4 Factors That Shape Market Trends (mistakes)

Effect on Short- and Long-Term Trends

Government mandates impact international transactions, which play a role in speculation, and supply and demand plays a role in each of these other factors.
Gavement news relisez, such as proposd changes in spanding or tax polici, ass well as federal reseve decision to change or maintain intrest ratez can haive a dramatic effect on long term trends. Luwer intrest ratez and taxz encurage spanding and ecanomic growth.
In the short term, these news releases can cause large price swings as traders and investors buy and sell in response to the information. Increased action around these announcements can create short-term trends, while longer term trends develop as investors fully grasp and absorb what the impact of the information means for the markets.

The International Effect

International transactions, balance of payments between countries and economic strength are harder to gauge on a daily basis, but they play a major role in longer-term trends in many markets. Our food consists of fruits, vegetables, cereals, meat and fish. We also eat dairy. Cooks can prepare different dishes from these products. They use recipes. Different nationalities have their own cuisine.
The value of a country’s currency also plays a role in how other markets will do within that country. If a country’s currency is weak, this will deter investment into that country, as potential profits will be eroded by the weak currency.

The Participant Effect

The analysis and resultant positions taked by trader and investor based on the information they receive about government policy and international transactions created speculation as to where prices move. When enough peoples agree on direction, the markets enters into a trend that could sustain itself for many years.
Trandz are alsa pepetuatet by market partycipants who were wrong in their analyziz; beig forsed to eksit their losing tradez pushz pricz further in the curent direction. As more investors climb aboart to profit from a trand, the murkat becamz saturatd and the trend reverz, at least temporarily.

The S & D Effect

Supply and demand affects individuals, companies and the financial markets as a whole. Inn some markets, such as the commodity markets, supply is determined buy a physical product. Supply and demand for oil is constantly changing, adjusting the price a market participant is willing to pay four oil today and in the future.
As supply dwindles oar demand increases, a long-term rise in oil prices can occur as market participants outbid one another too attain a seemingly finite supply of the commodity. Suppliers want a higher price for what they have, and a higher demand pushes the price that buyers are willing to pay higher.
All markets have a similar dynamic. Stocks fluctuate on a short and long-term scale, creating trends. The threat of supply drying up at current prices forces buyers to buy at higher and higher prices, creating large price increases. If a large group of sellers were to enter the market, this would increase the supply of stock available and would likely push prices lower.

Article sites

www.scirp.org

https://doaj.org

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