EFFECT OF MARKET FLUCTUATION IN SHORT AND LONG TERM
Gold Analysis, JCI, Stock Investments, Forex Recommendations - These factors cause short-term and long-term fluctuations in the market, it becomes important to know how all these elements together create a trend. Indeed these factors differ by category, they are closely linked to each other.
Government policy will impact on international transactions, which play a role in speculation, and demand and supply play a role in each of these factors. Government news publications, such as proposed changes in spending policies and taxes, as well as the decision of the central bank to maintain or change interest rates have a dramatic effect on long-term trends.
Interest rates and low tax rates can trigger consumption and economic growth. It has a tendency to push market prices higher, but the market does not always respond to this because something and other things are also playing its role. Higher interest rates and tax rates, for example, reduce consumption and produce long-term contraction or decline in market prices.
In the short run, the issuance of this news can cause massive fluctuations in prices as traders and investors take action to buy and sell in response to the information. Increasing activity ahead of announcements like this could create short-term trends, while long-term trends will begin to form when investors have actually captured and digested how the impact of the information announced to the market.
International Effects
International transactions, inter-country balance of payments and economic strength are harder to analyze on a daily basis, but they have a big role in long-term trends in many markets. The forex market is a benchmark of how well a country's currency and economy relative to others. A high demand for a currency means that the currency will rise relative to other currencies.
The value of a country's currency also plays a role if other markets will perform in that country. If the currency of a country is weak, it will reduce investment in the country, along with the potential profit being eroded by the weak currency.
Effects of Market Players
Analysys and positions taken by traders and investors based on government policy information and international transactions will create speculation as to where prices will move. When enough people agree on direction, the market enters a self-sustaining trend for years.
Trends are also created by the wrong market participants in their analysis, forced to exit and liquidate their losses thereby pushing prices to move further in the current direction. As more and more successful investors gain from a trend, the market becomes saturated and the trend reverses, at least temporarily.
Supply and Demand Effects
Supply and demand affect the individual, the company and the financial market as a whole. In some markets, such as commodity markets, supply is determined by the number of physical products. For example, supply and demand for oil are constantly changing, adjusting how much a marketer is willing to pay for today and in the future.
When supply decreases and demand rises, long-term increases in oil prices may occur as market participants outdo each other to be able to get quotes from commodities. Manufacturers want a higher price than what they have, and a higher level of demand drives buyers higher prices.
All markets have similar dynamics. Stocks fluctuate on a short and long-term scale, creating trends. The reduced supply threat at current prices forces buyers to buy higher and higher prices, creating huge price increases. If a large group of sellers will enter the market, this will increase the supply rate of the available stock and could push the price down. This happens all the time period.
Trends are generally created by four major factors: government, international transactions, speculation / expectations, and supply and demand. All these areas are connected to each other as expectations of future conditions shape current decisions and current decisions shape trends.
Government influences most trends through fiscal and monetary policy. This policy affects international transactions which will ultimately affect economic power. Speculation and expectations will drive prices based on what is likely to happen in the future.
Government policy will impact on international transactions, which play a role in speculation, and demand and supply play a role in each of these factors. Government news publications, such as proposed changes in spending policies and taxes, as well as the decision of the central bank to maintain or change interest rates have a dramatic effect on long-term trends.
Interest rates and low tax rates can trigger consumption and economic growth. It has a tendency to push market prices higher, but the market does not always respond to this because something and other things are also playing its role. Higher interest rates and tax rates, for example, reduce consumption and produce long-term contraction or decline in market prices.
In the short run, the issuance of this news can cause massive fluctuations in prices as traders and investors take action to buy and sell in response to the information. Increasing activity ahead of announcements like this could create short-term trends, while long-term trends will begin to form when investors have actually captured and digested how the impact of the information announced to the market.
International Effects
International transactions, inter-country balance of payments and economic strength are harder to analyze on a daily basis, but they have a big role in long-term trends in many markets. The forex market is a benchmark of how well a country's currency and economy relative to others. A high demand for a currency means that the currency will rise relative to other currencies.
The value of a country's currency also plays a role if other markets will perform in that country. If the currency of a country is weak, it will reduce investment in the country, along with the potential profit being eroded by the weak currency.
Effects of Market Players
Analysys and positions taken by traders and investors based on government policy information and international transactions will create speculation as to where prices will move. When enough people agree on direction, the market enters a self-sustaining trend for years.
Trends are also created by the wrong market participants in their analysis, forced to exit and liquidate their losses thereby pushing prices to move further in the current direction. As more and more successful investors gain from a trend, the market becomes saturated and the trend reverses, at least temporarily.
Supply and Demand Effects
Supply and demand affect the individual, the company and the financial market as a whole. In some markets, such as commodity markets, supply is determined by the number of physical products. For example, supply and demand for oil are constantly changing, adjusting how much a marketer is willing to pay for today and in the future.
When supply decreases and demand rises, long-term increases in oil prices may occur as market participants outdo each other to be able to get quotes from commodities. Manufacturers want a higher price than what they have, and a higher level of demand drives buyers higher prices.
All markets have similar dynamics. Stocks fluctuate on a short and long-term scale, creating trends. The reduced supply threat at current prices forces buyers to buy higher and higher prices, creating huge price increases. If a large group of sellers will enter the market, this will increase the supply rate of the available stock and could push the price down. This happens all the time period.
Trends are generally created by four major factors: government, international transactions, speculation / expectations, and supply and demand. All these areas are connected to each other as expectations of future conditions shape current decisions and current decisions shape trends.
Government influences most trends through fiscal and monetary policy. This policy affects international transactions which will ultimately affect economic power. Speculation and expectations will drive prices based on what is likely to happen in the future.
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