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24-Hour Market

At 5:00 pm EST Sunday, trading begins as markets open in Sydney. At 7:00 pm EST the Tokyo market
opens, followed by London at 3:00 am EST. And finally, New York opens at 8:00 am EST and closes at
4:00 p.m. EST. Before New York trading closes, the Sydney market is back open its a 24-
hour seamless market!
As a trader, this allows you to react to favorable or unfavorable news by trading immediately. If
important data comes in from the United Kingdom or Japan while the U.S. futures market is closed,
the next days opening could be a wild ride. (Overnight markets in futures currency contracts exist,
but they are thinly traded, not very liquid, and are difficult for the average investor to access.)

Read more: http://www.babypips.com/school/preschool/why-trade-forex/forex-vs-


Major Currency Pairs

The currency pairs listed below are considered the majors. These pairs all contain the U.S. dollar
(USD) on one side and are the most frequently traded. The majors are the most liquid and widely
traded currency pairs in the world.
Best Days of the Week to Trade Forex

So now we know that the London session is the busiest out of all the other sessions, but there are also
certain days in the week where all the markets tend to show more movement. Know the best days of
the week to trade forex.

Below is a chart of average pip range for the major pairs for each day of the week:

Pair Sunday Monday Tuesday Wednesday Thursday Friday

D 69 109 142 136 145 144
D 73 149 172 152 169 179
Y 41 65 82 91 124 98
D 58 84 114 99 115 111
D 28 81 98 87 100 96
D 43 93 112 106 120 125
F 55 84 119 107 104 116
EUR/JPY 19 133 178 159 223 192
Y 100 169 213 179 270 232
P 35 74 81 79 75 91
F 35 55 55 64 87 76

As you can see from the chart above, it would probably

Read more: http://www.babypips.com/school/preschool/when-can-you-trade-forex/best-days-of-the-


Best Times to Trade:

When two sessions are overlapping of course! These are also the times where major news
events come out to potentially spark some volatility and directional movements. Make sure you
bookmark the Market Hours cheat sheet to take note of the Opening and Closing times.
The European session tends to be the busiest out of the three.
The middle of the week typically shows the most movement, as the pip range widens for most
of the major currency pairs.
Read more: http://www.babypips.com/school/preschool/when-can-you-trade-forex/best-days-of-the-

Worst Times to Trade:

Sundays everyone is sleeping or enjoying their weekend!

Fridays liquidity dies down during the latter part of the U.S. session.
Holidays everybody is taking a break.
Major news events you dont want to get whipsawed!
During American Idol, the NBA Finals, or the Superbowl.

Read more: http://www.babypips.com/school/preschool/when-can-you-trade-forex/best-days-of-the-


bearish reversal pattern means actual bearish pattern, do sell in this pattern
bearish chart pattern

What is the relationship between inflation and

interest rates?

By Jean Folger A A A

Inflation and interest rates are linked, and frequently referenced in

macroeconomics. Inflation refers to the rate at which prices for goods and
services rises. In the United States, interest rates the amount of interest paid
by a borrower to a lender are set by the Federal Reserve (sometimes called
"the Fed"). In general, as interest rates are lowered, more people are able to
borrow more money. The result is that consumers have more money to spend,
causing the economy to grow and inflation to increase. The opposite holds true
for rising interest rates. As interest rates are increased, consumers tend to have
less money to spend. With less spending, the economy slows and inflation

The Federal Open Market Committee (FOMC) meets eight times each year to
review economic and financial conditions and decide on monetary
policy.Monetary policy refers to the actions taken that affect the availability and
cost of money and credit. At these meetings, short-term interest rate targets
are determined. Using economic indicators such as the Consumer Price
Index (CPI) and the Producer Price Indexes (PPI), the Fed will establish interest
rate targets intended to keep the economy in balance. By moving interest rate
targets up or down, the Fed attempts to achieve maximum employment, stable
prices and stable economic growth. The Fed will tighten interest rates (or
increase rates) to stave off inflation. Conversely, the Fed will ease (or decrease
rates) to spur economic growth.

Investors and traders keep a close eye on the FOMC rate decisions. After each
of the eight FOMC meetings, an announcement is made regarding the Fed's
decision to increase, decrease or maintain key interest rates. Certain markets
may move in advance of the anticipated interest rate changes and in response
to the actual announcements. For example, the U.S. dollar typically rallies in
response to an interest rate increase.
Why Interest Rates Matter
For Forex Traders
By David HuntAAA |

The biggest influence that drives the foreign-exchange market is interest

ratechanges made by any of the eight global central banks. These changes are
an indirect response to other economic indicators made throughout the month,
and they possess the power to move the market immediately and with full force.
Because surprise rate changes often make the biggest impact on traders,
understanding how to predict and react to these volatile moves can lead to
quicker responses and higher profit levels. (Read Get To Know The Major
Central Banks for background on these financial institutions.)

