Why Forex Trading Online Rules the Markets

Forex trading online has an enormous impact on many other markets, including the commodities and equities markets. Forex is relevant to traders in all markets.

Forex Trading Online Helps Traders and Investors

The advent and spread of forex trading online has helped traders and old school investors of all kinds. It has made them look at the financial markets from a new perspective, and pay more attention to currency movements. Movements which prior to forex trading online were much less technical. Currency trading has become much more technically driven, all because too many traders share and look at the same charts. They are all trading forex and pay attention to the same support and resistance levels. And a as result, many currency pairs have a strong degree of technical predictability, around 70% of the time. Exceptions still apply of course, since during the other 30% of the time technical analysis fails, lags, or gives way to fundamentals. Especially when it comes to the US dollar, technical analysis fails much more often than it does with other currencies. But even in the case of the US dollar, online traders are quick to follow on the action of large institutional traders, thereby creating momentum. Collective trading activity can be seen across many currencies, and these almost instantly impact stocks and commodities. The impact varies dramatically from stock to stock, and from one commodity to another, but very often it is there.

Forex Trading Online and Old School Traders

Old schools traders and investors, such as gold investors used to focus too much on key factors impacting the supply and demand in the gold market. But in today’s markets, where forex trading online rules, currencies such as the Australian dollar act in strange and interesting ways. If gold moves in a solid trend, then the Australian dollar will follow suit. But the opposite can happen too. It is possible for the Australian dollar to set a medium term trend, and the lagging gold will actually follow through. These two markets are strongly interconnected. The markets have many more commodities and stocks, where a specific currency pair acts as a key catalyst or even as a driving force at times. Forex traders implement online CFD trading in today’s world, in an effort to trade efficiently both the currency side and the commodity / stock side of the underlying market mechanism. The gold – Australian dollar thing, is actually one unified market. Trading spot forex alone puts traders at disadvantage, trading gold alone, is also a far-sighted approach. But trading both gold and Australian dollar through CFDs allows traders to continuously trade the lagging component, and make consistent profits. All the homework and analysis is focused on figuring out which component is lagging and which is leading.