Does Our Trading Affect Market Price Movements?
It’s nice if we can improve our trading results to be more successful and spend only a little time in analyzing. Of course it becomes the dream of retail traders like us. All that can happen if we realize our role as a retail trader and have a proper perspective on the forex market. The main question that we often hear and still be debated at the level of retail traders is whether our trades affect the market price movements?
Most retail traders do not realize that their money that is contributed in the forex market has almost no impact on price movements. So retail traders have to play with the same rules as other “big players”. And maybe not a favorable choice for us.
Who is called “Big Player”?
Big Player or big players are forex market players who do forex trading with huge funds and with certain goals such as price discovery, price stability, speculation, profit orientation and others.
The government through central banks, banking institutions and financial institutions are big players who can make prices in the forex market move.
The government through the central bank set policy interest rates to stabilize inflation and the economy up to the value of its currency. The Central Bank also determines the benchmark interest rate of bank loans, and has the ability to influence the market by releasing important economic information / data.
Banking institutions transfer money to and from global institutions and make a stock of each major currency.
The role of retail traders in the forex market is not to drive market prices, but rather to seek profit (speculation) from market price movements that occur. Holding in this perspective, a retail trader can get the most benefit from his trading.
Following the steps or analysis done by the big players to be a wise advice for retail traders. At least, if there is a trend in the forex market the retail trader has an obligation to follow the direction of the trend and not to fight the trend. Remember, not to drive the market price.