Log in or register to download unlimited Forex robots!
Lesson 3: Why Currency Rates Change
Understanding why currency rates change is essential for anyone interested in Forex trading.
Let's break down the factors behind these changes.
1. Market Perception and Speculation
Forex trading is based on speculation. Traders are constantly interpreting data and news, trying to predict how others will value a currency in the future. This speculation can cause significant price movements. For example, if a trader believes negative news will make others value the euro less, they might sell it at a current high price, like 1.12758. This process is all about predicting future demand and sentiment.
2. Technical Analysis (The Chart)
Traders use technical analysis to read the market. They look at charts and use indicators like the Relative Strength Index (RSI) or Stochastic Oscillator to determine market conditions. If the euro being "overbought" suggests that many traders have already invested in it, expecting it to rise. When everyone has bought and no one is left to buy more, the price can start to fall as traders sell to free up cash for other trades. It's important to note that unlike equity trading, Forex doesn't use volume figures, making this analysis slightly different.
3. Economic Factors
Economic indicators heavily influence currency values. Traders monitor macroeconomic factors like inflation, wage increases, and overall economic health to gauge a currency's strength. For instance, if the European economy shows robust growth and stability, the euro might strengthen against other currencies. The Forex market tends to simplify these economic complexities into more digestible indicators.
4. Influence of News and Events
News, especially regarding central bank decisions like interest rate changes, can significantly impact currency values. Like when the Federal Reserve's decision to raise interest rates strengthened the dollar against the euro. Conversely, when the European Central Bank hiked its rates, it affected the EUR/USD pair differently. Market reactions to such news often depend on whether the event was anticipated or not.
So, currency rates change due to a blend of market speculation, technical analysis, economic factors, and reaction to news events. Understanding these components helps you make more informed decisions.
Profit posts by forum members!
Why don't many people post their daily winning results?
MT4talk PRO members can Turn off MT4talk daily winning result post requirements for $49.99 / month. More info...
Latest profit posts from the Trade Executor EA users.
By using the MT4talk website, you automatically agree to the Forum Rules & Terms of Use, as well as the terms below.
Everything you see on the MT4talk website is created by its users, mainly the members of the MT4talk forum.
What is MT4talk?
MT4talk is an online Forex forum with over 5000 Forex robots and over 3000 Forex indicators uploaded by forum members in the last 10 years, available to download from forum posts. The Uploaded file does not come with support.
The website doesn't sell Forex robots and doesn't provide support for the ones you download. MT4talk offers a PRO membership, allowing you to download unlimited files from forum posts. Even though the site usually doesn't provide support for downloaded Forex robots, if you're new to Forex and need help, you can buy the MT4talk dedicated support membership from the MT4talk forum. The MT4talk Dedicated support subscription is only available for purchase for MT4talk PRO members.
The MT4talk Team also provides an Artificial Intelligence Forex robot called "MT4talk Forex AI Signal - Trade Executor EA" to PRO members. However, this Forex robot is only a bonus and is not included in the original PRO membership.
Updates for the Forex robots may be limited or nonexistent, depending on the creator. If you choose to download any Forex robot or setting file from the forum, you acknowledge that you are using it at your own risk. MT4talk PRO membership is a digital product. Therefore, after you complete the PRO membership purchase, there is no refund available!
We are conducting real-life tests on Forex robots to assess their performance. For certain robots, we may use a demo account to conduct tests, and for other Forex robots, we may use a real Forex account. It's essential to recognize that we are not financial advisors and cannot provide investment guidance. Our objective is to discover effective market analysis solutions through testing various strategies, which could be beneficial to our community.
CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS, IN GENERAL, ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.
Disclaimer - No representation is being made that any Forex account will or is likely to achieve profits or losses similar to those shown on backtests in this forum. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. Hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. All information on this forum is for educational purposes only and is not intended to provide financial advice. Any statements posted by forum members or the MT4talk EA Tester Team about profits or income expressed or implied, do not represent a guarantee. Your actual trading may result in losses as no trading system is guaranteed. You accept full responsibilities for your actions, trades, profit or loss, and agree to hold the MT4talk team and forum members of this information harmless in any and all ways.
Affiliates Disclaimer - The website may have links to partner websites, and if you sign up and trade through these links, we will receive a commission. Our affiliate partners are FXOpen, FBS, LQDFX, and MyForexVPS.
Copyright MT4talk.com Forum Rules - Privacy Policy.