What Drives Prices?

Every financial market, from forex to futures, boils down to one mechanism: ** buyers and sellers reaching agreement **. When you look at a chart, you are looking at the history of those agreements — the price at which someone was willing to buy and someone else was willing to sell.

Supply, demand, and urgency

Prices move because of urgency imbalance. If eager buyers outnumber eager sellers, buyers must offer more to get filled, and price rises until sellers appear. The reverse pushes price down. News, economic data, and central-bank decisions don't move markets directly — they change how urgent participants feel, which then changes the flow of orders.

Two properties of markets follow directly from this:

• Liquidity — how much can be traded without moving the price. Major currency pairs like EUR/USD are among the most liquid instruments in the world; a retail-sized order is a drop in the ocean.
• Volatility — how fast prices change. More disagreement (or more urgency) means bigger swings.

Why new traders care

Beginners often search for the "reason" behind every move. Professionals think in terms of order flow and odds: what are other participants incentivized to do, and what does the price action suggest they are already doing?

In the Fundezy simulator you can watch this live. Open the Trade Terminal, pick EUR/USD, and just observe the price ticking for a few minutes. Notice it never moves in a straight line — each tick is a small negotiation.

The market is not fair or unfair

A price is not "too high" or "too low" in any absolute sense. It is the current consensus. Trading is the art of forming a view on where the consensus will drift, while controlling what happens when you are wrong. That second half — controlling losses — is covered in Course 03, and it matters more than any prediction you will ever make.

Key takeaways

1. Price is the output of buyer–seller negotiations; urgency imbalance moves it.
2. Liquidity dampens movement; volatility reflects disagreement.
3. You never need to know why — you need a plan for if.

By the numbers

Global foreign-exchange turnover averaged $7.5 trillion per day in April 2022 (BIS Triennial Central Bank Survey) — every dollar of it moved by buyers and sellers reaching agreement. The US dollar sat on one side of 88% of all trades in that survey, and EUR/USD alone accounted for about 23% of daily turnover: the deepest ongoing negotiation in the world.