Central Banks | Learn how they affect the market movements

Central banks

Central Banks

Central Banks

Central banks are some of the most influential players on the binary options market and you always need to keep a close eye on them if you want to stay on top of things and be able to make the right prediction. If you’re still new to this kind of trading, the importance of keeping track of these institutions may elude you, so we will quickly go through the main reasons why monitoring the moves of these banks should be your top priority. Our experts will keep things nice and simple here, meaning that absolutely anyone can read this article and learn something new. Without any further ado, let’s get started!

Central Banks | Why are they important?

The reason central banks are so important is the fact that they determine a country’s monetary policy. Every country has its own central bank, so you want to keep track of the central banks behind the most influential currencies in the world, but we’ll get to that a bit later. Each of these institutions holds meetings on regular basis and the conclusions reached there are some of the most important Causes of Market Movements. You can always expect the market to react after these meetings, so you should adjust your strategy accordingly. Your Economic Calendar can be of great help to you here because it shows you when the next meeting is scheduled to take place, but it also contains info on other important events.

Central Banks | Which ones to follow?

So, which central banks should you keep track of no matter what? Well, the Federal Reserve (also known as the Fed) is certainly a good choice because this is the central monetary institution of the United States and therefore the institution responsible for the USD. European Central Bank (ECB) is responsible for the euro, Bank of England for the GBP and Bank of Japan for the yen. They all have different meeting regimes, so find out when the next session is and plan accordingly. This doesn’t just apply for these currencies – no matter which currency you want to trade, central banks are the best source of information about it, especially if you’re still a beginner. After a while, when you figure out how things work and what can influence a currency’s value, you will be able to predict decisions of central banks and react more quickly on the market.

Central Banks | Conclusion

And that’s why central banks are important for traders. Their decisions are what fuels market changes and causes currencies to oscillate. Once you get a firm grasp on their policy, you will be able to predict how the market will develop and make much more accurate predictions. Obviously, central banks behind the most influential currencies should be watched closely, but no matter which currency you trade, the country’s central bank is what you want to keep your eye one. Find out when the bank that interests you has a meeting and prepare yourself.    

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FURTHER READING:

1. Stocks For The Long Run: The Definitive Guide to Financial Market Returns and Long-Term Investment Strategies (J. J. Siegel, 1994)
2. Irrational Exuberance (R. Shiller, 2000)
3. Midas Technical Analysis: A VWAP Approach To Trading And Investing In Today’s Markets (A. Coles, D. Hawkins, 2011)
4. Binary Options Trading Strategies (Alex Nekritin – 2012)
5. Liar’s Poker (M. Lewis, 2010)

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Author: Ben Prescott
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