The forex exchange calls for plenty of vigilance coupled with the ability to determine how events around the world may affect the value of your holdings. This is the foremost reason why access to information – timely, accurate information – has been what separated the successful from the unsuccessful trader for so long. The digital age, with the internet able to let us know what’s happening all around the world the moment it takes place, has been the biggest factor when it comes to leveling the trading field.
It has allowed all of us, regardless of where in the world we are, to place our bets on major stocks, government bonds, and currencies from all corners of the world based on whether we think they might retain their value, go up, or, in shorting cases, on whether they will fall in the future. Accessibility to the market has never been higher.
Even with this market access, the fact still remains that individual traders have to make the choice of which currencies to buy a holding in. The right choice will translate to profit, while the wrong one will spell a loss. How are they to make these decisions in order to achieve good results?
One of the most important practices for successful traders is keeping an eye on the world events with the ability to affect the value of their holdings. These market indicators are vital for every trader, from the smallest day trader to the largest forex trading firm. Here are a few of the most relevant market indicators in the forex trader’s working life.
General Market Conditions
As you might reasonably expect, the general conditions prevailing in a given market will be relevant to the individual trader’s portfolio. If the entire market is fairing badly, it’s unlikely that your particular holding will be the exception. While the internal workings of a market are usually complicated, traders need to keep an eye on general trends in market activity so as not to be caught napping when the wave catches up to them. Vigilance is the operating word here.
Economic Reporting Services
There’s a reason why the picture of the high-flying business executive with their ubiquitous copy of the business news opened in front of them is such a popular caricature. It’s because it’s a true representation of reality. Those in the finance industry, with traders ranking high among them, need to be constantly updated on the world of business and what’s going on inside it. While it’s no secret that the reaction of traders to economic news sometimes makes its effects even more severe, the fact remains that nobody wants to be the last to know when bad news for the market comes to be known. Being the first – or the last – to know may spell the difference between spectacular success and devastating failure in the rapidly changing world of forex trading.
Natural Disasters
As they say in the investment world, there can be no profit without an element of risk, and the economic markets mirror this reality perfectly. There will always be a level of unpredictability when we’re considering forex markets, not least because we will be dealing with the currencies of various governments across the worlds. We all know that currencies are basically indicators of a country’s economic health, and are prone to fluctuations just as much as countries are prone to ups and downs in terms of economic performance.
In certain instances, you will have events with seemingly little economic interest when viewed superficially have drastic effects on a nation’s economy. When an earthquake occurs in a country, the effects spread further than the tragic loss of life and property that might be immediately visible. There will be damage to infrastructure, important industries, disruption of communication, market shutdowns, trade delays, port closures, and all manner of other knock-on calamities that will cavalcade into extensive economic damage for the affected nation and its economic, trading, and tourism partners.
While we are able to predict some of these natural calamities to some extent, thus being able to prepare somewhat for their effects, we can never completely offset their disruptive effects. All this is aside from the various man-made calamities that befall developing and developed nations seemingly at random. Political uprisings, for example, may cause as much damage to a nation’s economy as a tsunami, and so must be regarded with as much trepidation as their natural counterparts.
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