Most important economic indicators forex

Economic indicators are statistical analyses that observe the trends and performance of the economy and enables people to predict the future state of the economy depending on those trends. There are three classifications of these according to the time they change relative to the shifting of the general economy. These are:
Leading indicators : Being short-term indicators of the economy, they usually change before major changes in the economy happen. Leading indicators can help predict the possible movement of the economy in the future so economists can practice the appropriate measures. Examples are stock market returns and money supply.
The following are important to the foreign exchange industry because any change could affect the forex market greatly, whether in a good or bad way. Economic indicators are then being closely monitored in the investment world.
The following are some of the common economic indicators relevant to foreign exchange:
Gross Domestic Product (GDP). GDP refers to the market value of all the goods produced within a specific country in a year. GDPs are considered an important indicator of a country’s standard of living. It is usually released on the last day of every quarter at 8:30 a. m. EST, reflecting the economic activity of a country during that quarter.
Producer Price Index (PPI) . PPI measures the changes in prices by the producer in exchange for their product. Together with CPI, they are the major measures of inflation. PPIs are released at 8:30 a. m. EST on the second full week each month. Unlike CPI, which measures relate to the consumer’s viewpoint, PPI is measured from the point of view of the producers.
Consumer Price Index (CPI) . This measures the changes in the prices of goods and services as purchased by households and compares it to its previous value. This is an important measure of inflation. The values are released monthly, 8:30 a. m. on the 15 th day of each month.
Durable Goods Orders . Durable goods are defined as products expected to last more than three years. In this respect, the durable goods orders is a measurement to measure the amount of spending people do on these types of products, or in other words, long-term purchases. Believed to provide an insight on the future of the manufacturing industry, the durable goods orders are released on the 26 th of each month at 8:30 a. m. EST.
Forex Trading In A Real-life Trading & No-risk Environment!
Interest Rates . The Federal Open Market Committee monitors this indicator as well as the others mentioned above in order to determine the economy’s state. The interest rate itself is one of the most influential indicators among the forex markets since they drive the market itself. Depending on the data gathered, the FOMC will either employ or not employ its resources in order to increase, decrease or let the interest rates remain stagnant. This will determine future prices in the market .
NAPM . NAPM, which stands for National Association of Purchasing Management, is the measurement of the health of the management sector, and in extension, the general economy. Based on the survey of 250 companies all over a country, the NAPM is released on the first business day of each month at 10 a. m. EST.
Retail Sales Index. Released on the 12 th day of the month, 8:30 a. m. EST, the retail sales index is a measure of all goods sold by retailers all over the country, and reflects the degree of consumer confidence. The retail sales index is routinely revised even after its release.
Employment Indicators. These announcements occur monthly on the first Friday at 8:30 in the morning EST, and are a major mover of the market. The employment indicators include the employment and unemployment rate, the rate and number of new jobs created for the past month, the average weekly work hours, and the average salary per hour.
Beige Book . This report is published two weeks before the Federal Open Market Committee’s (FOMC) meetings 8 times a year to cover the economic conditions in different regions. The book contains data pertaining to these conditions through reports from banks and interviews with key business contacts. This book is said to influence how the FOMC would act on its upcoming meetings.
Consumer Confidence Index . Released on the last Tuesday of the month at 10 a. m. EST, the consumer confidence index measures the consumer’s views about the state of the economy, their confidence in it as well as their spending power. This is an important economic indicator since when consumers feel confident and secure about their economy, they are more willing to make purchases.
4 Responses to Important Economic Indicators in Forex Trading.
Economic indicators are very important as they are statistical analyses that observe the trends and performance of the economy which help us to predict the future status of the economy depending on those trends. Now a days various trading platforms and brokers also provide indicator that help us to trade.
Un grand plaisir de lire ce billet, je vous remercie grandement .
There is certaС–nly a lot to find out about this С–ssue. I like all of tТєe points you’ve made.
Aw, this was a very nice post. Spending some time and actual effort to produce a.
good article… but what can I say… I hesitate a whole lot and don’t.

