Tips on Using Economic Data in Forex Trading

In a previous post we underlined the importance of knowing exactly when each set of economic data is due in the country whose currency you are trading. Here are some other points you need to be aware of:

• Make sure you are clear which aspect of the country's economy is being revealed in the figures - e.g. which measure the growth of the economy (GDP), inflation(PPI, CPI), employment (non-farm payrolls) etc.
• Understand which economic indicators have the greatest potential to move markets.
• Be clear which economic issues are the most crucial for the country you are dealing with. For instance, if inflation is a more important issue than economic growth in that country, inflation figures will have more effect on the market than figures that show GDP.
• This point is very crucial. Remember that the numerical value of an indicator is not as important as the extent to which the figures have been anticipated by the market. The market expectations for all releases are posted on various sources on the Internet and you need to put these on your calendar along with the release dates.

In the next post we will look at further hints on using economic indicators. Remember that Easy-Forex has lots of very helpful information in this area for those who are trading with them, and go into much more detail than is possible here. Also don't forget the information available at http://www.bizwrite.co.uk/Forex/forexindex.html