If you’ve already completed a course on how to trade the Forex currencies, you’ve probably learned a basic principle; supply and demand affect currency prices.
Currencies are prone to the laws of supply and demand. When more investors want a particular monetary unit, its cost increases. But taking a step further, many of the pros focus on what actually causes the shifts in demand and supply. They do so in order to get more accurate information that may lead them to better decisions on whether to buy or sell a currency.
One of those factors includes economic growth. Before individuals put money into a country’s business they want to ensure the economy is on solid ground. By the same token, Forex traders take certain economic indicators into consideration to ascertain the health of the economy. They look at unemployment, GDP, consumer confidence and more. Thus, they create a “laundry list” and later on determine whether the signals point to a currency hike or a currency depreciation. For instance: rise in the unemployment benefit claims is bad. Hike in GDP is positive. Drop in exports is bad, while drop in unemployment is good. With these reports, a trader is able to anticipate moves in the global Forex market.
Many people who trade with a strategy involving S & D keep track of the economic calendar events. Even scalpers look at S& D movers. Indicators like GDP are often said to be a scalper’s favorite.
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