Chapter 2 – Why does the Forex Market move?

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This is not a trick question. For instance, has it ever occurred to you after watching the price action on EUR/USD for days, seeing it go from 1.5300 to 1.5550, and ask yourself that question?

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Well, I have and the simple answer is that there are more orders BUYING EUR/USD than SELLING, so the price went up from 1.5300 to 1.5550 based on more demand and less supply.
Then, it dawned on me that for every price action, a tick, or a pip, there are orders being filled. The market is traveling to the direction where it gets more orders. Now think of this like taxi cabs instead of subway or a train. The orders are dictating where the market goes, not the market making stops at every pip and see if there are orders. If there aren’t any orders, market will not even travel there in the first place.

 

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About Kelvin Ching

I'm a professional Forex trader and I have been trading for over 7 years. I was a series 3 broker and a registered CTA with the NFA, the main regulatory agency in the United States, and I have been involved at the highest levels in commodity trading. I also have a background in Information Technology, graphics design, and programming... I'm the co-founder of CurrencyNewsTrading.com, a site dedicated to fundamental analysis and news trading.

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