Trends are the possibility of any development in this direction. In short-term or long-term terms, in the entire market or part of it, movement from one price to another creates profit and loss. There are four main drivers of long-term trends and short-term fluctuations. By studying how they shape trends in the long run, one can understand why some trends develop, why they exist, and how future trends may arise. Here are these four main factors.
- The state — it has a great influence on the free market. Fiscal and monetary policies have a profound impact on the financial market. By raising or lowering interest rates, the government and the Federal Reserve can effectively slow or try to accelerate the country ‘s economy. This is called monetary policy.
If government spending increases or decreases, it is called fiscal policy, and can be used to ease unemployment and/or stabilize prices. By changing interest rates and the amount of money available on the open market, the State can change the flow of investment into and out of the country.
- International payment transactions — the flow of money between countries affects the economic power of the country and the exchange rate of its currency. The more money leaves the country, the weaker its economy and currency. Countries that predominantly export — either physical goods or services — constantly receive money. This money can then be reinvested and can stimulate financial markets in these countries.
- Assumptions and expectations are an integral part of the financial system. If consumers, investors or politicians believe in the direction in which the economy will develop in the future, it affects how we work today. The expectation of future action depends on current actions and shapes both current and future trends. Sentiment indicators are usually used to assess the views of groups on the current state of the economy.
- Supply and demand — create pushing and tightening price dynamics. They change as demand and supply change. If something is demanded and the offer starts to decline, prices will rise. If supply increases, exceeding current demand, prices will fall. If supply is relatively stable, prices can fluctuate up and down as demand grows or declines. Positions and expectations, supply and demand.
Knowing these factors, which cause both short-term and long-term fluctuations in the market, it is important to understand how all these elements combine to create trends. Although they fall into different categories, they are closely related to each other. Government permits or instructions affect international operations, affecting assumptions and supply and demand affecting all of these factors.
Lower interest rates and taxes drive spending growth and economic growth. This tends to push market prices up, but the market does not always react in this way because other factors play a role. For example, higher interest rates and taxes hold back spending and lead to lower or longer-term falls in market prices. In the short term, these press reports could cause big price fluctuations as traders and investors make purchases and sales responding to information. The increased activity resulting from these reports may create short-term trends, while long-term trends develop as investors fully understand and perceive the impact of this information and its importance to markets.
Trends can also be supported for a long time by the efforts of those market participants who have made a mistake in their analysis, and to get out of their loss-making deals, they further push prices in the current direction. As the number of investors wanting to use the trend for profit increases, the market is saturated, and the trend is reversed, at least temporarily.
Список литературы:
- Agabekian, I.P. English/I.P. Agabekian. — Rn/D: Phoenix, 2017. — 318 c.
- Berezina, O.A. English for university students. Grammar exercises: Educational manual for students of higher vocational education institutions/O.A. Berezina, E.M. Spilyuk. — M.: IC Academy, 2018. — 208 c.
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