Borders seem to be more symbolic now than they are barriers to trade like they were years ago.
Trends are what allow traders and investors to capture profits. There are four major factors that cause both long-term trends and short-term fluctuations.
These factors are government, international transactions, speculation and expectation, and supply and demand.
Here are the four major factors: By increasing and decreasing interest ratesthe U. Federal Reserve can effectively slow or attempt to speed up growth within the country. This is called monetary policy. By altering interest rates and the amount of dollars available on the open marketgovernments can change how much investment flows into and out of the country.
Learn more in our Federal Reserve Tutorial. Countries that predominantly exportwhether physical goods or services, are continually bringing money into their countries. This money can then be reinvested and can stimulate the financial markets within those countries.
Speculation and Expectation Speculation and expectation are integral parts of the financial system. Expectation of future action is dependent on current acts and shapes both current and future trends. Sentiment indicators are commonly used to gauge how certain groups are feeling about the current economy.
Analysis of these indicators as well as other forms of fundamental and technical analysis can create a bias or expectation of future price rates and trend direction. Supply and Demand Supply and demand for products, services, currencies and other investments creates a push-pull dynamic in prices.
Prices and rates change as supply or demand changes. If something is in demand and supply begins to shrink, prices will rise. If supply increases beyond current demand, prices will fall. If supply is relatively stable, prices can fluctuate higher and lower as demand increases or decreases.
While all of these major factors are categorically different, they are closely linked to one another. Government news releases, such as proposed changes in spending or tax policy, as well as Federal Reserve decisions to change or maintain interest rates can also have a dramatic effect on long term trends.
The lowering of interest rates and taxes can encourage spending and economic growth. This in turn has a tendency to push market prices higher.
In the short termthese 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 may develop as investors fully grasp and absorb what the impact of the information means for the markets.
A high demand for a currency means that currency will rise relative to other currencies. The Participant Effect The analysis and resultant positions taken by traders and investors based on the information they receive about government policy and international transactions create speculation as to where prices will move.
When enough people agree on one direction, the market enters into a trend that could sustain itself for many years. Trends are also perpetuated by market participants who were wrong in their analysis.
As more investors climb aboard to profit from a trend, the market becomes saturated and the trend reversesat least temporarily. In some markets, such as commoditiessupply is determined by a physical product.
Supply and demand for oil is constantly changing, adjusting the price a market participant is willing to pay for oil today and in the future. As supply dwindles or demand increases, a long-term rise in oil prices can occur as market participants outbid one another to attain a seemingly finite supply of the commodity.The global marketplace is diverse.
While diversity provides opportunity, it also provides challenges. In this lesson, you'll learn about the forces that affect trade in the global market. Aug 29, · There is typically a drop-off in trading (meaning the volume of transaction) at noon, as most of the major news events are out in the market.
During this lull, stock prices can often lose some ground. Quick Answer. Some of the environmental factors affecting global and domestic marketing decisions include: social environment, economic environment, technological environment, competitive environment, cultural environment, political/legal environment, and .
In order to analyze cryptocurrency market fundamentals, more global factors should be taken into account over the long term, such as legal . Nov 21, · At the same time growth is slowing in Asia and world trade is likely to grow at a slower rate than GDP.
It is a recovery without a real upturn in the business cycle, threatened by a range of factors. One: the year of political populism? could become a year marked by political populism. The global marketplace is diverse.
While diversity provides opportunity, it also provides challenges. In this lesson, you'll learn about the forces that affect trade in .