Ever thought about what factors move the market? How much money is needed to move 1pip? How many lots does it take to move the market? Are you interested in doing an in-depth study of price movement?
If so, this post is for you. After reading this, you can make a rough estimation of how much money you may need to move the market.
Remember you as a retail trader can’t move the market alone. It requires the huge participation of market makers and financial institutions.
Let’s read: How much money does it take to move the market?
The answer to this question is different for the stock market and forex market. For the stock market, the amount you need to move on varies country-wise due to tax. For the forex market, you may need 10% of the daily traded amount to move the currency pair. For example, the forex market trades about $5.3 billion daily. To move the market you may need 10% of this.
It also depends on what currency pair you want to move and the time of the trade. The right amount is not easy to guess.
However, you can make a rough estimation of about 10% of traded volume to move on the market in a predictable direction.
What Moves The Market
In simple words, it’s money that moves the market. Macroeconomics factors also contribute to stock market movements such as inflation, interest rate, unemployment, and economic growth. Moreover, politics, market psychology, and natural disasters can also affect market movement.
Money is the primary factor that initiates buying and selling. Other secondary factors affect buying and selling power of market participants.
When there is no money, there will be no activity, no buying, and no selling in the market. Whether it’s the stock market or forex market, money is the major factor.
Time is also a considerable factor. In forex, the same pair may need fewer amounts to move 30 ticks when the market opens after the weekend. Because it’s traded in these hours in Australia and New Zealand.
How Much Money Moves The Forex Market
It’s not easy to gather the data of whole world markets and calculate the exact amount. Though you can make a rough estimation to understand the role of money in the moving market.
Its market makers actually distribute prices where they want the market to move. The role of the retail trader is very little in deciding price movement.
Let’s talk about the forex market. How much money moves the forex market?
The amount you need to move the forex market depends mainly on two factors. The first one is the time of trade and the second is the currency pair you want to move.
Moving EUR USD 30 ticks at 8.30 pm would take 2-3 billion as it is a hot time to trade this pair in Europe and North America. The same pair may need less amount to move 30 ticks when the market opens after the weekend. Because it’s traded in these hours in Australia and Newzealand.
How Much Money Does It Take to Move the Market by 1 pip?
The money needed to move the market by 1 pip depends on the currency pair you choose. Consider the calculation:
10,000 (units) * 0.0001 (one pip) = $ 1 per pip
For EURUSD, It means for BUY and SELL position of 10,000, the pair moves 0.0001 or one pip, you may lose or win $1. Or you may need $1 to move the market by 1 pip. In other words, you may need to move 100pips if you want to earn $100 out of the EURUSD pair.
This amount varies from currency to currency. For EURUSD, it is calculated in dollar per PIP, but for currency like EUR/GBP the currency value will be in Pound Sterling
How many lots does it take to move the market?
How many lot sizes does it take to move the market of forex or futures?
It mainly depends on liquidity in the market. There are certain points in the market when even a single lot can move it. But there are points of price movement, when bulls and bears are fighting, even 10,000 lots won’t move the market.
It all depends on the supply and demand chain. When there is no buyer in the market, even a single lot is enough to move the market.
One more, the number of lots you fill is also dependent on your broker’s risk exposure. It varies from broker to broker. Most brokers will not allow filling more than 50 lots at once.
So, it’s difficult to decide how many lots it takes to move the market. The market is a big entity and it requires a lot of calculation or data to find the exact lot size needed to move the market.
Frequently Asked Questions
How do market makers move the price?
Market makers move the price by creating buying and selling activity in the market. They tend to buy shares at a lower price and sell them at a higher price.
When more volumes of shares are traded, the market makes more money. Sometimes market makers are also found manipulating the price.
What moves the price of the stock?
Its supply and demand chain determines the price of the stock. The price of stock changes daily with certain macroeconomic factors and political factors.
If the demand for a stock is high, more and more people are interested in buying it. This is the moment when the price moves up.
What happens if the stock price goes to zero
Stock can lose all its value and become zero. This happens when an investor loses his whole investment. It is a very complicated situation for an investor or company when their stock hits zero. All of its shares become worthless.
It’s difficult to count the exact amount that the market needs to move on. However, you can make a rough estimation through daily transactions.
Again it is difficult to count the total volume traded daily in banks. When the market moves on, activity is generated in the financial market. More and more investors and participants take part in this activity. As a result, price moves in a certain direction.
So you can say money is the backbone of the financial market.