how does the market work?

Hi traders, I still dont understand. Why is price moving? Let mi elaborate it:

If i trade EUR/USD with some ECN broker and I buy 1 lot, the order is executed only when on the other side will be some trader who want to sell 1 lot and broker couple them, am i right? So why is price moving? On the chart there should be only horizontal line...

or?

So far, i have thought that price is moving for example up about 1 pip, becauselot of people is buying EUR/USD and broker dont couple them with other side, because there are no people which are selling EUR/USD hence the market is moving up, if there are lot of sellers and lack of buyers, broker doesnt couple them and market is heading down? or how does it work?

Thanks in advance, and sorry for my english ;-)

Im not the best qualified to explain exactly what happens, but you have to remember that the forex market is extremely liquid, and there is always some one else willing to take the opposite side of the trade. Its not leke a thinly traded stock where you may struggle to take trades.

If there were more buyers than sellers then price has to go up to encourage new sellers to meet the strong demand. The more that demand and supply are out of bablance the faster price moves.

Someone else will probably expain it better.

you need to understand the difference between limit/stop orders and market orders, and the way the two affect each other and the resulting prices.

anyone 'on the books' with prices waiting to be hit will be sitting there forever until someone comes along and either adjusts their pending order to match the currently highest bid price or lowest ask price in which case their order is basically the same as a market order, or if some random person who isn't already waiting on the books comes along and simply says buy or sell at whatever the current price is then this will also affect the book and the pricing.

example : if you have 100 different 1lot orders sitting on the bid at $1 in the order book and this is the highest bid, then what happens if 100 x 1lot sell orders hit the market? the bid price level at $1 is all filled and now gone, so the next lowest price is left on the book. this creates a void that will either cause sellers to chase the price downward and alter their sells to be closer to the new lower bid in which case the bid and ask price drops, or sellers will hold their ground and so other buyers will alter their orders and move their bids higher closer to the steadfast sellers ask price in which case the prices return to where they were a moment ago, or the sellers could for some reason decide to raise the price of their sell orders and this creates an even wider void (spread) between the bid and ask.

let the tug of war ensue.

the same in reverse for ask orders getting eroded etc etc. it's all very basic stuff. if you watch an illiquid penny stock you can see it sit there all day with no change in price and a relatively large spread while bidders and sellers sit there hoping their orders get hit but with no outside interest in the stock. then take a liquid stock and you can watch all day as the prices move around similar to how we watch forex prices.

same with watching the asian session versus the london versus the US session. they each have differing amounts of liquidity and therefore differing amounts of volatility and momentum. you are either on the book waiting to be hit, or you are off the book and hitting whatever the current prices are. what happens to the bid/ask is the result of prices being hit, or prices on the book being altered to other prices by the people sitting on the book.

Thanks, is there another opinion? why is price moving

You do realize that there are millions of people trading all around the world at every moment of the day, yes?

Market moves based on intent and objectives of the big institutional traders

At Times market is sort of random and other times market is planned to the tick.
During random times small money moves the market and that makes things choatic and not easy to trade

During the flow of the big money. market is tradeble if you understand structure.
VSA helps, but still you will need entry and exit system to time entry due to pullbacks and corrections and size of accts.
but above all Market structure gives boundries to your trading arena.
I 'm no expert on this however I've been trading with structure and MP and VSA.
MP or Market profile is a good way to gauge the market and understand boundries and levels.

FX Profits.

The market is never random. There is always a reason for the movements. We may not be aware of what those reasons are but there is always a reason behind each movement.

Totally agree, but its difficult to trade with small money..
I Prefer trading along side the big boys.

Usually they have more conviction to either side.

my take on random is more of RANGY situation.

the op asked about the mechanics behind the price actually moving around a pip at a time. i gave THE answer, not an opinion, and now we have all of this extra metaphysical metaphorical BS being spun like usual.

why did i bother!

I hear you have a Bicycle for sale & you are asking $50.00 but have not yet had a call.

I'll give you $10.00 for it. How does that sound.
Ask = $50.00
Bid= $10.00 but probably No Trade.
Ask Moves to 40.00
Bid Moves to 20.00 Still 'No Trade'
Ask moves to 30.00
Bid Moves to 30.00. Tada... Trade Posted.

It's about Supply & Demand. {The Volotile Component.}
Perhaps there are hundreds of Bikes For Sale but only 50 people need them.
Perhaps there is only 1 Bike For Sale {Yours} & 100 People want it.

Would that alter your Ask Price?
Watch The Spread. Not just the Difference between Bid & Ask but How did the Spread Change.

Did The Ask Price Climb away from the Bids or did the Bid Price Fall from the Ask.

Bidders Offering Less & Less will entice Sellers to "Negotiate"
Vice Versa on a Bull Run.

Supply Is Hard To Find = Hi Price.
Supply Is overloaded = Lo Price.

Demand Is Hard To Find = Lo Price.
Demand Is overloaded = Hi Price.

Currently, Demand for Security {Flight to Quality. Gold & CHF} is Hi.
When Traders pull thier money from other stuff to Buy Gold they sell the least guaraunteed or weakest to pay the bill.

Hence: IMO I can only assume that Folks are Trading Crosses because they like them or have not yet figured out what is Driving this/these Market/s
That Being: The Global Econommic unstability.

Rant & Anecdote but hope you get something from it.

BMc.
Demand

I totally agree and this reason is more buyers or sellers.