Forex broker analysis usually revolve around economic indicators, released by government or private organizations, to examine and determine how they influence the price movements of currency pairs, commodities and other financial products.
Forex broker analysis usually revolve around economic indicators, released by government or private organizations, to examine and determine how they influence the price movements of currency pairs, commodities and other financial products. Knowing the most important economic indicators and how to successfully analyze and trade them is indispensible for any broker who wants to make it in the currency market. The Gross Domestic Product (GDP) indicator is one of the most tracked pieces of information by any forex broker. The GDP is regarded as the measurement of a country’s total production of goods and services during a certain period, including personal consumption, government purchases, private inventories and paid-in construction costs, among others. The GDP is considered to be a lagging indicator in forex trading, thus, traders also focus on the advanced and the preliminary reports. Before and after its release, the market can experience profound ups and downs, making it extremely followed by any forex broker who wants to make a profit. The Consumer Price Index (CPI) is a measure of change in the prices of consumer goods of more than 200 different categories. It can also be an indicator of the general cost of people`s living and can be used to see whether a country is making money on its products and services or not. It is related to the strength or weakness of a country’s currency, so it is very often that currency news are related to CPI releases and the general trends it describes. The retail-sales report is a commonly monitored indicator by forex broker experts. It measures all the receipts of all retail stores of a given country in a certain period of time. The report is extremely useful because it is a timely indicator of broad consumer spending patterns. This report can also lead to market volatility. The Industrial Production indicator shows the variations in production indices of a country’s factories, industrial complexes, mines etc, in a country. It deals with commodities and the way their prices fluctuate during a certain amount of time, so it is crucial for a forex broker to be fully trained on ways to analyze it. Another important indicator to overview market trends is the unemployment rate. It can be used to reveal the strength or weakness of a country`s economy, which in turn will affect the value of its currency. This indicator is frequently reviewed by brokers from all over the world, as the work force of a country is an excellent tool to establish accurate economic parameters through which to trade. It’s important for traders in a globalized economy to focus on different economic indicators at different times, as one will invariably be related to the other. Make proper use of economic calendar is also very important in forex trading. Traders should list all economic indicators and their release date to have a clear idea in advance of what indicators are coming and their possible influence on their trading. Lastly, numbers can be revised after an indicator release, so it is important to be fully aware of data revision.