The currency market, just like any other, is motivated by supply and demand. So, by truly understanding the concept of supply and demand and why it's so important in the currency market will allow you to be successful in your journey. Having a good grasp on supply and demand will make all the difference in your trading career because it will grant the ability to filter through the pile of daily news that will only distract you, and instead focus on the news that will help that will benefit your career.
So the question still stands, how do supply and demand affect the Forex market? Well, you first need to understand that supply is the measure of how much a certain asset is available at any one time. The value of the asset or goods, a currency in this case, is directly linked to its supply. As the supply of a currency increases, the currency becomes less valuable. Therefore, as the supply of a currency decreases, the currency becomes more valuable. When discussing demand which is the measure of how much a particular commodity people want at any one time, demand for a currency has the opposite effect for supply. As the demand for a currency increases, the currency becomes more valuable, and vice versa.
The key to being successful in the Forex market is being able to determine where there's increasing supply and where there is an increasing demand in the market. If you can anticipate that and figure it out, you're well on your way to being successful in the market. To put this more simply, price moves due to supply and demand imbalances at the market at any given time. Once you grasp this basic concept, you can view the market in a more logical lens.
I suggest drawing the supply and demand areas on the chart because this way you will be visually aware of where the zones are and be prepared to trade when the price reaches the appropriate supply and demand zones. With Apiary Fund's reviews of the currency market, I've learned to always chalk up your chart. The more you create visually with indicators to help you achieve trading success, the better. The Apiary Fund encourages you to use as many tools at your disposal because you're then setting yourself up for success in the market.