Most Important Forex Indicators All Forex Traders Should Know.
Trading the Forex market is not easy. Despite this, a number of traders are still able to consistently make profitable returns.
Part of the answer is that they successfully use Forex trading indicators. The existence of proven best Forex indicators implies the Forex market is not a random walk, as some economic theories contend.
The flaws of the human psyche mean that markets do not always behave rationally. The Forex markets have a tendency to behave in certain ways under certain conditions.
Want to know the best part?
This behaviour repeats itself , meaning that certain price patterns will occur time and again. The best Forex indicators attempt to recognise such patterns as they form and to gain an edge by exploiting that knowledge. Make sure to use feature-rich trading software.
Which are the best indicators for Forex trading?
The best Forex indicator will be the one that suits your own style and psychology. Which is to say, there is no one Forex best indicator that fits all trader's styles .
The good news is there is a wide variety of Forex indicators available. With time, you should be able to find the right indicators for you.
Great Forex indicators help follow trend.
As noted earlier, there are a lot of contenders for best Forex indicators – and some get quite complicated. This is why you should start with more simple Forex trading indicators.
Let's overview some of the more well-known indicators.
Simple moving average.
A simple moving average (SMA) is the average price for a specific time period. Here, average means arithmetic mean. For example, the 20-day moving average is the average (mean) of the closing prices during previous 20 days.
Why use average?
The purpose it to smooth out price movements in order to better identify the trend. Note that the SMA is a lagging indicator, it incorporates prices from the past and provides a signal after the trend begins. The longer the time period of the SMA, the greater the smoothing and the slower the reaction to changes in the market.
This is why SMA is not the best Forex indicator for advance warning of a move .
But here's a good part – it is one of the best Forex indicators when it comes to confirming a trend. The indicator usually operates with averages calculated from more than one data set – one (or more) shorter time period and one longer.
Typical values for the shorter SMA might be 10, 15 or 20 days. Typical values for the longer SMA might be 50, 100 or 200 days.
You might be wondering – when does it signal a trend?
It signals a new trend when the long-term average crosses over the short-term average. The long-term average moving above the short-term average may signal the beginning of an uptrend. The long-term average moving below the short-term average may signal the beginning of a downtrend.
You can experiment with different period lengths to find out what works best for you.
Exponential moving average.
While similar to the simple moving average, this Forex trading indicator focuses on more recent prices. This means that the exponential moving average (EMA) will respond more quickly to price changes.
Typical values for long-term averages might be 50-day and 200-day EMAs. 12-day and 26-day EMAs are popular for short-term averages. A very simple system using a dual moving average is to trade each time the two moving averages cross. You buy when the the shorter moving average (MA) crosses above the slower MA, and you sell when the shorter MA crosses below the slower MA.
With this system, you will always have a position, either long the currency pair in question or short it .
You exit your trade when the shorter MA crosses the longer MA. You then place a new trade in the opposite direction to the one you have just exited. By doing this, you are effectively squaring and reversing.
If you don't want to be in the market all the time, this is not going to be the best Forex indicator combination. In that case, a combination using a third time period might suit you better.
A triple moving average strategy uses a third MA. The longest time frame acts as trend filter. When the shortest MA crosses the middle one, you do not always place a trade.
The filter says you can only place long trades when both shorter MAs are above the longest MA. You can only go short when both are below the longest MA.
MACD indicator.
Want to know the best part?
As well as identifying a trend, it also attempts to measure the strength of the trend. In terms of giving you a feeling for the strength behind the move, it is perhaps the best indicator for Forex .
Calculating the divergence between a faster EMA and a slower EMA is a key concept behind the indicator.
The indicator plots two lines on the price chart. The MACD line is typically calculated by subtracting the 26-day EMA from the 12-day EMA, then a 9-day EMA of the MACD is plotted as a signal line.
When the MACD line crosses below the signal line, it is a sell signal. When it crosses above the signal line, it is a buy signal.
You can set all three parameters (26, 12 and 9) as you wish. As with moving averages, experimentation will help you find the optimal settings for you.
