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Saturday, June 29, 2013

How to Use Stop Losses in ForexTrading

The use of stop loss is very important for risk management in forex trading. Before entering into any trade, you need to be very clear on the level of risk that you will take in that trade. Suppose, you spot a high probability swing trade setup with risk to reward ratio of 1:3!

How do you calculate the risk to reward ratio? 
Your risk is the amount you are willing to lose if the trade goes wrong. Suppose, you are willing to lose $500 in that trade. $500 translates into 50 pips on a standard account. The reward is your profit target. It should be $1,500 or 150 pips to give you a risk to reward ratio of 1:3!




Some traders may not be comfortable with 50 pips stop loss (SL). You are the best judge on how much risk you want to take. In swing trading on higher time frame charts like the daily chart, you will have to use a SL between 30-50 pips in order to give the trade some room to work out. Too tight a stop loss something like 20 pips and the chances are that it might get tripped soon by the noise. Too wide a stop loss and you risk losing too much.

So always decide on the SL very carefully when you enter into a trade. Where to place the initial SL of 50 pips? If you use candlesticks, you can use the candlestick patterns to tell you where to place the SL. In fact, a good trading system will tell you where to place the stop loss.

Now, when the trade goes well and starts moving in the direction that you had wanted, you can move the SL with the daily movement of the trendline. Another approach in case of trend trading is to use a trailing stop. Once the trade becomes profitable, replace the initial stop with a trailing stop.

A trailing stop trails the price action by the amount of pips that you specify. For example, you put a trailing stop of 20 pips in an uptrend. This trailing stop loss will always trail the price action by 20 pips. This way, once you are profitable, you can continue in the trade as long as the trend continues.

When the trend reverses and price action retraces by 20 pips, this trailing stop will be tripped and you will be out of the trade. Whatever, use of a stop loss is an art that you should not ignore. With practice and experience, you will be able to know the best place to put the stop loss.

Total Trade - Weekly Report


Total Pips per day-Weekly Report


Forex Free Signal Weekly Report--24.06.2013 to 28.06.2013


Friday, June 28, 2013

Online ForEx Trading Scams: Draining you dry



“When there is money, there is greed.”
“When there is greed, obviously there will be scams.”

The people who are craze on money are invited to start a forex trading and they are having a hope to become the richest person in the society. In forex trading the scammers will hangout an innocent people and they use them as a prey especially this usually happens through online.
This is what we call as an “Online Forex Trading Scams”



Usually the scammers tempt the traders by promising a huge profit can be earned within few weeks. Sometimes the money from the poor trader cannot be placed in the market, but instead it would be lost or diverted.

Some of the indicators of scam are listed below,
 
If anyone says that the forex trading is unpredictable and they will help you up to accuracy of 90% and that accuracy is just a rubbish one.
If some sites are promising to earn 30% to 40% within two months means please don’t believe that words. In my point of view first of all you should like trading, little amount will yield little profits.

It is very easy to do money transactions but it is very risk to refund the money.

The best way to go about this is the long way.

  • No shortcuts.

  • No promises;

  • Just pure hard work,

  • Patience and wisdom.

Don’t be in an appetite to get rich. Check the tools of ForEx trading. Learn from the masters. Read a lot. Do research.

Thank you

Forex signals


Forex signal


What is the Forex Market?

 What is the Forex Market?

 So what exactly is this Forex market that you've heard so much about on late night infomercials and banner ads across the Internet? It happens to be the biggest financial market in the world today. Within the Forex market, $4 trillion exchanges hands on a daily basis. That's trillion with a "t" in case you thought it was a misprint. That dwarfs the stock market, which only trades a puny $134 billion on a daily basis.
If this market sounds like something you would like to learn more about, this is the place for you. In this section of the site, you can learn about the basics of the foreign exchange markets and what it takes to be a successful Forex trader. You can also learn about some of the many benefits of currency trading. When reading this section of the site, just keep in mind that the currency market is definitely not for everyone. While it does have immense potential for traders who want to make money, some people just don't get it. There's also been a lot of attention paid to Forex scams and Forex frauds , which discourages some from getting involved. That is completely fine. Just check it out and give it the benefit of the doubt before making a judgment.
 




