FOREX MEASURES
• Gross Domestic Product (GDP)
• GDP Deflator
• Trade balance
• Unemployment rate
• Non-Farm Payrolls (NFP)
• Average hourly earnings
• Consumer price index (CPI)
• Producer price index (PPI)
• Employment cost index
• Tan Kan, BOJ (Bank of Japan report)
• Business climate index (IFO)
• Humphrey-Hawkins testimony
• Consumer confidence
• Industrial production index
• Capacity utilisation
• Durable goods orders
• Factory orders
• Leading indicators index
• Productivity
• Retail sales
• Confederation of British Industries (CBI)
• Money supply M1, M2, M3
• Institute For Supply Management (ISM)
• Atlanta Fed index
• Average Workweek
• Beige book
• Building permits
• Business Inventories
• Chicago PMI (Purchasing Managers Index)
• Construction spending
• Consumer credit
• Current account (Balance of payments)
• Existing home sales
• Export prices
• Help-Wanted Index
• Housing starts
• Import prices
• Jobless claims
• Michigan consumer sentiment index
• ISM services index
• New Home Sales
• Personal income
• Personal Spending, Consumption
• Philadelphia Fed index
• Real Earnings
• Redbook
• Unit Labour Cost
• Wholesale inventories
• NAPM or PMI (National Association of Purchasing Managers Index)
Forex measures
Macroeconomic performance characterises economic development, indicating economic growth or decline. Based on these measures, price shift trends may be predicted. Thus, it may be said with certainty that publishing of favourable data may lead to considerable and long-term shift in exchange rates. These performance indicators include Nonfarm Payrolls, GDP, Industrial Production, CPI, PPI and a number of other marcoeconomic performance indicators.
The date and time of a specific indicator being published are known in advance. There are so-called calendars of economic indicators and major events in the functioning of some countries (noting specific dates or approximate release time). The market prepares for such events. There are expectations and forecasts on the value of a given indicator and its interpretation.
The release of data may lead to sharp exchange rate fluctuations. Depending on how market participants interpret a given indicator, an exchange rate may swing either way. This swing may either reinforce or adjust an existing trend, or even start a new one. A given outcome depends on several factors: the market situation, the economic situation of countries hosting the currencies, prior expectations and attitudes, and, finally, the value of a given indicator.
THE BEST TIME FOR TRADING
There are no hard-and-fast rules for when to trade, but the following are general guidelines.
Specific currencies
For some currencies, there are preferred trading windows:
• 8:00 - 20:00 is best for British pounds, Swiss francs and Euros
• 01:00 - 06:00 and 13:00 - 20:00 are best for yen (by CET time)
Economic news
Economic news can affect exchange rates, and it’s released according to a calendar. When news is going to be published, you can do the following:
• Place your orders just before the news is released if you want to speculate on it
• Stay out of the market if you want to avoid the effects
Time intervals
When you track the market, you can use different time intervals. Specific codes are used for these intervals, as shown in the table below.
Code Interval
D1 1 day
H4 4 hours
H1 1 hour
M30 30 minutes
M15 15 minutes
M5 5 minutes
D1
There is no best time for D1. However, you should check the new candlestick quickly after an interval ends.
H4
Again, there's no best time. You should check every 4 hours and look for buy and sell signals.
H1, M30, M15 and M5
The best time is when the market is fluctuating the most. This normally happens at the following times:
• 03:00 - 05:00
• 10:30
• 13:00
• 16:00 -19:00 – peaks occur at 16:45 and 18:30
PRICE EFFECT
Forex traders need to know when to cut their losses. This is difficult for inexperienced traders, and they often lose large amounts of money by holding on to unprofitable positions. This is the price effect, and you need to avoid it.