The Bollinger band.
Any list of proven best Forex indicators needs to include some form of volatility channel.
A volatility channel is another method of identifying a trend. It uses the idea that if the price goes beyond a moving average plus an additional amount, then a trend may have begun.
A Bollinger band is a volatility channel invented by financial analyst John Bollinger more than 30 years ago. It is still among the best indicators for Forex trading out of the various volatility channel methods.
the number of days for the moving average the number of standard deviations that you want the band placed away from the moving average.
The most common values are 2 or 2.5 standard deviations. In statistics, the standard deviation is a measure of how spread apart the values of a data set are. In finance, standard deviation acts as a way of gauging volatility.
What's the bottom line?
A Bollinger band will adjust to market volatility. It widens as volatility increases and narrows as volatility decreases. A long-term trend-following system using Bollinger bands might use two standard deviations and a 350-day moving average.
You would initiate a long position if the previous day's close is above the top of the channel, and take a short if the previous day's close is lower than the bottom of the band.
The exit point would be when the previous day's close crosses back through the moving average.
Fibonacci retracement.
Fibonacci retracement indicator is based on the idea that after an extreme move, a market will have an increased chance of retracing by certain key proportions.
Those proportions come from the Fibonacci sequence.
This is a sequence of numbers known since antiquity, but popularised by the Italian mathematician known as Fibonacci. The modern sequence begins with 0 and 1. Any subsequent number is the sum of the preceding two numbers in the sequence.
Hence the sequence begins – 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233…
The Fibonacci ratios come from these numbers. The most important ratio is 0.618. This number is calculated by looking at the ratio of one number to the number immediately following it in the sequence.
This value tends toward 0.618 as you progress through the series. For example, 89/144 = 0.6181 and 144/233 = 0.6180.
Another key ratio is 0.382.
This is derived from the ratio of a number to another number two places further on in the sequence. The ratio tends toward 0.382 as you progress through the series. For example, 55/144 = 0.3819 and 89/233 = 0.3820.
The last important key ratio is 0.236. This is derived from the ratio of a number to another number three places on in the sequence.
What does this all mean?
The theory is that after a major price move, subsequent levels of support and resistance will occur close to levels suggested by the Fibonacci ratios. So it's a leading indicator – it is intended to predict price movements before they occur . This is in contrast to indicators that use moving averages, which show trends only once they have begun.
There is an element of self-fulfilling prophecy about Fibonacci ratios. There are many traders who may act on these expectations and, in turn, influence the market.
The final verdict.
The best indicator for Forex trading will be the one that works best for you. You may find it is effective to combine indicators using a primary one to identify a possible opportunity and another as a filter.
The filter would determine whether the overall conditions are suitable to trade.
As with most other activities, you will learn trading with indicators by practicing. Right now you can find all the indicators we have discussed and more in MetaTrader Supreme Edition and try out strategies risk free with a demo trading account. Also, you can learn more about trading systems by watching our upcoming webinars.
Top-10 viewed articles.
MetaTrader 4.
Forex & CFD trading platform.
iPhone App.
MetaTrader 4 for your iPhone.
Android App.
MT4 for your Android device.
MT WebTrader.
Trade in your browser.
MetaTrader 5.
The next-gen. trading platform.
MT4 for OS X.
MetaTrader 4 for your Mac.
Start Trading.
Platforms.
Education.
Promotions.
Risk warning: Trading Forex (foreign exchange) or CFDs (contracts for difference) on margin carries a high level of risk and may not be suitable for all investors. There is a possibility that you may sustain a loss equal to or greater than your entire investment. Therefore, you should not invest or risk money that you cannot afford to lose. Before using Admiral Markets UK Ltd or Admiral Markets AS’ services, please acknowledge all of the risks associated with trading.
The content of this website must not be construed as personal advice. We recommend that you seek advice from an independent financial advisor.
All references on this site to ‘Admiral Markets’ refer jointly to Admiral Markets UK Ltd and Admiral Markets AS. Admiral Markets’ investment firms are fully owned by Admiral Markets Group AS.