Who Trades Forex

Many parties are involved in the market. Traders like you, retail brokers, ECN brokers, and the interbank Forex traders all play a role in this market. They all work together to create the largest, most liquid market in the world today.

Trading Times


One of the benefits of getting involved with currency trading is that you can open Forex trades at any time throughout the week. The foreign exchange markets are not held in a single location and are open 24 hours per day, 5 days per week. This is truly the market that never sleeps (except on the weekends). Understanding the Forex market hours for the various foreign currency exchange locations around the world can help you choose the best trading times for your particular strategy. For example, one strategy that you use might work better when the Tokyo foreign exchange market is open or during the Forex UK session than during the India Forex or the New Zealand Forex session session. Everything is done through online trading but they still have trading sessions in locations across the world like London, New York, Tokyo and Sydney.

A quick side note: currency trading in India works a little differently than it does in other countries. If you live in that country, make sure you know the rules.

Depending on where you live, you may also need to understand the Forex tax laws for your region.

Besides trading regular Forex currency pairs, you can also get involved with Forex options trading as well. Options and forward contracts are popular when it comes to managing foreign exchange risk .


Compared to Stocks

While Forex investments hold the same basic principles of buying low and selling high, online foreign exchange trading works a little bit differently than what most investors are used to. With the Forex market, you are actually trading one currency against another in an effort to gain Forex pips . When you trade two currrencies at once, you are dealing with Forex currency pairs. Instead of trying to trade shares of Corporation XYZ, you are trading the Dollar against the Yen or some other combination of currencies. Your hope is that you can take advantage of the fluctuations in exchange rates between the two currencies.




With the Forex exchange , you only have a few currencies to deal with. In the stock market, you have thousands upon thousands of stocks that you could potentially buy. With Forex, you really do not have to be a jack of all trades to be successful. You can pick a few currency pairs that you like and stick with them. When trading currency pairs, it is important that you understand how to read foreign exchange quotes and what foreign exchange spreads are and why they are critical to Forex traders.

Another key difference between the stock market and Forex market is the number of participants. In the stock market, you and the sellers have to do business inside a centralized exchange. In the Forex currency exchange you have many participants including the major banks, electronic brokering services, retail brokers, ECN's and traders.

Although we're a bit biased towards the Forex market (obviously) the stock market definitely still has some merit to investors. Stock options in particular can be intriguing. If you are interested in stock options, the place you want to check out is Stock Options Made Easy.

Demo Accounts


When you get started in the Forex market, you actually have the ability to trade a demo Forex account which gives you the chance to practice your trading strategies. You can practice scalping, hedging and any other strategy that you might have. You can get one of these accounts for free from any Forex broker in the market and start trading immediately. These accounts also make it possible for you to get a grasp on Forex money management as well. Without money management, you will struggle to make any money.

Potential

Trading in the foreign exchange market has immense potential for individual traders. As stated earlier, a lot of money exchanges hands in this particular market. If you could only get an unbelievably small portion of that, you would be extremely wealthy. When trading in the market, you will get the opportunity to use large amounts of leverage. Some brokers offer leverage of up to 500:1. This allows you to control extremely large amounts of capital on each trade. Other financial markets may only allow you to use 1:1 leverage if any at all. This has the capability of helping you bring in a lot of money in a short period of time.

While it does have amazing potential, you have to learn how to be successful in the foreign currency exchange before the money comes rolling into your pocket. You have to learn about things like money management , trading systems and trading discipline before you can realistically expect to win consistently.

Risk

The market also carries with it a large amount of foreign exchange risk . If you're going to play, you have to be willing to lose. You should not ever get started unless you have money that you could do without. Until then, you can practice trading on a demo account. If you're not sure what the market is going to do, you can always check out the latest Forex analysis . This will help you see what the experts think about the market at any given time.