Here's what happens:
• You spend days analysing a currency and decide it should go up
• You're so convinced that you decide to make a major investment
• You wait until the timing is exactly right and invest most of your available funds
• Your order is filled
• The currency starts to go down
• You check if anything has happened that could account for this
• There isn't and you decide to hang on
• The currency goes down further
At this point, the price effect kicks in. The initial drop could have been a blip, and you might have been right to hang on. Now, however, you don't want to lose all your hard work, and you're probably hoping to get your losses back. You can't admit the investment was a mistake, so you keep hanging on and lose the entire amount.
The price effect happens when your emotions overcome your common sense. No matter what your analysis told you, if a currency is dropping, it's dropping, and you need to cut your losses. When you make an investment, decide how much you're willing to lose, and stick to it. Don't let your emotions take over and don't keep chasing losing propositions.
FOREX MARKET DURING CRISIS
The Forex Market and the World Economic Crisis
The recent world economic crisis started in 2008, triggered by a liquidity shortfall in US banks after the collapse of the US housing market. The crisis then spread around the world, thanks to securitisation of sub-prime mortgages. Securitisation is where debt is mixed together and sold on as a new financial instrument.
Securitisation was supposed to reduce risk, but in practice it became impossible to separate good and bad debt and to understand the true exposure. This led to a loss of confidence in exposed banks around the world; some of them had to be bailed out to prevent an economic meltdown.
The global recession which followed caused high unemployment and declines in economic output. While most countries have now returned to anaemic growth, new crises loom. One of the most concerning is eurozone sovereign debt; Ireland, Portugal and Greece have already received massive bailouts, and others such as Spain and Italy are at risk.
Turbulent economic times cause volatility in the forex market:
• Confidence ebbs and wanes with every piece of news
• Panic selling occurs on both fact and rumour
• Central banks pour liquidity into the market to prop up currencies and financial institutions
Forex traders make money when currency values change, so today's economic turbulence is an opportunity for profit. At the same time, market uncertainty creates additional risk:
• Long-term traders are less affected, as short-term variations tend to even out
• Short-term traders need to take particular care to avoid large losses
For forex traders, economic crisis is not a time for poverty, but for creating wealth. Take care, though; you want to end up a winner, not a casualty.
• Gross Domestic Product (GDP)
• GDP Deflator
• Trade balance
• Unemployment rate
• Non-Farm Payrolls (NFP)
• Average hourly earnings
• Consumer price index (CPI)
• Producer price index (PPI)
• Employment cost index
• Tan Kan, BOJ (Bank of Japan report)
• Business climate index (IFO)
• Humphrey-Hawkins testimony
• Consumer confidence
• Industrial production index
• Capacity utilisation
• Durable goods orders
• Factory orders
• Leading indicators index
• Productivity
• Retail sales
• Confederation of British Industries (CBI)
• Money supply M1, M2, M3
• Institute For Supply Management (ISM)
• Atlanta Fed index
• Average Workweek
• Beige book
• Building permits
• Business Inventories
• Chicago PMI (Purchasing Managers Index)
• Construction spending
• Consumer credit
• Current account (Balance of payments)
• Existing home sales
• Export prices
• Help-Wanted Index
• Housing starts
• Import prices
• Jobless claims
• Michigan consumer sentiment index
• ISM services index
• New Home Sales
• Personal income
• Personal Spending, Consumption
• Philadelphia Fed index
• Real Earnings
• Redbook
• Unit Labour Cost
• Wholesale inventories
• NAPM or PMI (National Association of Purchasing Managers Index)
Forex measures
Macroeconomic performance characterises economic development, indicating economic growth or decline. Based on these measures, price shift trends may be predicted. Thus, it may be said with certainty that publishing of favourable data may lead to considerable and long-term shift in exchange rates. These performance indicators include Nonfarm Payrolls, GDP, Industrial Production, CPI, PPI and a number of other marcoeconomic performance indicators.
The date and time of a specific indicator being published are known in advance. There are so-called calendars of economic indicators and major events in the functioning of some countries (noting specific dates or approximate release time). The market prepares for such events. There are expectations and forecasts on the value of a given indicator and its interpretation.
