If you have no clue about the market movers and want to improve your trades using this technique, you are at the right place. Whether you are new or already invested plenty of time in trading and need some tips for using market movers, this article is for you. Even though there aren’t any proper rules and techniques to win the trades, observing market movers can be of great help. So, let us get started by understanding the concept of market movers.
What are Market Movers?
Market movers are the news that influences the volatility of the market. These types of news direct the market in a direction by increasing the short-term volatility. Before the publication of the market movers, the market has a low volatility rate. However, as the traders identify the market mover, they increase their trading activities.
When the Bollinger band indicator identifies the market volatility as low, it’s time to wait for the green signal. The Bollinger band indicator has a classical structure, and it forms a funnel. The upper and lower band collectively indicates the shrinkage and expansion of the funnel. This structure on the indicator specifies the compression in the market.
As a trader, you can take advantage of this condition through the break-out technique. This technique signifies the opening of the position. What you need to do is to observe the indicator and match the outer bands.
Improve Your Trading Using Market Movers
Here are some techniques you should follow to get the most out of market movers:
1. Understand the Type of Market Movers
Keep in mind that market movers do not only represent the positive movement in the market. That’s where many traders make mistakes. The movers can be of two types, which include positive market movers and negative market movers.
A positive market mover affects the upside of the market. However, the negative market movers will influence the downside. Sometimes, you can easily identify the type of market movers, but in some instances, you need to observe the impact on the market.
Follow the influencers related to your market, as they will update the consequences of specific market movers. Many experts also anticipate the market movers before the actual event, referred to as pre-market movers. Following the analysis of these experts will help you make the right decision at the right time.
2. Keep an Eye on Economic Market Movers
You can identify the economic market movers through economic indicators. These indicators contain statistics and data about the performance of a certain market. The fluctuation in the economic indicators may occur due to various factors, including GDP, public deficit, inflation, and many other economic factors.
For instance, the increase in demand and supply of national goods can affect the selling and buying in the trading market. You need to closely observe the economic indicator and make a potential decision. Understanding the economic conditions takes time. Therefore, you need to keep patience and keep an eye on the factors.
3. Observe the Seasonal Market Movers
Seasonality is the foreseen change in the market observed every year in the same season. There is no guaranteed pattern for an event to repeat itself. But, when the pattern repeats for 80% to 90% of the time, it becomes a seasonal market mover. For instance, the period from November to April is the best time to invest in the SP500 index. On the other hand, you will notice a weak market in the stock market indices during summers.
4. Wait for the Central Bank Decision
The Central Bank Decisions are incredible market movers. For that, you need to go through the quarterly meetings of the central bank. In these meetings, the central bank decides the interest rates. When there is an increase in the rates, it indicates that the value of a currency will rise for the short term. Therefore, this is a good time to purchase its currency. However, if the interest rates decline, it’s time to sell that currency.
5. Analyze the Political Movements
Political events and movements have a great impact on the trading world. You can easily understand these market movers and make profitable trading decisions. For instance, if a country is going through a political election, you will notice a fluctuation in the market. Furthermore, the results of the election can also influence the movement in the market. For instance, during the last U.S. election, the financial markets were highly volatile before and after the results.
To keep it simple, market movers are the event or factors that influence the financial and economic indicators. This encourages the traders to buy and sell the related instruments. Remember that different trading markets have different market movers. The market movers can influence the control trends and price of the instruments. There isn’t any specific strategy that you need to follow, but observing the factors that influence the market will help you make better decisions. Furthermore, you need to follow the influencers and experts and keep a daily check on them. Sometimes exchanges attract traders through market movers.