Forex Discussion
When you're learning the basics of the market, sometimes it helps to be able to interact with other like-minded individuals. I mean, let's face it...most of your friends or family probably have no idea what the foreign exchange market is or why you're interested in it.

Because of this, you might want to check out some of the various places online where you can chat with other people who are interested in the market.

Thursday, June 27, 2013

Forex – Get Rich Slow

Some questions which are listed below are probably familiar to you:
  • How long do you think it will take to grow my account from $1,000 to $50,000?
  • How long before I can quit my job?
  • How long until I can make $20,000?
You probably notice a theme to all these questions:; money. Let’s face it the vast majority of people are attracted to Forex for the money. Forex can make you money. It can make you a lot of money, but it will not happen fast.


Reality Check

I am sure you already know that Forex is not a get rich quick scheme. Many people out there spout that line. However, what many people won’t tell you Forex trading is a career. And as with any career it can take a long time to master Forex. So, if you are considering Forex you need to ask yourself two simple questions:
  • Do I have the passion needed to take on a new career and become successful?
  • Do I have the patience needed to get through the bumps in the road to succeed?
If your answer is no to either of these questions perhaps Forex isn’t for you.

Getting Rich Slow

I have been trading for nine years now and I have yet to meet anybody who has gotten rich fast in Forex. I am not saying that it is impossible. What I am saying is that the vast majority of successful traders get rich slowly. Becoming a successful Forex trader breaks down into five steps:
  • Learning the basics
  • Planing & Preparing (write a proper trading plan and money management plan)
  • Developing a trading method
    • Testing your trading method
    • Tweaking your trading method
  • Nailing down your trading psychology.
  • Getting rich!
Most new traders want to jump from step one to step five in the space of a few months. Realistically, you will have to go through each step to succeed and it will take you some time. So I am sorry to be the one to tell you this but Forex is very much a get rich slowly game. Some good news though is that Forex4Noobs provides a free video course that will guide you through step two “Plan & Prepare”. Forex4Noobs also has a fun and interactive forex education section that will help you with step one “learn the basics”.

So Why you Bother?

Well the fact is that most people do not get rich quick in any career or business. So giving up on Forex because it will take you time to achieve success is silly. I personally feel that the best thing about Forex is the freedom it provides. Unlike most careers, once you become consistently profitable in Forex you can scale back your chart time.
Over the past two months, I set up a stop watch and timed the total amount of time I spend trading per week. I found that on average I spend six hours per week trading. Compare that against the 8-12 hour work day most people are forced to do these days. Forex is the obvious winner.
Forex certainly does have a lot of benefits and it can turn your life around. However, please do not fall into the trap of thinking that you will be rich within six months.

Free Forex signal

For more:
http://www.facebook.com/RealForexSignals?ref=hl

Wednesday, June 26, 2013

Forex trading strategy for EUR/USD

Currency pair: EUR/USD.

Time frame: 30 min.

Indicators: MACD (12, 26, 9), Parabolic SAR default settings (0.02, 0.2)
Entry rules:

When Parabolic SAR gives buy signal and MACD lines crossed upwards buy.

When Parabolic SAR gives sell signal and MACD lines crossed downwardssell.

Exit rules:
Exit at the next MACD lines crossover or if the market starts trading sideways for some time.



If you agree with this leave a comment here...


Tuesday, June 25, 2013

Forex Expectations

Everybody has intention to get huge profit in forex. Conversely, most of the traders are misled in their expectations. There is no doubt that every trader expects to make profit. There is nothing exemption in my expectation. 

I am not a hermit so; my desire is to pump money into my account. Instead of pumping money in my account, forex trading will dump my account if I’m expecting more. I think we will attain some good profit once we have shortened our expectations. 

 

 

The expectation of 100% or double profit makes us to face heavy losses. Eventually, these frequent losses will make us to leave from Forex trading. Those who are greedy would deserve for this relief. 

So, try to minimize your foreseeable profit to 10% and it allows us to continue our trading.

