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    4 Factors That Shape Market Trends

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    April Ann Diwa Abadilla
    This document discusses 4 major factors that shape market trends: government policies, international transactions, speculation and expectations, and supply and demand. It explains how each factor can influence trends in both the short-term and long-term. Government policies like interest rates and spending can affect investment flows. The flow of funds between countries impacts economies and currencies. Speculation and expectations from consumers, investors and politicians can drive market movements. Finally, changes in supply and demand push and pull prices up and down. All of these interrelated factors collectively create trends in the financial markets over time.

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    4 Factors That Shape Market Trends

    Uploaded by

    April Ann Diwa Abadilla
    393 views2 pages
    This document discusses 4 major factors that shape market trends: government policies, international transactions, speculation and expectations, and supply and demand. It explains how each factor can influence trends in both the short-term and long-term. Government policies like interest rates and spending can affect investment flows. The flow of funds between countries impacts economies and currencies. Speculation and expectations from consumers, investors and politicians can drive market movements. Finally, changes in supply and demand push and pull prices up and down. All of these interrelated factors collectively create trends in the financial markets over time.

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    This document discusses 4 major factors that shape market trends: government policies, international transactions, speculation and expectations, and supply and demand. It explains how each factor can influence trends in both the short-term and long-term. Government policies like interest rates and spending can affect investment flows. The flow of funds between countries impacts economies and currencies. Speculation and expectations from consumers, investors and politicians can drive market movements. Finally, changes in supply and demand push and pull prices up and down. All of these interrelated factors collectively create trends in the financial markets over time.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    393 views2 pages

    4 Factors That Shape Market Trends

    Uploaded by

    April Ann Diwa Abadilla
    This document discusses 4 major factors that shape market trends: government policies, international transactions, speculation and expectations, and supply and demand. It explains how each factor can influence trends in both the short-term and long-term. Government policies like interest rates and spending can affect investment flows. The flow of funds between countries impacts economies and currencies. Speculation and expectations from consumers, investors and politicians can drive market movements. Finally, changes in supply and demand push and pull prices up and down. All of these interrelated factors collectively create trends in the financial markets over time.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    4 Factors That Shape Market Trends

    Trends are what allow traders and investors to capture profits. Whether on a short- or long-term
    time frame, in an overall trending market or a range of environment, the flow from one price to
    another is what creates profits and losses. 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.
    Major Market Forces
    Learning how these major factors shape trends over the long term can provide insight into how
    future trends may occur. Here are the four major factors:
    Government
    Government holds much sway over the free markets. The fiscal and monetary policies that
    governments and their central banks put in place have a profound effect on the financial
    marketplace. By increasing and decreasing interest rates, the U.S. Federal Reserve can effectively
    slow or attempt to speed up growth within the country. This is called monetary policy. If
    government spending increases or contracts, this is known as fiscal policy and can be used to
    help ease unemployment and/or stabilize prices. By altering interest rates and the amount of
    dollars available on the open market, governments can change how much investment flows into
    and out of the country.
    International Transactions
    The flow of funds between countries effects the strength of a country's economy and its currency.
    The more money that is leaving a country, the weaker the country's economy and currency.
    Countries that predominantly export, whether 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. Consumers, investors and
    politicians all hold different views about where they think the economy will go in the future and
    that effects how they act today. 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.
    These factors can cause both short- and long-term fluctuations in the market, but it is also
    important to understand how all these elements come together to create trends. While all of
    these major factors are categorically different, they are closely linked to one another.
    Government mandates can effect international transactions, which play a role in speculation and
    changes in supply and demand can play a role in each of these other factors.
    Formative Test

    What is the difference between a trend and a fad? Have your answer through the acronym:

    T-

    R-

    E-

    N-

    D-

    F-

    A-

    D-

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