Top Fundamental Indicators that can help you understand the economy
Traders all over the world wait with baited breath to find out the data from a variety of economic indicators. Some indicators cause short-term spikes in Forex pairings. Some are so specific that they get drowned out by the noise in the overall economy. There are some macroeconomic indicators that have proven extremely reliable in predicting the state of the economy. The power of these indicators to affect the stock markets and currencies is so pervasive that you really cannot understand the economy without an idea of what they are all about.
For trading or for conversation
When you are looking to trade binary options with optionsclick, or just want to have a conversational knowledge about the economy, these are some of the macroeconomic indicators that you need to know about.
Interest rate announcements
Interest rates are the most important factor in the movement of currencies in the forex market. High interest rates mean an attractive investment proposition and money flowing into a country. If the country is attractive then its currency will reflect this and will get stronger. That is why some countries keep interest rates artificially low to keep their currency low and therefore protect the comparative pricepoints of their exports.
Consumer price index
This is one of the most powerful indicators of inflation. The measure tracks the buying power of a population with their own currency. A normal inflation rate suggests a healthy economy.
Gross domestic product
This is the highest level macro figure for the performance of the economy of a country. It is the value of products and services produced annually. If you are trading then this indicator is normally for confirming a trend rather than predicting, and there are other indicators that may point to future trends much better.
Retail sales index
This is a monthly indicator that has a lot of power in the forex market. If people are not spending then problems lie ahead for a country’s economy. Spending patterns are tracked very carefully by those that want to know how an economy is progressing.
Employment indicators are good for looking at the stage at which an economy is at. They reflect the business cycle. By knowing what proportion of the nation is working, how many jobs are being created or lost, and at what rate average wages are increasing, you can get a clearer picture of business sentiment, the real situation with inflation, and generally how the economy is faring.
If you are looking to begin trading forex, or have been reading something like a cherrytrade binary review before embarking on a binary options career, make sure you do not just focus on technical analysis, take a look at the fundamentals as well.
If you want to really understand the economy then you need to understand how the fundamental factors and indicators are reflected in the technical aspects of the economy, and in particular the graphs, averages and candlestick patterns that traders use. A lot of the economy is about confidence. Almost every day something comes along that changes our opinion of how things are going, and that is reflected in market drops. Have a read about market psychology and you will be well on your way to understanding the economy.