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adamsmiths

Top 3 Factors that Influence the Financial Market

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adamsmiths

While trading in any market, traders and investors gain higher earnings with the help of trends. When prices fluctuate, profits and losses occur in the trending or ranging market. There are a number of factors that are the reasons of long term and short term market trends. If you want to analyse the financial market effectively, you have to focus on these factors. Just a few factors are discussed below.

 

  1. Governments

The government is the major participant of the financial trading market, and it holds huge sway over the free markets. Different monetary policies and fiscal policies that are taken by the government have great impact on the financial market place. The effect of the government in the financial market is so powerful that along with the federal banks it can increase or decrease the interest rates in order to slow down or speed up the growth of the country. In a word, it can be said that the government can control the growth of the country’s economy. This is known as monetary policy.

In order to stabilise the prices or enhance the employment rate, if a government increases its contracts or spending, it is called a fiscal policy. The government has the power to change the flow of the investment into and out of the country by managing the open market and the interest rates.

 

  1. International Transactions

If the fund flows between two countries, it affects the economic structure of the country and its currency. For example, if a country imports goods from other countries, it exchanges the local currency against that good. This will make the economy of the importer country weaker. On the other hand, the country that exports goods, become economically stronger. By reinvesting the money that flows, the country can stimulate the financial market.

 

  1. Speculation and Expectation

Speculation and expectation are the two major integral parts of any financial system. On the basis of the present action, traders, investors, consumers and politicians predict the future of the financial markets. Expectations of tomorrow are highly dependent on the current actions that form the present as well as the future trends. Sentiment indicators are used to measure how certain groups are feeling. In order to estimate the future prices rates and the direction of the trend, technical analysis is used.

The above mentioned factors affect short-term as well as long term trends. So know them well, if you want to be a successful trader or investor in the financial market.

Edited by Neo

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1111

:welcome:In short the markets are rigged!

 

Designed by the rich to

 

rob from the not

 

so rich.

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