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News-Trading and Economic Indicators

News-Trading

Economic Indicators

An economic indicator is an economic statistic (periodic-release) that aims to provide information regarding how an economy or an economic zone has performed during a particular period. Economic indicators are divided in three main categories as concerns their timing (leading, coincident, lagged) and in three categories as concerns their attributes (Procyclic, Countercyclic, Acyclic).

 

Economic Indicators and Timing

There are three types based on their timing:

1. Leading Indicator (Before)

Leading indicators are very important as they tend to change before an economy is changing. That means that leading indicators can be used as signaling-mechanisms of upcoming macroeconomic conditions. For example the Consumer Confidence Index (CCI) and the Home Sales Report are considered two important leading indicators. In addition the performance of the Government Bonds or the stock-market index can be considered as leading indicators.

2. Coincident Indicator (At the same time)

This type of economic indicator changes at the same time as an economy is changing (for example GDP).

3. Lagged Indicator (After)

A lagged indicator is changing a few quarters after an economy is changing (for example unemployment).

 

Economic Indicators and Attributes

There are three main attributes of Economic Indicators based on their relation to an economy’s performance

(i) Procyclic Indicator: Moves in the sane direction as an economy (for example GDP)

(ii) Countercyclic Indicator: Moves in the opposite direction as an economy (for example inflation or unemployment).

(iii) Acyclic Indicator: Has no relation with the economy.

Create your Own MT4/MT5 Trading Indicators for Free

 

The most Important Economic Indicators

Here is a list with the most important economic indicators:

1. Interest Rates

□ Importance: Enormous *****

□ Influence: Forex, Equity Markets, Commodity Markets, Bonds Market

□ US Release: US interest rates decisions are made by FED 8 times per year

□ ECB Release: The European Central Bank meets monthly to decide about its interest rates policy (Between the 10th and the 14th day of each month)

This is maybe the top economic indicator which can lead to extreme volatility and straightforward movements.

Interest Rates Decision

2. Gross Domestic Product

□ Importance: Enormous *****

□ Influence: Forex, Equity Markets, Commodity Markets, Bonds Market

□ US GDP Release: US Advance GDP released 1 month after the end of the quarter by the Bureau of Economic Analysis (BEA). Final GDP released 3 months after the quarter’s end. GDP releases during the last week of each month.

□ Europe’s GDP Release: Monthly by Eurostat

Gross Domestic Product (GDP)

3. Employment / Unemployment

□ Importance: Great ****

□ Influence: Forex, Equity Markets, Commodity Markets, Bonds Market

□ US NFP Release: The NFP report is released on the 1st Friday of every month by the US Bureau of Labor Statistics.

□ EU Unemployment Release: Monthly by Eurostat, usually during the last day of each month or the first day of the next month

US Non-Farm Payrolls

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TREND INDICATORS

Trend indicators are technical analysis indicators which are used for the identification of a price trend.

 

□ If a financial market or asset is trending these indicators can provide considerably reliable trading signals.

□ If a financial market or asset is ranging, trend indicators may mislead traders.

In the case of a ranging market, traders can use momentum indicators which are able to identify short-term price movements within the range.

Financial Markets can either be Trending or Ranging:

(i) Trending Markets: When the price of a Financial Asset or Market follows as certain trend during a long time period.

(ii) Ranging Markets: When the price of an asset or market moves up or down without following a certain long-term trend. Ranging means trading in a particular price level formed by an upper and a lower band.

 

Create your Own MT4/MT5 Trading Indicators for Free

 

Popular Trend Indicators

 

There are a lot of Trend Indicators available, these are the most popular:

(1) Standard Deviation (SD)

(2) Bollinger Bands

(3) Parabolic Stop and Reverse system

(4) Ichimoku Kinko Hyo (一目均衡表)

(5) Moving Averages

 

(1) Standard Deviation (SD)

Utility: Measuring Volatility

Standard Settings: 20 / 21 Periods

Introduction To Standard Deviation

» Read more about the Standard Deviation (SD)

 

(2) Bollinger Bands

Utility: Measuring Volatility / Evaluating Trend Strength

Standard Settings: 20 Periods

» Read more about the Bollinger Bands

 

(3) Parabolic SAR (Stop and Reverse system)

Utility: Evaluating Trends

Standard Settings: 2% acceleration factor and 20% maximum step

» Read more about the Parabolic SAR

 

(4) Ichimoku Kinko Hyo (一目均衡表)

Utility: Evaluating the Trend / Identifying Overbough / Oversold Market Levels

Standard Settings: Tenkan-Sen (9), Kijun-Sen (26), Senkou Span (52)

» Read more about the Ichimoku Kinko Hyo

 

(5) Moving Averages

Utility: Evaluating the Trend / Trend Reversals

Standard Settings: Fibonacci Numbers as Periods

» Read more about the Moving Averages

 

 

READ MORE

■ COMPARE PROVIDERS

Forex Brokers

Trade Signals ► CFDs Brokers        
■ TREND INDICATORS Trend Indicators

» Standard Deviation

» Bollinger Bands

» Parabolic SAR

» Ichimoku

» Moving Averages » Fibonacci Trading
■ TRADING OSCILLATORS Oscillators

» Rate of Change

» RSI

» Williams %R

» Stochastic

» Gator

» Momentum

   

» MACD

» Awesome

» DeMarker

» DMS System

» CCI

» StochRSI
■ NEWS INDICATORS News Indicators

» Interest Rates

» GDP

» US NFP

» Consumer Price Index

» Retail Sales

» Trade Balance
   

» Purchasing Manufacturing Index

» Consumer Confidence Survey    

 

 

 

Trend Indicators

George Protonotarios for WebForex.net (c)