As a day trader, it is essential to pay close attention to the economic calendar and the key information that it provides when making trading decisions. There are several economic indicators that may reveal important news that can affect market performance, which in turn can have a significant impact on a trader’s investment returns.
One of the main economic indicators that matter the most for day traders are political events. As seen with recent large scale geopolitical tensions, these can have negative effect on the global economy, leading to the kind of macro-economic environment we are experiencing now, with the cost-of-living crisis, high inflation, and interest rates.
Another leading indicator that traders will need to focus on when informing their decisions is the stock market. High stock prices can indicate the general health of companies and decreasing stock prices are less positive. The stock market is an important indicator to understand, especially for retail investors at the beginning of their trading journey, as it allows them to try to understand market movements and decide whether to buy or sell their positions.
Gross Domestic Product (GDP) allows traders to view the market value of all the services and goods produced within the country. Rising GDP is associated with an economy that is showing a trajectory of growth and expansion, whereas a negative change in a country’s GDP highlights a weakened stance and position. Using GDP as an indicator, traders should invest more in currencies from countries with a growing GDP and seek to possibly exit any investments with currencies from countries with falling GDP numbers.
Understanding the purpose of economic indicators and why they matter in terms of how they affect several markets will go a long way in shaping a day traders investment journey. As a trader, you will want to have a general awareness of what is happening in the markets, and what factors might affect them. With Trive, our innovative multi-asset investment platform means that you are always up to date with market news and economic situations. Once traders learn and understand how the economic indicators affect different markets, this could translate to more successful and profitable trades.
Sources: Day Trade The World
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