Economic Indicators

[voodooxx]

I realize there are many sights displaying info on various indicators, the importance of each, etc., and I realize different indicators are important at different times according to what the market and fed are keying in on. But...can someone who is a current active currency trader give me their top five market movers that in their opinion work most of the time?

Thanks!

[MickMason]

You want to catch those big moves, huh? 100pips in 15 seconds! If you do that with BIG leverage you'll be rich! If you could borrow a few thousand, get 400:1....(tap, tap, tap)...by this time next year (tap, tap, tap)....$3,824,932 for working 10 minutes a month

Great plan, only it don't work.

The short-term impact of fundamentals on the FX market is all about surprise, the unexpected rate hike or NFP numbers will see the kind of moves you're looking to exploit, the bigger the surprise, the bigger the move. The only problem is you won't know the reaction until it's too late!

Unless you're an economic analyst who fully understands the implications of released data (and even the well-respected experts get it wrong sometimes), have a lightening fast news feed and an even faster finger, and of course a broker who gives money away and lets you in, you're best staying right away from 8.30am on Thursdays!

As a novice you want to look for nice steady returns, trade non-volatile markets, follow technicals with a plan and tight money management, it's boring and can be hard work and a lot of hours for sometimes little return but in the long run you will survive and go on to make some decent money. Gambling is best kept in the casino or on the race track!


Mick

[Gamma_Jammer]

Voodooxx - you could do worse than listen to Mick - he's clearly talking a lot of sense. And in essence you know the answer yourself - you even included it on your post. The impact of these economic releases is tainted to a huge extent by what the FX market is keying on from week to week (and sometimes from day to day).

And it gets worse. In the interbank market, rumours will typically start a day or so before a major release. On the morning (London time) of a major US release there can typically be between 2 and 5 serious rumours circulating by the time you get to lunchtime. And obviously, if theyre from credible sources they will affect the price action to a certain extent. So sometimes you can get a much greater reaction post release than you would expect (if all the rumours were rubbish) and sometimes you get hardly any reaction at all (if everyone has already bet on a strong number for example). Sometimes this can even result on a dollar decline on strong US numbers (if for example all the interbank traders that loaded up on the greenback in the morning figure that the follow through is going to be pretty limited and take their profit right away.

And it's actually even more complicated than that. Many releases are accompanied by breakdowns to the data, and revisions to the previous release. Even a good economist, calling out reccomendations in real time to the spot desk, has to be on top of his/her game to keep up with this. And these guys have bloomberg terminals giving the data to them near instantanaeously. Something you simply dont have access to unless you're in a bank (or have a lot of money).

It doesn't mean you'll never make money over the numbers, it simply means its much more of a lottery than you think, so if you want to stay in the game longer than a week, BE VERY CAREFUL. If you really want to try and take advantage of these mad afternoons in NY, I would advise trying to get a feel for market positioning long/ short and try and work out what move will hurt the most people. Then, trade on a break when the big stops get hit AFTER the numbers.

Good luck

[eternalfuture]

voodooxx,

So, want to "fire and forget" with economic figures, eh?

Possible, but not easy. Sometimes, it involves luck. Even if you're an economist, interpreting the possible impact of a data release, you might still end up on the wrong side.

Example: non-farm payroll increase in May, which was reported in June was absolutely, should've been dollar supportive. Yet look what happened that day. Dollar got bruised. Infact, May data was even better than the ones in March and April (since it contained upward revisions of the previous two months data).

So, anyone following the by-the-book interpretation would've crushed at that time. Do you know what people think about the data that time? According to financial news, the reaction differed compared to the "what-should've-been" because there's another thing to worry about: inflation and the aggressive tightening (which could strangle the economy in the long-run), and of course, that "already priced in" or "good, but not good enough, we want more" mantras.

Just focus on unexpected events, whether technicals (the break of key technical supports/resistances) or fundamentals.

That's just what I think, though. Others may differ.

Good luck!

[darmasdt]

Originally posted by eternalfuture
Just focus on unexpected events, whether technicals (the break of key technical supports/resistances) or fundamentals.

Great!.
Your experience make you able to draw this golden rule. So the next step is to make sure we know what is the expectation of the market, and what happen when the number released or any particular 'expected to hold' support/resistence levels are broken.. Am I rite?

[Baruch]

Originally posted by eternalfuture
voodooxx,

So, want to "fire and forget" with economic figures, eh?

Possible, but not easy. Sometimes, it involves luck. Even if you're an economist, interpreting the possible impact of a data release, you might still end up on the wrong side.

Example: non-farm payroll increase in May, which was reported in June was absolutely, should've been dollar supportive. Yet look what happened that day. Dollar got bruised. Infact, May data was even better than the ones in March and April (since it contained upward revisions of the previous two months data).

So, anyone following the by-the-book interpretation would've crushed at that time. Do you know what people think about the data that time? According to financial news, the reaction differed compared to the "what-should've-been" because there's another thing to worry about: inflation and the aggressive tightening (which could strangle the economy in the long-run), and of course, that "already priced in" or "good, but not good enough, we want more" mantras.

Just focus on unexpected events, whether technicals (the break of key technical supports/resistances) or fundamentals.

That's just what I think, though. Others may differ.

Good luck!

Yeah, but what makes those tecknical breaks of support/resistance? The fundamentals. The technical indicators are lagging - the fundamental indicators are leading.

[mindgame]

Originally posted by eternalfuture
voodooxx,

So, want to "fire and forget" with economic figures, eh?

Possible, but not easy. Sometimes, it involves luck. Even if you're an economist, interpreting the possible impact of a data release, you might still end up on the wrong side.

Example: non-farm payroll increase in May, which was reported in June was absolutely, should've been dollar supportive. Yet look what happened that day. Dollar got bruised. Infact, May data was even better than the ones in March and April (since it contained upward revisions of the previous two months data).

So, anyone following the by-the-book interpretation would've crushed at that time. Do you know what people think about the data that time? According to financial news, the reaction differed compared to the "what-should've-been" because there's another thing to worry about: inflation and the aggressive tightening (which could strangle the economy in the long-run), and of course, that "already priced in" or "good, but not good enough, we want more" mantras.

Just focus on unexpected events, whether technicals (the break of key technical supports/resistances) or fundamentals.

That's just what I think, though. Others may differ.

Good luck!

It's all about expectations and positioning.

[Baruch]

Originally posted by mindgame



It's all about expectations and positioning.

Yeah, and money flow.