Course 6: Introduction to the analysis of economic statistics and market sentiment

Every week hundreds of economic statistics are published all around the world , but there are actually few publications that really lend themselves to news trading, with an immediate impact on the market.

We can count 5-10 in the US, and 3-5 in the Euro Zone, Australia, Canada and New Zealand. These statistics are usually monthly or quarterly and their publication is planned in advance.

Unfortunately, things change often, and the market is not always responsive to the same statistics.

Spot the market obsessions

The market, and traders, are not working "obsessions." Each period corresponds to a "hot topic" (Brexit for example in the summer of 2016), and statistics related to this hot topic become more important. One could almost speak of a fashion phenomenon.

And these modes evolve rapidly, so that it is sometimes difficult to follow the thread. Besides, for someone who practices news trading, taking a vacation for a week can have detrimental consequences (for a time) on his ability to "feel the market mood" and to trade news.

The main thing to remember is that it is absolutely necessary to identify the obsession of the moment, the fashionable subject, because once a subject is under the spotlight of traders, information about this subject will impact the market Far more than it should in normal times.

This means that sometimes Greek elections may be more important than German GDP, or that US housing starts may be larger than the monthly unemployment report.

And to evaluate what is the subject of the moment, there is no secret, it is necessary to remain constantly "connected to the market", to take knowledge of the "headlines" for different sources of info, and to identify what types of infos Translate into significant forex impacts. This is the area of ​​expertise of ProfessorForex.com.

Appetite and risk aversion

In order to know which trader, and how, one must also take into account market sentiment, whether traders are prone to risk taking, or whether risk aversion dominates.

Indeed, the impact of positive events will be accentuated in case of risk appetite, but minimized in the event of risk aversion. Conversely, the bad news can be mitigated by the optimism surrounding it, and the good news highlighted.

It is therefore necessary to know what news generates risk aversion:

* Geopolitical uncertainty (wars, attacks, or rumors about it) 
* Bankruptcies of large companies and negative surprises in the results of large companies 
* Important economic statistics that deviate significantly from the consensus

Or the appetite for risk:

* Geopolitical stability (peace treaties, etc.) 
* Good results for large companies 
* Good surprises in economic statistics