Monday, June 24, 2013

5 Forex Tips For Beginner

5 Forex Tips For Beginner


    1. If you don’t have much capital, forex is the ideal form of investment.

    2. If you have too little capital, you’d better not trade at all.

    3. Love the market (one forex tip that says it all)

    4. Very important forex tip: trading at high level requires a good knowledge of the market.Not even the best trader in the market gains all the time.

    5. Forex market is extremely volatile. For this reason, timing is essential: knowing when to start, stop or pause is a crucial to gain money with forex.

Saturday, June 22, 2013

EUR/USD Fundamental Analysis May 29, 2013 Forecast

Analysis and Recommendations:

The EUR/USD is trading at 1.2934 flat for the day. Early in the session there was some EUR weakness that coincided with Nikkei strength and JPY weakness; however since then EUR has been quiet. Fundamental releases were not encouraging, as France released weaker than expected consumer condence at 79, the lowest level since the summer of 2008 and German import prices were notably south, falling 1.4% m/m and 3.2%y/y. The potential for the ECB to implement negative interest rates remains a focus with ECB member Noyer today suggesting that such a policy has never been implemented at a major central bank and yesterdays suggestion by the ECBs Asmussen that a discussion around negative interest rates is ongoing at the central bank and he is less open to the possibility than others.

On Monday, trading in EUR/USD developed as one could expect in the absence of most UK and US players. The calendar in Europe was empty. European equities regained some ground after the correction in the second half of last week and showed nice gains of around 1 % soon after the open. This protected the downside in EUR/USD. However there was no strong enough incentive to push equities or currencies beyond technically relevant levels. So, EUR/USD held a very tight sideways range in the 1.2930/40 area. Later in the session, European equities still gained more ground, but without impact on EUR/USD. EUR/USD closed an uneventful trading session at 1.2931, virtually unchanged.

They provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports.

Friday, June 21, 2013

EUR/USD Fundamental Analysis June 21, 2013 Forecast

Analysis and Recommendations:

The EUR/USD tumbled another 94 points today to trade at 1.32. The slide began yesterday as Mr. Bernankes began his address and news conference after the FOMC meeting. The Fed may moderate its pace of bond purchases later this year and may end them around mid-2014, Bernanke said at a press conference in Washington.If the incoming data are broadly consistent with this forecast, the committee currently anticipates that it would be appropriate to moderate the pace of purchases later this year, Bernanke said. And if the subsequent data remain broadly aligned with our current expectations for the economy, we will continue to reduce the pace of purchases in measured steps through the first half of next year, ending purchases around mid-year.Bernanke is expanding the Feds balance sheet toward $4 trillion as he seeks to reduce a jobless rate that stands at 7.6 percent after four years of economic growth. The Fed left unchanged its statement that it plans to hold its target interest rate near zero as long as unemployment remains above 6.5 percent and the outlook for inflation doesn’t exceed 2.5 percent.











Euro-area services and factory output increased more than economists forecast in June, adding to signs the currency bloc may emerge from its record-long recession in the second quarter.A composite index based on a survey of purchasing managers in both industries rose to 48.9 from 47.7 in May, London-based Markit Economics said today. That is the highest in 15 months and exceeded the median estimate of 48.1 in a Bloomberg News survey (ECPMICOU) of 26 economists. A reading below 50 indicates contraction.Positive data helped limit the decline the drop in the euro. The European Central Bank cut its growth projections for the euro zone this month and now predicts the 17-nation economy will shrink 0.6 percent this year before growing 1.1 percent in 2014. Today's data on services and factory output followed a June 18 report showing that European car sales fell to a 20-year low in May after unemployment in the euro area reached a record high of 12.2 percent in April.


FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports.



Thursday, June 20, 2013

USDJPY Technical Analysis on June 20, 2013




  • For the past few days the dollar has strongly supported against the yen but for more than three weeks this pair seems to be weakened. As per long term analysis, I think there will be a plenty of achievements to come into this pair. What we are watching now is a simple retracement of huge move from September 2012 lows to last month’s highs. 
  • I haven’t induced that the retracement has completed yet. So the final result we concluded is keeping an eye on the 50 and 61.8 fib levels of the move from last month’s highs to this month’s lows. 
  • If the pair breaks above this fib level it would considered as the retracement in the pair may over, otherwise there will be further weakness for this pair. If the 50 fib level moves around 90.42 means it will be the target point
  • Specify the particular trend to act as a key support and resistance level on the daily chart, the middle the middle bollinger band could also provide a key hint about the future direction of the pair. A close above here would be quite a bullish signal.

