Forex Trading Daily Forecast EUR/USD

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PARTICIPANTS IN THE MARKET OF SHARES AND CFD

Participants-stock-market-CFD

Market shares and CFD face so many market participants in one place. All these people (traders, speculators and others.) should be aware of the forces of supply and demand, if they want to survive and make a profit. Each participant has his own plan and vision. Some of them look for a quick profit while others look for not so big profits but for a long time. Some may invest much money while others have few resources that are enough to cover the minimum in the account. It is impossible to understand what happens in the heads of all traders. But the overall perceived understanding of their motivation can help you to forecast the development of the market (the direction of movement) and you can take advantage of it. And this is the key to get more profit. 

For purposes of this discussion we will divide the main market participants into two groups:

Institutional investors as a whole are professionals. It is typical for them to manage large sums of money and participate in mutual, hedge, pension and other funds. They are very influential and therefore you should focus on them when you try to understand and predict the market.

Individual investors are people who do not have large sums of money or solid experience and they intend to spend an additional income which should increase their welfare. This group should take a less prominent role in your analysis.

Institutional investors move the markets. They have a lot of money in their portfolios and have a great impact on the market and its prices. Their ability to buy shares in large quantities will surely move prices more than conventional retailers ever could. Institutional investors follow mainly strict orders, follow certain rules of trade and invest in specific types of assets. Some institutional investors operate only with funds that invest in many companies with large capitalization (market capitalization exceeding $ 5 billion). At the same time other institutional investors stick to technology funds and buy shares of technology-based companies like Microsoft or Google. Speaking of market capitalization it is an expression of the number of issued shares multiplied by the share price. For example, Company X has 1 million shares market price $ 100 which gives the company a market capitalization of $ 100 million. Predicting what will make the institutional traders with their portfolios allows you to specify how their actions will affect to the share prices.  You would hardly know what exactly the institutional traders make. However, if you know what they see and what decisions they make you can find out where the market would have gone.

 

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