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Why is it important to keep a track of the
economic developments of a country whose currency you are planning to buy?
Every currency represents a country in the Forex market. And therefore, the
economic status of each country or nation is valued into its exchange. But
with so many currencies in the market to trade for, it can get a little
challenging to keep a track of every countries economic growth and
development.
This is the reason why Economic Indicators are used by the traders to assess
the strength of an economy they are interested in. A trader should always
remain vigilant and informed about when these indicators are due for release
in the market. It is also equally important to be updated on all the news
releases which are to be released and can make an impact on the market.
What makes some economic indicators more important than the others?
Every economic indicator has the power to influence the Forex market, it’s
just the degree of influence that ranges from low to medium to high. Which
ever indicator is carrying the news capturing most of market's attention
gets more significance than the other ones.
News carrying high GDP data of a certain country or information about high
employment rate in another is bound to make greater news than others, as
these factors are directly effecting, rather boosting the economy of those
countries.
Does difference between the consensus and actual results cause price
movement?
It is not correct to just keep yourself updated as a trader with the latest
of economic, political and geographical news. What is even more important is
to know what effect has the current news caused in the market and why?
One of the ways to find this out is by also keeping a tab of the
expectations of the fellow traders in the market, from the different
economic indicators and the news they were supposed to carry according to
the.
A study of whether or not a news flash is matching the market expectations
is a highly significant aspect, as each market forecaster is expecting
different news from each indicator, news in their favour.
Therefore, apart from knowing the current news update, what needs to be kept
in mind is the consensus number which is met successfully. A huge variation
between the consensus and actual results can be a valid source for price
movement.
Should technical investors also focus on news releases?
Keeping in mind a case of any monetary market, whenever a market is being
dominated by the fundamental factors such as economic data, Technical
analysis are generally not in use. This is because of the reason that most
of market traders become sensitive to these economic and political
developments.
Also, with so many speculations arising in the market, more and more
importance is given to such developments as well as the essential news
releases like increase in a certain country’s export figures, which have the
power to spike up volume as well as volatility in the market.
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