data might just be shrugged off. In addition to this, you have a feel on what kind of technical analysis works and what doesn't.. Do break outs work usually? Or do the markets range? Understanding the market, for me, is being able to adapt to different market conditions over time.
over 2 years ago
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It is when you attempt to know how the market will move in different situations. This can be done by watching charts and reading different fundamental analysis on or off the market.
over 2 years ago
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By monitoring the market activities, you are trying to understand the market- like analyzing how a pair moves when economic data is released or even when you're evaluating the effect of falling gold and other commodities. Knowing the answers for those questions is one way of understanding the market.
over 2 years ago
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