The truth about market dynamics that financial media never mentions
How the markets used to reactNot so long ago, stocks were influenced by company performance, revenue, and innovation. When a new product hit the market and started trending, big investors would jump on the money train and ride the rise. Likewise, when a product failed, investors would jump ship.
Indices and currencies would often respond to economic reports. If a nation’s GDP was trending high and jobless claims were falling, the nation’s currency would be perceived as a strong investment. That’s the Wikipedia version, but reality is far from that.
While those mechanisms still play a role in the financial world, there are less obvious influences pushing and pulling the markets in different directions, and when you recognize them, those indecisive moments you occasionally have while forecasting will start to make more sense.
So what is this untold dynamic that can change your analysis habits?
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