DislikedCan someone explain the following to me as i am new to forex and am having trouble understanding.
Lets say the price drops 100 pips on the GBP/USD in 10 minutes.
Now the answer to why this happened is because there were more sellers than buyers , is that assumption correct and if not what is the correct answer ?
Now the second question i have is.... for every seller there needs to be a buyer so how can there ever be more sellers than buyers in the market at any one time to make the price drop ?Ignored
You're right, there were more sellers wanting to sell than there were buyers wanting to buy, and you're right again - for every seller there has to be a buyer.....but at a price.
It's a bit more complex than this but the simple answer is supply and demand. If everyone wants to buy something it becomes more expensive, ie sellers want more money for it because they know lots of people want to buy it, therefore the price of the item (in this case a currency) goes up. The reverse is true for selling, if everyone want to sell something then they have to offer it at a price which will attract a buyer, so price goes down.
So when someone says there were "more sellers than buyers" what they actually mean is there were more people wanting to sell than there were buyers wanting to buy.