Investors in any market, be it securities or currencies, wants to know what causes price fluctuations so they can predict them and make a profit. While stock investors research publicly traded corporations in order to make trading decisions, those on the Forex must consider what influences the currency exchange rates between nations. Because it is so volatile with significant fluctuations in small term prices, it is mainly vital for the Forex trader to know what moves the markets in order to be successful and make a profit.

To some extent because trades occur 24 hours a day between Sunday and Friday afternoon, the Forex is a very volatile market. Just as with equities, pricing on the Forex is influenced by economic and political factors facing the nations involved in the currency pair. Because the U.S. dollar is used to back 90% of all the transactions on the Forex and its nation plays such a significant role in the world nation, economic data released by the government will affect market prices—temporarily. Here are some of the prime releases that Forex scalpers or day traders tend to look at when determining whether or not to enter a position:

1. Interest Rate Decisions
2. GDP rate increase/decrease
3. Unemployment data
4. Inflation: Consumer/Produce price
5. Retail Sales
6. Consumer Confidence Surveys
7. Business Confidence Surveys
8. Trade Balance
9. Manufacturing Confidence Surveys

But, while all of these navy no doubt play a small term role in price movements on the Forex and other fiscal markets, their influence is very temporary and the prices soon reflect them. It is not common for Forex scalpers or day traders to delight in long-term success because the volatile nature of the market makes losses more likely with more trading.

There is another force that does play a role in the movements of all fiscal markets: human behavior. Indeed, Psychology is a very huge factor in any investment choice and its effects can be studied in fiscal charts. Four human emotions play very huge roles in the price movements on the Forex:

· Greed
· Dread
· Faith
· Hope

Greed compels even technological traders to snub stopping points and chase a trend too far—to the point of loss or losing a significant part of profits. Once an exit point has been reached—cash out.

Dread of loss is a very common human emotion and it certainly causes many investors to take a loss too hard and quit investing. But, simply setting acceptable stop/loss orders will prevent you from losing more than you are comfortable with.

Even faith and hope can cause us to chase profits too far or not get out when losses start to mount. Technological analysis, continuous back testing, and sticking with an investment strategy while being open to adjustment—these are all common traits in the most successful traders. Although the economic indicators and news releases do play a small term role in prices, it is ultimately human Psychology that moves the Forex.

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