Forex trends and herd tracking

Often traders talk about the individual psychology of Forex traders, but what are the factors that determine the trend in the market? How does it collectively affect this psychology of the market as a whole?

There are buyers and sellers in all markets who give opposing opinions and views. These conflicting opinions about the situation in the herds or collective markets are what ultimately define the trends.

Now let's talk about some of the factors that influence and define market trends.

When looking at the Forex market in the eyes of fundamental analysis, it is important to remember that a range of factors can reverse trends and influence market direction. Any unforeseen event, whether economically or politically, can shake up markets and cause trend changes in an instant.

For example, a change of government in a country may reinforce or undermine confidence that affects the currency it represents. Certain measures taken by States or central banks or directly strengthen or depreciate their currency relative to others, leading to bullish or bearish trends towards the interpretation of traders as a whole.

All traders monitor the flow of prices and reflect this through indicators, so there are certain expectations from traders as a whole about what will happen. The thing is, the trend may change because everyone will experience the same emotions. This creates a flock. Also be aware of news releases or sudden unexpected news as they may change the trend in the example.

In times of great volatility, investors in this uncertainty become more risk-averse and prefer hard currency or gold. People are willing and able to take greater risks in favor of higher yields during stability.

It is also vital to focus on market makers and central bank policies because you rarely want to trade against these parties. Both market makers and central banks, and to a lesser extent financial coalitions and hedge funds, have the power to reverse the trend quickly and you don't want to get caught on the wrong side of this action.

Under normal circumstances, markets are usually triggered by price action, media hype and fundamental and technical levels of the market, however, there is always the likelihood that an unforeseen event such as 9/11 or the country's currency will be depreciated overnight as in Argentina or Russia. Collective postures and feelings are what drives the markets and the more you can understand the psychology of individual marketers and groups as a whole, the better your advantage in the markets.

The forex market is now much more unpredictable and volatile than it was a decade ago. The more information you have, including the day-to-day analysis of trends and the factors that influence them, predicts a greater chance of profit.