The economy drives markets. This fact applies to commodity futures, stocks, and foreign currencies. The full force of changes in the economy are felt over months and years. But when news of economic issues breaks, day traders must deal with the immediate reaction of the market in minute by minute trading. Thus decoding economic indicators is important in allowing the day trader to capture market movements and trade profitably.

Leveraging Real-Time Economic Data for Day Trading

Economic indicators such as the non-farm payroll report, consumer price index, or USDA weekly export sales report come on a regular basis. A day trader will know when any of these reports will come out. Thus they can trade in anticipation of the report or in reaction to it. An old saying in the markets is that a profit comes from buying on the rumor and selling on the news. Markets tend to overreact when news is expected to be either good or bad. The disciplined trader can leverage real-time economic data for day trading profits. As always, the wise trader will set their take profit and stop-loss targets to ensure gains and limit losses.

Interest Rates and Forex: A Day Trader’s Perspective

An often repeated saying is that you cannot fight the US Federal Reserve. When inflation drives the costs of goods and services up, the Fed commonly raises interest rates. This is done to slow the economy and commonly drives stock prices down. Meanwhile it drives up the value of the US dollar against other world currencies. Forex day traders then deal with an upward trend for the dollar against the yen, euro, Swiss franc, and other world currencies. Higher interest rates and a stronger dollar also affect commodity futures trading. Commodities like crude oil, coffee, and winter wheat are priced in dollars on the New York Mercantile Exchange (NYMEX). Thus a stronger dollar can drive down the price (in dollars) of a given commodity.

Intraday Strategies for Trading on Employment Reports

One might think that when unemployment numbers get better that the markets would be happy. But because markets expect the Federal Reserve to react to a stronger economy by raising interest rates, stocks tend to fall along with commodity futures. And when unemployment figures are worse, the markets go up. Day traders in stocks, currencies, and commodities all need to keep an eye on employment data. First there is the matter of buying the rumor and then there is selling the news. Markets anticipate and often overreact. Establishing a trading position prior to a market runup and selling as the actual news hits is a common way for day traders to profit from employment reports no matter what market they are trading.

Consumer Confidence and Retail Sales: Spotting Day Trading Opportunities

The government and various other institutions track a whole host of economic indicators. Important ones include measures of consumer confidence and actual retail sales numbers. The retail sales tell us what just happened in the past. Consumer confidence gives us an indication of what to expect going forward. In each case the day trader can trade in anticipation of what the report will reveal. Or they can trade as the market reacts to the news. The best results go to the disciplined day trader who uses an established strategy and routinely sets their stop-loss and take profit targets.

Mastering the Economic Calendar for Effective Day Trading

A day trader need not be surprised by economic indicators as they follow set schedules. Gross domestic product, inflation indicators, consumer spending, agricultural production, balance of trade, employment numbers, Federal Reserve open market committee minutes, all come on set dates. The prepared day trader keeps a list of the indicators that they find most profitable. One does not need to trade every one of these. In fact, many tend to reflect the same information. The key is to choose one of two of these, learn what they predict, and generate reliable profits each time they are reported.