Consumer Confidence Definition
Investors need information that will guide them in making economic decision. This information is usually available at any particular time of the year, therefore any trader who is looking forward to make important economic decision should rely on it to be in a position to make viable conclusions. One of the most important parameter is economic indicator. Economic indicators are markers which provide proper guidance to the investors on the underlying data. The information is crucial for any economic decision that the traders make. The indicators usually describe how the country economy is performing and the impact this has on the national currency.
Public policy dictates that the stakeholders should be kept informed on the changes that are taking place in their country or entity. If it is private sector, the shareholders, employees and other interested parties should be periodically provided with financial information which clearly shows where the company stands as far as its performance is concerned. The same case applies to the government; it has a role to inform its citizens on the performance of the economy. This entails the release of economic data on a regular basis. Governments usually adhere to given schedules, for example some economies give quarterly reports where the economic indicators are released for public consumption. Traders in Forex market need to keep watch of these indicators to be in a position to make sound decisions.
In and around time when the Forex economic indicators are released, the trading volume either decreases or increases. The change of trading volume in a Forex market is usually determined by the type of economic indicators which are released. If the indicators point out to a bright future traders will react positively through increasing their activities around a currency ,on the other hand if the released indicators paint a gloom picture as far as the current and future status of the economy is concerned, there will be panic in and around the market. People will rush to move away from the currency which are not performing well or withdraw from the market in anticipation of the worst performance in the future.
Traders may not be in a position to interpret some of the indicators especially if they do not have sound background around this area. There will be a need to consult an expert to give a clear picture on what they mean. This will greatly help them in making sound decision especially matters pertaining to buying or selling of a currency.
To use the data, one must know exactly when it is scheduled for release; this helps the trader to make a decision based on the information. An economic calendar is one of the tools which can help the trader to know when a given economic indicator is due for release. Having this kind of information before hand puts one at a competitive advantage since the trader will be in a position to tell how a currency will behave in relation to the released data. If for example you know that the employment data will be released on Friday and have been following the market, release of a promising report will move the market, as the traders start unwinding the short positions.
As a trader one should try to understand the basics, grasping the relationship between the report and economic performance and in general the currency movement in the market will help in making worthwhile economic decision.