Admiral Markets UK Ltd is registered in England and Wales under Companies House – registration number 08171762. Admiral Markets UK Ltd is authorised and regulated by the Financial Conduct Authority (FCA) – registration number 595450. The registered office for Admiral Markets UK Ltd is: 16 St. Clare Street, London, EC3N 1LQ, United Kingdom.
Admiral Markets AS is registered in Estonia – commercial registry number 10932555. Admiral Markets AS is authorised and regulated by the Estonian Financial Supervision Authority (EFSA) – activity license number 4.1-1/46. The registered office for Admiral Markets AS is: Ahtri 6A, 10151 Tallinn, Estonia.

5 Forex News Events You Need To Know.
In the fast moving world of currency markets where huge moves can seemingly come from nowhere, it is extremely important for new traders to learn about the various economic indicators and forex news events and releases that shape the markets. Indeed, quickly getting a handle on which data to look out for, what it means, and how to trade it can see new traders quickly become far more profitable and sets up the road to long term success.
Trading technical chart patterns can be extremely profitable but one must always be aware of the fundamental story which is ultimately driving the markets. Below we have listed five of the most important News Releases/Economic Indicators you need to know right now!
Top 5 Market News Events.
1.Central Bank Rate Decision.
The committee is made up of members which vote at each meeting with “Hawkish” members those in favour of a rate rise and “Dovish” members those favouring a lowering of rates.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Forex involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer.
Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.

How Economic Indicators and Economic News Can Impact Forex Trading.
Powerful trend-starting Forex market trading indicators.
Major Indicators.
The Gross Domestic Product (GDP)
The sum of all goods and services produced either by domestic or foreign companies. GDP indicates the pace at which a country's economy is growing (or shrinking) and is considered the broadest indicator of economic output and growth.
Industrial Production.
It is a chain-weighted measure of the change in the production of the nation's factories, mines and utilities as well as a measure of their industrial capacity and of how many available resources among factories, utilities and mines are being used (commonly known as capacity utilization). The manufacturing sector accounts for one-quarter of the economy. The capacity utilization rate provides an estimate of how much factory capacity is in use.
Purchasing Managers Index (PMI)
The National Association of Purchasing Managers (NAPM), now called the Institute for Supply Management, releases a monthly composite index of national manufacturing conditions, constructed from data on new orders, production, supplier delivery times, backlogs, inventories, prices, employment, export orders, and import orders. It is divided into manufacturing and non-manufacturing sub-indices.
Producer Price Index (PPI)
The Producer Price Index (PPI) is a measure of price changes in the manufacturing sector. It measures average changes in selling prices received by domestic producers in the manufacturing, mining, agriculture, and electric utility industries for their output. The PPIs most often used for economic analysis are those for finished goods, intermediate goods, and crude goods.
Consumer Price Index (CPI)
The Consumer Price Index (CPI) is a measure of the average price level paid by urban consumers (80% of population) for a fixed basket of goods and services. It reports price changes in over 200 categories. The CPI also includes various user fees and taxes directly associated with the prices of specific goods and services.
Durable Goods.
Durable Goods Orders measures new orders placed with domestic manufacturers for immediate and future delivery of factory hard goods. A durable good is defined as a good that lasts an extended period of time (over three years) during which its services are extended.
Employment Cost Index (ECI)
Payroll employment is a measure of the number of jobs in more than 500 industries in all states and 255 metropolitan areas. The employment estimates are based on a survey of larger businesses and counts the number of paid employees working part-time or full-time in the nation's business and government establishments.
Retail Sales.
The retail sales report is a measure of the total receipts of retail stores from samples representing all sizes and kinds of business in retail trade throughout the nation. It is the timeliest indicator of broad consumer spending patterns and is adjusted for normal seasonal variation, holidays, and trading-day differences. Retail sales include durable and nondurable merchandise sold, and services and excise taxes incidental to the sale of merchandise. Excluded are sales taxes collected directly from the customer.
Housing Starts.
