Get To Know Supply And Demand In The Forex

The market price moves like the law of gravity. Buyers and sellers of mutual attraction until it reached a price agreement. By observing the price charts, traders tried to predict, analyze, and explore the price movement.

In essence, every movement of currency prices determined by supply and demand (Overture) (request) If the news is positive, then the demand increases and supply decreases. Whereas if there is negative news, it's usually request to be slightly reduced and supply has increased.

Supply and Demand

Supply is the amount of goods available, while Demand is the amount of items that you want. To understand, let's use a simple illustration here. Imagine you are going to sell oranges at market own results nearby and You don't necessarily have to sell out of stock all Orange Orange because of the price that is being inflated.

At first the selling price for 1 bag of oranges only amounted to 1 dollar. Of the entire crops, You only sell 4 or 5 bags at these prices. Eventually, the price of Orange reached 10 dollars per bag and at the price you sell the whole oranges that you have. From this it is clear that illustration is recommended that Yours may not directly sell the entire Orange you, but wait until the price is really high.

The chart below is called "bidding curve", the red line indicates the supply increase because the price moves higher (located on the horizontal axis).

Now think of the buyer-seller relationship from the point of view of the consumer. The lower the price, the demand be higher which is the opposite of the curves of supply. If the price of oranges is just $ 1 per bag, then the desired consumers is to buy orange as much as possible. Just as rising prices, as well as the supply, because if the price of the oranges into 10 dollars per bag, then the consumer will automatically find another product that is cheaper.

The seller and the buyer will meet and compete in the market to determine the price. So the market price is determined. The following is a table that describes the situation:

The supply and demand curves can show prices efficiently because buyers and sellers can monitor their trading from behind the computer screen.