Wednesday, June 19, 2013

AUDUSD Forecast

 

 

  • On Wednesday, the AUD/USD fully moves to the down mode.Currently we get a candle which is in a type of Inverted Hammer.

  • Today AUD/USD mostly depends on sell position .Typically we can expect our sell position up to 0.88986.

  • Which will reach by the next candle of AUD/USD. We need to pay more attention at an exact point of 0.93239.

  • When it reach the 0.93239 point today ,surely we can make a sell position and our sell limit is up to 0.88986 only.

Tuesday, June 18, 2013

Strategies for Trading Forex on News Releases

One of the most interesting trading strategies that forex traders commonly employ is trading on economic news releases. Specifically, closely watched economic news items such as the United States' Non-Farm Payrolls and, Gross Domestic Product numbers tend to result in significant reactions in the forex market, especially if they differ substantially from the market's prior expectations. Learn more about how the GDP and the Non-Farm Payrolls data influences the forex market.

News and economic data are the main drivers of market developments, but in a little different way than many traders think. While many novice traders expect important economic events and news releases to be reflected on the price immediately, complain about the irrationality of the market when that doesn’t occur and protest that trading the news is not possible, in fact it is possible, and extremely lucrative in the long term, if one is willing to wait for the payback to arrive. In this article we will take a look at various data types, and attempt to classify them according to a few basic criteria. We will also try to explain how news releases determine market prices in the long term, especially those of greater value and impact on the market. Finally, we will say a couple of words on short term news trading, and the different data releases that are important.

In the US most major news releases occur between 8:30 am and 10 am New York time, and consequently trading is also most active and volatile in this period. Option expires, and market openings take place during this period also, when traders are busy at their desks absorbing and evaluating overnight data, attempting to place all the developments in a general context for usage later in the day. Since volatility is so high in this period, the profit/loss potential is also the highest. It is obvious that proper risk controls and money management techniques will play a major role in our trading method, if we want to avoid being caught in false breakouts and whipsaws.

The markets’ reaction to any type of data is unpredictable. This is not only the case when the news release is in line with analyst expectations, as published by news channels and financial news providers, but also when the release surprised significantly. Sometimes it’s not even possible to predict how volatile the markets reaction will be to the news release. Sometimes the market will move within a range of fifty or more pips in response to data released. Sometimes a 100-pip movements in the span of one or two minutes will be reversed and completely negated by the price action during the rest of the day. Conversely, while news releases are usually the most volatile periods of a typical trading day, a very unusual release may be welcomed with relative calm if the market decides to do so. What is the cause of all this great unpredictability?

During a news release a number of speculators will react immediately, hoping to gain a quick profit and exit. These will create a very brief ballooning of spreads and volume in the immediate term, but also will distort the underlying technical picture greatly. As these initial buyers or sellers exit, momentum traders will attempt to join in and fuel a more sustainable short-term trend with their actions. Depending on the time and liquidity in the market, they may well be successful, but sometimes they too are checked by previously unknown order layers that check the advance of the price. When these absorb the momentum traders, and short term speculative entrants, the initial reaction of the price may be reversed or negated also.

But while this is so, we do not imply that it is not possible to trade the news in the forex market. All that must be born in mind by the trader is that he’s engaging in a game of probability; he must be very well aware that there doesn’t exist a news release that will ensure that the market will move in this or that fashion. Stop loss orders must not be very tight, and leverage must be kept quite low, so that the order we enter can survive more than a few seconds of the initial shock reaction by short-term actors.