The Housing Starts report measures the number of residential units on which construction is begun each month. A start in construction is defined as the beginning of excavation of the foundation for the building and is comprised primarily of residential housing. Housing is very interest rate sensitive and is one of the first sectors to react to changes in interest rates. Significant reaction of start/permits to changing interest rates signals interest rates are nearing trough or peak. To analyze, focus on the percentage change in levels from the previous month. Report is released around the middle of the following month.
Economic indicators are snippets of financial and economic data published by various agencies of the government or private sector. These statistics, which are made public on a regularly scheduled basis, help market observers monitor the pulse of the economy. Therefore, they are religiously followed by almost everyone in the financial markets. With so many people poised to react to the same information, economic indicators in general have tremendous potential to generate volume and to move prices in the markets.
While on the surface it might seem that an advanced degree in economics would come in handy to analyze and then trade on the glut of information contained in these economic indicators, a few simple guidelines are all that is necessary to track, organize, and make trading decisions based on the data. Know exactly when each economic indicator is due to be released. Keep a calendar on your desk or trading station that contains the date and time when each stat will be made public. You can use our economic calendar. Keeping track of the calendar of economic indicators will also help you make sense out of otherwise unanticipated price action in the market.
Consider this scenario: it's Monday morning and the USD has been in a tailspin for three weeks. As such, it's safe to assume that many traders are holding large short USD positions. However, on Friday the employment data for the U. S. is due to be released. It is very likely that with this key piece of economic information soon to be made public, the USD could experience a short-term rally leading up to the data on Friday as traders pare down their short positions. The point here is that economic indicators can affect prices directly (following their release to the public) or indirectly (as traders massage their positions in anticipation of the data.)
Understand what particular aspect of the economy is being revealed in the data. For example, you should know which indicators measure the growth of the economy (GDP) vs. those that measure inflation (PPI, CPI) or employment (non-farm payrolls). After you follow the data for a while, you'll become very familiar with the nuances of each economic indicator and what part of the economy they are measuring.
Not all economic indicators are created equal. Well, they might've been created with equal importance but along the way, some have acquired much greater potential to move the markets than others. Market participants will place higher regard on one stat vs. another depending on the state of the economy. Know which indicators the markets are keying on. For example, if prices (inflation) are not a crucial issue for a particular country, inflation data will probably not be as keenly anticipated or reacted to by the markets. On the other hand, if economic growth is a vexing problem, changes in employment data or GDP will be eagerly anticipated and could precipitate tremendous volatility following their release.
The data itself is not as important as whether or not it falls within market expectations. Besides knowing when all the data will hit the wires, it is vitally important that you know what economists and other market pundits are forecasting for each indicator. For example, knowing the economic consequences of an unexpected monthly rise of 0.3% in the producer price index (PPI) is not nearly as vital to your short-term trading decisions as it is to know that this month the market was looking for PPI to fall by 0.1%. As mentioned, you should know that PPI measures prices and that an unexpected rise could be a sign of inflation. But analyzing the longer-term ramifications of this unexpected monthly rise in prices can wait until after you've taken advantage of the trading opportunities presented by the data.
Once again, market expectations for all economic releases are published on various sources on the Web and you should post these expectations on your calendar along with the release date of the indicator. Don't get caught up in the headlines. Part of getting a handle on what the market is forecasting for various economic indicators is knowing the key aspects of each indicator. While your macroeconomics professor might have drilled the significance of the unemployment rate into your head, even junior traders can tell you that the headline figure is for amateurs and that the most closely watched detail in the payroll data is the non-farm payrolls figure.
Other economic indicators are similar in that the headline figure is not nearly as closely watched as the finer points of the data. PPI for example, measures changes in producer prices. But the stat most closely watched by the markets is PPI, ex-food and energy. Traders know that the food and energy component of the data is much too volatile and subject to revisions on a month-to-month basis to provide an accurate reading on the changes in producer prices.
