Many of us have received a new year wish for prosperity. It is not magic and it becomes ever more clear that we need many tools to assist us in making that wish come true.
Last year I expressed the view that whilst we have to be masters of technical analysis none of it makes much sense unless it is within the context of a fundamental grasp of global economics.
This is not as hard as it at first might seem once you know what to look for and how to interpret it and use it . It then becomes a part of the discipline of being a trader.
The times in which we are trading are becoming more unpredictable.
This week the news from France of a possible terrorist attack on journalists is yet another event that unsettles an unsettled world.
The global equity markets have shown down moves in their first week of 2015.
There is anxiety in the air. Yields have dropped indicating bond buying indicative of risk aversion.
Risk appetite is not only affected by geopolitical events and the black swans which has to include the oil rout, but also the growing global concern of deflation.
The Known: Data and Prediction
Prediction is a necessity for the trader. It isn’t easy nor is it reliable, but there are ways to increase the odds. The data, as we know well, is relentless. There are results and information we would be foolish to ignore. Monetary policy is a given. For example (and it applies to all pairs) don’t trade the EURUSD unless you know what their central banks are up to.
This is a comparative game. Policies will please or disappoint; know which is which.
Data varies in it’s importance, PMI (manufacturing), CPI (the price index and an indicator of inflationary trend), GDP and the labour markets, are essential components as they are critical for assessing a nations economic health and in terms of the essential comparisons we need to make every time we trade a pair.
How to Prosper at Trading From the Data
The Results so far;
In the first three days there is plenty going on (fasten your seat belts if we continue this way!)
CPI flash estimate hot off the press today indicates a minus number. This is our ‘inflation’ indicator, or in the case of the Eurozone, lack of it and confirms the deflationary environment. With a meeting approaching the bets are mounting that Draghi will introduce full blown QE later this month
FOMC minutes indicate that rate rises will not happen before April. It may be longer as the price of oil bites and global pressures threaten the recovery.
Interesting to note that the committee think that lower energy prices are overall positive for the economy but will challenge inflation targets.
They also noted the lack of evidence of wage growth.
Therein lies a hint; it will be essential to follow the labour statistics. The ADP non farm number today was up on expectations. The official non farm number is on Friday.
Staying in the US, factory orders and non manufacturing PMI missed the number on Tuesday.
However, and this is the point to bear in mind for the year. Disappointment over the length of time it takes to raise rates, and the missing of inflation targets does not detract from the fact that the US market is at this time in recovery, however fragile. The Eurozone is in recession as is Japan.
missed a construction number and also services PMI came in under expectation. This is a concern since Services represent the major part of the UK GDP.
A Prosperous 2015!
A wealth of information to attain our 2015 goals is available both at Forex Mentor Pro and at the Fotis Trading Academy (link below) and for my part I will update here all that may affect trading decisions from the fundamental perspective whether it be political, result driven, central bank manipulations or natural disasters.
There is plenty of news to come and as stated it is non farm Friday in week one!. I will be back next week with a review.
Here is to a happy and successful year of trading.
How to Prosper at Trading in 2015