The two major problems of trading the news arise out of the difficulty in gaining timely information, and evaluating that in a fast enough manner to facilitate quick entry into a trade. Hence, it is clear that the trader must have a very good idea of what he expects from the news release.
  • Will he only open a position if the data shock the market? 
  • What is the threshold value for the data, above or below which a trade is justified? 
  • How long will the position be held? 
  • Which technical levels constitute the take-profit, or stop-loss orders for the trade? 
All these must be discussed and determined even before a trade order is entered. News releases must not be periods when the trader will be hesitating and vacillating between the various paths he can take. Instead, he must act like a machine, with almost automated movements, so that he can be immune to the emotional pressures created by the irrational short-term behavior of the market.

The last issue with trading news releases is born of the unreliable nature of the first versions. In fact, studies have shown that the BLS (the Bureau of Labor Statistics), for instance, consistently underestimates job losses in a recession, and underestimates job gains at the beginning of the boom. Nor does the experienced trader have any trouble in acknowledging this fact: revisions which reverse the meaning and character of the initial release are not at all exceptional in the markets. The short-term trader is not much bothered by this fact, but it has great significance for decisions on the long-term positioning.

There are three ways of trading the news.

1. Straddling Both Sides of the Market

Some traders position themselves on both sides of the market before a significant release using a hedged position.

They wait for the number to come out and then proceed to trade out of the position. For example, they might take a loss on one side during a post number correction, after having hopefully taken a larger profit on the winning side of the trade.

This straddle or hedge strategy consists of going both long and short in the same currency pair before the release of the economic number. Action is not taken until after the number is released.

Once the number comes out, the trader must decide how to "leg" out of the two legged position. Generally this involves taking both a profit and a loss.

If the number was favorable, often the trader will first take profits on the trade first. This enables the trader to allow the other unprofitable leg of the position to decrease the loss on the position as the market corrects after it made an initially often exaggerated reaction to the number.

If the number released was unfavorable, the same basic follow up strategy can be taken as the market falls by closing the winning short position first, and then trading out of the losing long side of the hedged position.

A variation on this technique involves placing a stop loss immediately on the losing position and waiting for the stop loss to be hit. Once the stop loss has been filled, the winning side of the position can be held for additional profits or liquidated immediately.

2. Long term

Several academic studies have established that the impact of some news announcements have their immediate impact spread over a period of weeks and months, instead of the single day in which the markets are thought to discount them. Non-farm payrolls, and to a greater extent, the interest rate decisions of the federal reserve are good examples for this kind of news flow. While the markets react violently and unpredictably in the short term, the mechanisms set up by low interest rates, and full employment (or conversely, high unemployment) have consequences that are relevant to many sectors of the economy, and trading them on a long term basis is certainly possible. The trader who uses this strategy will build up his positions slowly, and will attach greater value to low frequency releases (such as GDP reports), and will wait until the overall picture offers clarity, before he makes his trade decisions.

3. Short term

To trade news on a short term basis, the trader must have a clear criterion on what kind of news will justify a trade. Many news traders seek at least a 50 percent surprise in the data to consider the release tradeable. The novice trader, in turn, can use the initial period of his trading career for perfecting his money management skills. Trading the news on a short term basis can be easy and lucrative if the trader is disciplined enough to cut losses, and accumulate profits, but panic and mood swings, and undisciplined methodology will quickly erase all the gains through shocks and volatility.

These are the various types of indicators which have the potential to cause the greatest short term movements in the markets.

Consumer Price Index (CPI)


While very important, the severity of market reaction to CPI releases partly depends on the health of the general economy. In a booming economy, a string of uncomfortably high CPI values will force the central bank to raise rates in order to subdue growth. In a contracting economy, a high CPI value may prevent the central bank from realizing counter-cyclical interest rate reductions. Since central bank rates are so important for determining the tone of economic activity in the long term, markets pay great attention to the value of this indicator. On the short term, of course, these considerations have no relationship to the motives of speculators, but they do present the justification for violent short term price spikes for momentum traders and short-term speculators, if the data surprises in either direction.