Speaking of revisions, don't be too quick to pull that trigger should a particular economic indicator fall outside of market expectations. Contained in each new economic indicator released to the public are revisions to previously released data. For example, if durable goods should rise by 0.5% in the current month, while the market is anticipating them to fall, the unexpected rise could be the result of a downward revision to the prior month. Look at revisions to older data because in this case, the previous month's durable goods figure might've been originally reported as a rise of 0.5% but now, along with the new figures, is being revised lower to say a rise of only 0.1% Therefore, the unexpected rise in the current month is likely the result of a downward revision to the previous month's data.
Don't forget that there are two sides to a trade in the foreign exchange market. So, while you might have a great handle on the complete package of economic indicators published in the United States or Europe, most other countries also publish similar economic data. The important thing to remember here is that not all countries are as efficient as the G7 in releasing this information.
Once again, if you are going to trade the currency of a particular country, you need to find out the particulars about their economic indicators. As mentioned above, not all of these indicators carry the same weight in the markets and not all of them are as accurate as others. Do your homework and you won't be caught off guard.
General information regarding major economic indicators:
When focusing exclusively on the impact that economic indicators have on price action in a particular market, the foreign exchange markets are the most challenging (High Risk Warning). Obviously, factors other than economic indicators move prices and as such make other markets more or less potentially profitable. But since a currency is a proxy for the country it represents, the economic health of that country is priced into the currency. One very important way to measure the health of an economy is through economic indicators. The challenge comes in diligently keeping track of the nuts and bolts of each country's particular economic information package. Here are a few general comments about economic indicators and some of the more closely watched data.
Most economic indicators can be divided into leading and lagging indicators:
Leading indicators are economic factors that change before the economy starts to follow a particular pattern or trend. Leading indicators are used to predict changes in the economy. Lagging Indicators are economic factors that change after the economy has already begun to follow a particular pattern or trend.
Important economic indicators can change from time to time depending on the state of the US and global economy. Sometimes leading indicators are important when Forex markets are trendless, at other times lagging indicators are important when Forex currency price movements are less pronounced. Whether looking at GDP, industrial production, PMI, PPI, CPI, durable goods, retail sales or housing starts, it's important to remember that no data point by itself can be responsible for a currency pair price movement, even though it may appear that way in the short run. Traders can quickly change sentiment when economic data is released, so be ready for possibly more volatility and volume around these times. You can use technical analysis charting for more direction after data has been revealed. Each country has economic indicators that tend to drive foreign exchange markets, so find the important economic data for the countries in the currency you trade most often.
Forex Tutorials.
Platforms.
Get Started.
Support.
© 2017 FXDD Global, FXDD Malta Ltd. K2, First Floor, Forni Complex, Valletta Waterfront, Floriana, FRN 1913, Malta.
MFSA IS/48817 FXDD Malta Limited holds an investment service category 3 License and is regulated by the Malta Financial Services Authority (MFSA) of Notabile Road, Attard, BKR3000 in Malta.
*Approved to provide cross border services across the EU / EEA under the European Passport Rights.
HIGH RISK WARNING: Foreign exchange trading carries a high level of risk that may not be suitable for all investors. Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objectives, experience level, and risk tolerance. You could lose some or all of your initial investment; do not invest money that you cannot afford to lose. Educate yourself on the risks associated with foreign exchange trading, and seek advice from an independent financial or tax advisor if you have any questions.
ADVISORY WARNING: FXDD provides references and links to selected blogs and other sources of economic and market information as an educational service to its clients and prospects and does not endorse the opinions or recommendations of the blogs or other sources of information. Clients and prospects are advised to carefully consider the opinions and analysis offered in the blogs or other information sources in the context of the client or prospect's individual analysis and decision making. None of the blogs or other sources of information is to be considered as constituting a track record. Past performance is no guarantee of future results and FXDD specifically advises clients and prospects to carefully review all claims and representations made by advisors, bloggers, money managers and system vendors before investing any funds or opening an account with any Forex dealer. Any news, opinions, research, data, or other information contained within this website is provided as general market commentary and does not constitute investment or trading advice. FXDD expressly disclaims any liability for any lost principal or profits without limitation which may arise directly or indirectly from the use of or reliance on such information. As with all such advisory services, past results are never a guarantee of future results.