SigmaForex Explains How The Markets Move

Since 2003, Sigma’s aim has been to provide the best, powerful and most suitable currency trading technology along with superiority in execution, competitive services, and dependable customer service. Over the past years, Sigma has quickly become one of the world’s leading online retail currency trading institutions, providing integrated global trading systems, analysis techniques and the most reliable and sophisticated online trading software. We offer internet trading through Meta Trader. This trading platform is very stable and reliable. It is highly regarded and very popular among traders.

All financial markets are the same. Investors and traders may go to many lengths to work out the fundamentals behind a stock or market, but the real driving force is the supply and demand equation, which is created by the market participants themselves.

If everyone on the planet is bullish and long on a market because the 'fundamentals' suggest that this market is sound, they have affected the supply and demand equation of this market irrespective of the fundamentals behind it. They have in fact created an energy that will force the market the other way, simply because there is no one left to push prices higher.

The same is true the other way. If everyone is bearish a market, irrespective of the fundamentals, they will affect the supply and demand equation to the point where there are simply no sellers left. Price will then head up; which will seem to contradict the fundamentals or news at that time.

To jump on a market at the top is to buy when everyone else has bought. If you base an investment decision on information made available to everyone, i.e. the front page of a newspaper, you are in effect the last farmer to plant X seeds. The front page syndrome is the symptom that tells you the supply and demand equation has now turned around, regardless of the fundamentals.

We are in a precarious moment with regards to the markets currently. Where we go from here will be determined by the supply and demand equation with respect to the market participants. Are they all bearish, bullish or are they undecided? If they are all bearish, we can only go up; if they are all bullish, we can only go down.

If they are undecided, we get volatility, however all turning points in markets are created by an extreme in supply and demand of the market participants. All trends are the transferring of one to the other. In other words, when there is extreme bearishness, the market will head up, and keep heading up until all the bears turn into bulls