The Initial Jobless Claims indicator is a report that records how many people have applied for unemployment benefits in the United States, providing information on the state of the labor market of that country. This is a weekly published data, and provides information on how many people applied for unemployment benefits last week. Therefore, this report is also known as weekly jobless claims.
The report of the Initial Jobless Claims is prepared by the Employment and Training Administration of the U.S. Department of Labor, and is published on Thursday of each week at 13:30 GMT, with data from the previous week. Continue reading→ Initial Jobless Claims Indicator
No matter how absurd it may sound, a fake Forex blog does exist. Online foreign exchange traders go to Forex blogs to fill up the void in terms of trading information, news and insight. And when there is a need, there are also those that take advantage by filling that need with scam and useless information. It is risky enough to be in Forex trading, how much more so with the possibility to be drawn towards a fake Forex blog?
Look out for those outrageous headlines. For online users that have one time or the other been drawn to scams, the headlines might have done the trick. It is silly to put the finger on it but it is true: Be a millionaire trading foreign exchange! Gain $2000 a day trading Forex! These headlines provide easy solutions to everyday problems in a few words. In equipping oneself with trading knowledge, one finds out early on that these offers are impossible. Yet, trading can be complex that one just wishes for an easier path to the fulfillment of its goals. At the end of the trail, one is bound to be buying the blogs’ offerings and losing more money with nary the offered millions in sight.
Continue reading→ How to Avoid a Fake Forex Blog
The Durable Goods Orders is an economic indicator that reflects new orders placed with domestic manufacturers for delivery of durable goods (hard goods) from the factory, in the short term or in the future. This is a monthly published data, which always refers to the previous month in which the Department of Commerce’s Census Bureau issued the report.
The term durables goods applies to those who are expected to have a duration of more than three years. The report Durable Goods Orders comes in two monthly emissions:
- The progress report on durable goods.
- Manufacturers’ shipments, inventories and orders.
The reports are broken down by industry, which serves to eliminate the effects of a single volatile industry such as defense spending. Continue reading→ Durable Goods Orders
What is an overnight position?
These are open positions in the Forex market which are not closed at the end of the trading day in which they were opened. In the stock market an overnight position is considered at risk because it is common for as long as the exchange is closed (after the trading session) that some events may occur which can negatively impact the price of the stock traded.
In the Forex market, which is an international financial market that operates continuously 24 hours, it has been set the 17:00 EST (00:00 UTC) as the final hour of the trading day. At this time, any position that is still open is considered an overnight position. This hour is strict. If you open a position at 23:59:59 UTC and close this same position at 00:00:01 UTC, it will be considered an overnight position.
Every time we trade in the Forex market, all positions must be closed within two business days. Despite this, every trader has the option to renew all his open positions easily without the need for physical delivery of the foreign exchange contracts with which he is negotiating.
For example, if a trader buys $10,000 on Monday is in the obligation to make delivery of those $10,000 no later than Wednesday of the same week, unless he want to renew the position, which is called Rollover. Currently, most Forex brokers include among their services to their customers the option of renewing their open positions automatically (the rollover is credited or debited automatically if the client does not close their positions before a certain hour) or manually, which is also known as tom/next swaps a trade for the next day of the position´s settlement.
Thus, rollovers or swaps involve the application of a credit or debit in the operator’s trading account, which is based on the positions that remain open in the market at precisely 17:00 pm EST and differentials in interest rates between the currencies that make up the pairs with which we are trading. In this case, if we have an open position in which we proceeded to sell the currency that has the highest interest rate, our trading account will be debited (the account will be charged with the difference in the interest rate applied on the total volume of the position). But if in that position the same currency was bought, the account will be credited by the broker (the money deposited in the account is equal to the interest rate differential applied to the size of the position).
Continue reading→ Rollover in the Forex Market
When we trade in the Forex market at some point we will cross with requotes. While this does not happen all the time, it can happen and the trader should know what they are, what they mean and how to avoid them.
What is a re-quoting?
A re-quoting in the Forex market means that the broker with which we are trading is not able to provide us with an entry into the market based on the price we asked at the beginning when we send the order. Usually this occurs in highly volatile markets in which prices move up or down very quickly, usually in the periods in which important economic or political news are announced but also can be caused by some event that had a strong impact on the market.
Continue reading→ The Forex Market Requotes
The GDP or Gross Domestic Product is a report that includes the total value of all goods and services produced within a country in a given year, which is equal to the total of consumption, investment and government spending, plus the value of exports, minus the value of imports. The GDP report is disclosed at 8:30 am EST on the last day of each quarter and reflects the previous quarter. The importance lies in seeing the GDP growth during that period. In the case of the U.S., GDP growth has historically had an average value of about 2.5-3% per year.
The GDP can be calculated by three methods:
- Expenditure method.
- Method of distribution or income.
- Method of supply or added value.
Per Capita Gross Domestic Product Worldwide
Relevance of the Gross Domestic Product
The information provided by the data of this indicator is considered a measure of the economic health of the country, and basically allows the economists to set if there is economic growth or economic recession.
Moreover, GDP represents the size of the economy of a country, which serves for comparing to the economies of other countries.
Effects of the Gross Domestic Product in the market
The GDP data has a great impact on the markets. Its value is taken into account by investors as it indicates whether an economy is growing, stagnant or in recession. Sometimes, a figure that indicates a turning point, as a growth figure after several consecutive quarters of recession, which most likely indicate the beginning of the expansion trend may lead to strong market movements. As immediate consequences of this situation increases would occur in the securities markets, as investors will have positive economic expectations.
When the GDP is rising, investors can anticipate that the stock market will go up due to higher corporate profits. The revaluation of the equity markets and economic growth that shows this indicator implies a stronger currency. Consequently, many investors will be attracted to invest in a growing economy, so the expectations of the economy will improve, there will be more confidence, which at the same time will create new businesses, new jobs, etc.. Given this climate of economic prosperity, global investors have to buy the domestic currency to purchase shares of the stock market of the country or to invest in companies directly, which will cause the appreciation of the national currency.
Also, when this indicator rises, the counterpart is a declining bond market for fear of an increased inflation due to a probably economic overheating which may happen sooner or later. It is normal for an economy where activity grows and creates jobs, that wages tend to rise, and therefore the price of goods and services do the same. Thus it is easy to assume that economic growth will drive an increase in interest rates to curb rising inflation, and as a result, a depreciation of bond prices.
More fundamental indicators
As any investor with some experience in the Forex market knows, one of the main advantage of this financial market is that it operates 24 hours a day from Monday to Friday, which gives the trader the opportunity to take advantage of the many opportunities offered by the market throughout the day. This is because the financial market is not centralized as is the New York Stock Exchange, for example, so that at all times there are large and small traders worldwide who perform currency transactions whose total volume is much higher than any other market. This makes the Forex market an excellent investment option as there is liquidity to open and close positions at all times. In other financial markets the smaller trading volume sometimes makes not possible to find a counterparty to buy or sell when a trader wants to open a long or short position.
However, this does not mean that it is profitable to trade in the Forex market at all times, as there are periods in which the market is relatively calm and without any clear direction or trend so it is difficult to find good oportunities to obtain profits (these are the periods of lower trading volume for which there are relatively few investors transacting in the market).
Continue reading→ Forex market sessions