How can I predict where exchange rates will go?
As any market, FX market is driven by supply and demand:
- If buyers exceed sellers, prices go up.
- If sellers outnumber buyers, prices go down.
There are many different factors which influence supply & demand for every particular currency and, consequently, its exchange rate vs. other currencies. For example, national economic performance matters a lot. If Australian GDP is higher than expected, with all things equal Australian dollar will appreciate versus its counterparts and you can make a profit on buying AUD/USD. You will find all important events in our economic calendar.
Moreover, there are so-called technical tools & indicators. When you see a currency pair chart in your trading terminal, it’s assumed that this chart reflects all information available to the market. As a result, you can use the previous price action to foresee the future. According to this concept, previous highs and lows represent important levels where the currency pair may linger and reverse. If such level is breached, a big move may follow and a big move means good profit opportunities. Moreover, you will be able to identify trends – rising, descending and sideways – and open your positions in direction of a trend getting profit.
You can learn more about these things when you get started. Our analytics will be very helpful for this purpose.
Other articles in this section
- Demo accounts
- Forex brokers
- MACD (Moving Average Convergence/Divergence)
- Position size, level of risk
- Margin, Leverage, Margin Call, Stop Out
- Swap and rollover
- Transaction, profit, loss. Types of orders
- Economic calendar
- When is Forex market open?
- Bid and Ask price. Spread
- Calculating 1 pip value for different currency pairs
- What is a lot?
- Calculating profits
- What are pips and lots?
- Currency pairs. Base and quote currencies. Majors and crosses
- The advantages of Forex market
- What is Forex?