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Market noise in the Forex and other financial markets
Market noise beginner traders is not rare scare in the financial markets, but let's see what actually it is and how it appears on the chart.
Market noise - slight fluctuations in the asset price caused by changes in the ratio of the volume requests of buyers and sellers.
For example, select any asset and reveal its price chart on the minimum timeframe in which the terminal MetaTrader4 will be the M1. Note on the illustration:
Market noise in the chart
Seen over time has not demonstrated any significant growth or a significant reduction. I wonder what the price of an asset all this time stood still, and hesitated a little, then slightly rising, then falling. This phenomenon represents market noise in the Forex or any other financial market.
Why is this happening? At first glance it may seem that if there are no factors that can significantly affect the price rate of an asset, the cost of the tool should not change at all.
Examples with market noise
In fact it is not, because the market price of the instrument controls the ratio of supply and demand:
when the total volume of sellers at a certain price redeemable by the buyers, then the market value of the instrument increases (starts redemption amounts at a higher price);
when the total volume of sellers at a certain price exceeds the needs of the buyers, then the market value of the asset is reduced.
Imagine that on the market the sellers are ready to implement the 50 lots of the asset at the price of 1.2000, but buyers only buy 35 lots of an asset. Sellers are seeing low demand, reduce the price to 1.1999 in the hope that among potential buyers there are those who are not in a hurry to buy 1.2000, but are willing to enter into an agreement with 1.1999.
Over time the market is dominated by purchases, sales, forcing the price of the asset to change a little bit in both directions. Trades at any time can enter a new member with your request, which will not work to block volumes at the current market price. In this case, the value of the asset changes a little less profitable for the bidder side.
On any trading platforms market noise is a common phenomenon that is impossible to get rid of. Traders who enter into medium to long-term deals, usually do not even notice small fluctuations in the asset price, since they can greatly affect the result of the operation.
Measurement of oscillations in paragraphs
Scalpers and fans Pipsing, on the contrary, faced with market noises every day, because for them every point of profit plays an important role. They have to make allowances for this phenomenon, as the profit in pips per transaction is obtained is relatively small (up to 10 PP.) and every market fluctuation that can reduce the profit, is perceived painfully.
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| Category: Forex | Added by: (30.10.2017)
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| Views: 364
| Rating: 0.0/0 |
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