Fed decisions


Depending on the nature of the decision, and how surprised by it the market is, the price swings can be very large and the immediate reaction meaningless with respect to the long term direction of the trend. Fed decisions are one of the most anticipated events in the market, and their macroeconomic significance certainly justifies this attitude. The Fed meetings typically last for about two days, beginning on Monday and concluding on Tuesday. Then the decision is released to the public at around 9 pm New York time.

Fed rate decisions can cause large movements if the rate change is different from what was expected by market consensus. In the absence of such a surprise, traders will concentrate on the tone of the statement accompanying the interest rate decision. Depending on how dovish or hawkish the statement is, the markets will readjust their future interest rate expectations, and on that basis they will reprice currency pairs. The repricing period can be quite long, and it’s unwise to expect this process to be completed in the course of a few weeks.

European central banks and the US Federal Reserve usually release their rate decisions during the first week of each month. As most of the important data are released during this first week from around the world, traders are exceptionally nervous and excited, amplifying volume greatly, but also increasing volatility, as the large amount of short term speculative money opens and closes very short-term positions. In fact, some traders turn the typical movements of this period into a trading strategy.

Another key news item that can prompt significant forex market volatility is central bank intervention that is usually announced over major news wires. In this case, a country's central bank will sometimes need to adjust their currency and will enter the forex market to either support or bring down the value of its currency.

Non-farm payrolls

Sometimes called the mother of all data, on a typical month the time of this release coincides with the most volatile market action. Non-farm payrolls measure the payroll change of the non-farming private and public sectors. Since economic cycles, consumption, and consequently interest rates all depend on the employment situation of the US economy, the non-farm payrolls release is the most closely watched of all indicators.

For the most part, most experienced traders will avoid trading the immediate aftermath of this release, due to the somewhat nutty price action that follows it. If you’ll forgive the expression. On the other hand, if the trader is satisfied that the data release strongly suggests price movement in a direction, he will use the short term fluctuations that occur as a trading opportunity by entering orders that contradict the market’s short term direction.

While this data is so crucial to a nation like the US with a large domestic economy that is less dependent on trade and commerce, its equivalent is not as important for nations like Japan where the dynamics of the domestic markets is closely correlated to the situation of the global economy.

The non-farm payrolls data is typically released by the Bureau of Labor Statistics on the first Friday of each month.

Purchasing Managers' Index (PMI)


The PMI provide a very quick and accurate snapshot of the status of the various sectors of the economy. They do not create as much volatility as the other major releases (such as the non-farm payrolls data, or Fed decisions), but as a result they are also more tradable and safer as entry points. Needless to say, a very extreme value can create massive price shocks in either direction, but the real use of this data is for the guidance it provides for predicting the much more important data that is released towards the end of the week. We can trade these releases both on a trend following, or contrarian basis, depending on what our analysis is telling us about market positioning and the fundamental picture.

Other Major Economic Data Releases Most Often Traded Upon


  • Gross Domestic Product or GDP - regardless of the currency, this number makes up one of the most important numbers traders use to trade on.

  • Employment Numbers - the level of employment in a country can indicate the overall strength in their respective economy, and numbers like the U.S. Non Farm Payrolls and the Unemployment Rate can move the market substantially.

  • Trade Balance - Along with the current account data, the trade balance for a country can significantly impact the valuation of its currency.

Some words on insider information and availability of information

The unregulated and global nature of the forex market tends to make trading on insider information very unlikely compared to how trading is conducted in the stock markets. Basically, insider trading in the truest sense of the word does not really exist in the forex market, and even retail traders can compete on a fairly level playing ground when it comes to the availability of forex market information.

In general, the level of information required to trade forex usually comes from relatively open government sources for fundamental analysts or from the price action itself for technical forex traders. As a result, it tends to be readily available to just about anyone in the world in the modern information age. The primary exception to the general open availability of information in the forex market tends to be market flow information. This includes the execution of large trades and substantial orders in the forex market to which only the parties involved in the major transaction tend to be privy.

Conclusion

There are many more releases, and the trader can study each of them for creating his own strategy. The key point is protecting ourselves from emotional extremes, and making sure that we only open positions when we are really satisfied with the data release, and are confident that the scenario offers a reasonable profit potential.