Understanding these market fluctuations is important. It is created primarily by the main players in this great game.
These are central banks, hedge funds, investment funds. The price of currency pairs significantly depends on them.
But not only they affect the market.
There are also traders, small investors, and brokers. Yes, their personal contribution is not as significant as that of the main figures. But
there are a lot of them, and they can also affect the prices of currency pairs.
In economics, supply and demand is a model that explains price formation in a free, competitive market.
The same principle applies to the foreign exchange market.
Every time a currency is bought, a demand is created in the market that drives up the price.
Likewise, every time a currency is sold, a surplus of supply is created, which pushes the price of the currency down.
The impact of each purchase and sale in the foreign exchange market is directly proportional to the trading volume of each transaction.
The equilibrium price philosophy is the key to understanding how online currency trading works, as all economic events around the world have an impact on the market.