The release of data may lead to sharp exchange rate fluctuations. Depending on how market participants interpret a given indicator, an exchange rate may swing either way. This swing may either reinforce or adjust an existing trend, or even start a new one. A given outcome depends on several factors: the market situation, the economic situation of countries hosting the currencies, prior expectations and attitudes, and, finally, the value of a given indicator.
THE BEST TIME FOR TRADING
There are no hard-and-fast rules for when to trade, but the following are general guidelines.
Specific currencies
For some currencies, there are preferred trading windows:
• 8:00 - 20:00 is best for British pounds, Swiss francs and Euros
• 01:00 - 06:00 and 13:00 - 20:00 are best for yen (by CET time)
Economic news
Economic news can affect exchange rates, and it’s released according to a calendar. When news is going to be published, you can do the following:
• Place your orders just before the news is released if you want to speculate on it
• Stay out of the market if you want to avoid the effects
Time intervals
When you track the market, you can use different time intervals. Specific codes are used for these intervals, as shown in the table below.
Code Interval
D1 1 day
H4 4 hours
H1 1 hour
M30 30 minutes
M15 15 minutes
M5 5 minutes
D1
There is no best time for D1. However, you should check the new candlestick quickly after an interval ends.
H4
Again, there's no best time. You should check every 4 hours and look for buy and sell signals.
H1, M30, M15 and M5
The best time is when the market is fluctuating the most. This normally happens at the following times:
• 03:00 - 05:00
• 10:30
• 13:00
• 16:00 -19:00 – peaks occur at 16:45 and 18:30
PRICE EFFECT
Forex traders need to know when to cut their losses. This is difficult for inexperienced traders, and they often lose large amounts of money by holding on to unprofitable positions. This is the price effect, and you need to avoid it.
Here's what happens:
• You spend days analysing a currency and decide it should go up
• You're so convinced that you decide to make a major investment
• You wait until the timing is exactly right and invest most of your available funds
• Your order is filled
• The currency starts to go down
• You check if anything has happened that could account for this
• There isn't and you decide to hang on
• The currency goes down further
At this point, the price effect kicks in. The initial drop could have been a blip, and you might have been right to hang on. Now, however, you don't want to lose all your hard work, and you're probably hoping to get your losses back. You can't admit the investment was a mistake, so you keep hanging on and lose the entire amount.
The price effect happens when your emotions overcome your common sense. No matter what your analysis told you, if a currency is dropping, it's dropping, and you need to cut your losses. When you make an investment, decide how much you're willing to lose, and stick to it. Don't let your emotions take over and don't keep chasing losing propositions.
FOREX MARKET DURING CRISIS
The Forex Market and the World Economic Crisis
The recent world economic crisis started in 2008, triggered by a liquidity shortfall in US banks after the collapse of the US housing market. The crisis then spread around the world, thanks to securitisation of sub-prime mortgages. Securitisation is where debt is mixed together and sold on as a new financial instrument.
Securitisation was supposed to reduce risk, but in practice it became impossible to separate good and bad debt and to understand the true exposure. This led to a loss of confidence in exposed banks around the world; some of them had to be bailed out to prevent an economic meltdown.
The global recession which followed caused high unemployment and declines in economic output. While most countries have now returned to anaemic growth, new crises loom. One of the most concerning is eurozone sovereign debt; Ireland, Portugal and Greece have already received massive bailouts, and others such as Spain and Italy are at risk.
Turbulent economic times cause volatility in the forex market:
• Confidence ebbs and wanes with every piece of news
• Panic selling occurs on both fact and rumour
• Central banks pour liquidity into the market to prop up currencies and financial institutions
Forex traders make money when currency values change, so today's economic turbulence is an opportunity for profit. At the same time, market uncertainty creates additional risk:
• Long-term traders are less affected, as short-term variations tend to even out
• Short-term traders need to take particular care to avoid large losses
For forex traders, economic crisis is not a time for poverty, but for creating wealth. Take care, though; you want to end up a winner, not a casualty.
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