Economic data, what does it mean? And what is it? Why should you pay attention to it as a trader?
To start with economic data is the state of the economy of a particular country as whole and what it means for that country. When we talk about economic Data, we are talking about CPI, PPI, UN-EMPLOYMENT, and GDP (to name a few) data which,in turn, affect the performance of the different sectors of the country (public – government and private – companies, financial institutions etc.)
When it comes to fundamental analysis and trading on fundamental, you must know two things:
1. What is the data that is going to come out of a particular country? (e.g. USA)
2. Impact or significance of that data on the market on that particular day.
Knowing which data is going to come out is not enough, you have to know the importance of each and its impact in the market on the day and how the market will react to it. The important things you must do before data release is to look for:
• What data is coming out
• What was the previous release
• Market consensus
• Actual data itself.