Interest Rate Basics

Interest rates are crucial to day traders on the forex market for a fairly simple
reason: the higher the rate of return, the more interest accrued on currency
invested and the higher the profit. (Read A Primer On The Forex Market for
background information.)

Of course, the risk in this strategy is currency fluctuation, which can dramatically
offset any interest-bearing rewards. It is worth stating that while you may always
want to buy currencies with higher interest (funding them with those of lower
interest), it is not always a wise decision. If trading on the forex market were this
easy, it would be highly lucrative for anyone armed with this knowledge. (Read
more about this type of strategy in Currency Carry Trades Deliver.)

That isn't to say that interest rates are too confusing for the average day trader;
just that they should be viewed with a wary eye, like any of the regular news
releases. (Read Trading On News Releases to learn more.)

How Rates Are Calculated

Each bank's board of directors controls the monetary policy of its country and the
short-term rate of interest at which banks can borrow from one another. The
central banks will hike rates in order to curb inflation, and cut rates to encourage
lending and inject money into the economy.

Typically, you can have a strong inkling of what the bank will decide by examining
the most relevant economic indicators, namely:

The Consumer Price Index (CPI)

Consumer spending

Employment levels

Subprime market

Housing market

(Read more about the CPI and other signposts of economic health in
ourEconomic Indicators tutorial.)

Predicting Central Bank Rates

Armed with data from these indicators, a trader can practically put together an
estimate for the Fed's rate change. Typically, as these indicators improve, the
economy is going well and rates will either need to be raised or, if the
improvement is small, stay the same. On the same note, significant drops in
these indicators can mean a rate cut in order to encourage borrowing. (Read
more about the factors that influence interest rate changes in Forces Behind
Interest Rates.)

Outside of economic indicators, it is possible to predict a rate decision by:

1. Watching for major announcements

2. Analyzing forecasts

Major Announcements
Major announcements from central bank heads tend to play a vital role in interest
rate moves, but are often overlooked in response to economic indicators. That
doesn't mean they are to be ignored. Any time a board of directors from any of
the eight central banks is scheduled to talk publicly, it will usually give an insight
into how the bank views inflation.

For example, on July 16, 2008,Federal Reserve Chairman Ben Bernanke gave
his semiannual monetary policy testimony before the House Committee. At a
normal session, Bernanke reads a prepared statement about the U.S. dollar's
value, as well as answers questions from committee members. At this session,
he did the same. (Read more about the head of the Fed inBen Bernanke:
Background And Philosophy.)

Bernanke, in his statement and answers, was adamant that the U.S. dollar was in
good shape and that the government was determined to stabilize it even though
fears of a recession were influencing all other markets.

The 10am session was widely followed by traders, and because it was positive, it
was anticipated that the Federal Reserve would raise interest rates, which
brought a short-term rally by the dollar in preparation for the next rate decision.

Figure 1: The EUR/USD declines in

response to Fed\'s monetary policy
Source: DailyFX
The EUR/USD declined 44 points over the course of one hour (good for the U.S.
dollar), which would result in a $440 profit for traders who acted on the

Forecast Analysis
The second useful way to predict interest rate decisions is through analyzing
predictions. Because interest rates moves are usually well anticipated,
brokerages, banks and professional traders will already have a consensus
estimate as to what the rate is.

Traders should take four or five of these forecasts (which should be very close
numerically) and average them in order to gain a more accurate prediction.

What to Do When a Surprise Rate Occurs

No matter how good your research is or how many numbers you have crunched
before a rate decision is made, central banks can throw a curve ball and knock all
predictions out of the park with a surprise rate hike or cut.

When this happens, you should know which direction the market will move. If
there is a rate hike, the currency will appreciate, which means that traders will be
buying it. If there is a cut, traders will probably be selling it and buying currencies
with higher interest rates. Once you have determined this:

Act quickly! The market tends to move at lightning speeds when a

surprise hits, because all traders vie to buy or sell (depending on
hike or cut) ahead of the crowd, which can lead to a significant profit
if done correctly.

Be aware of a volatile trend reversal. A trader's perception tends to

rule the market at the first release of data, but then logic comes into
play and the trend will most likely continue on in the way it was
The following example illustrates the above three steps in action.

In July 2008, the Bank of New Zealand had an interest rate of 8.25% - one of the
highest of the central banks. The rate had been steady over the previous four
months, as the NZD was a hot commodity for traders to purchase due to higher
rates of return.

In July, against all predictions, the board of directors cut the rate at its monthly
meeting to 8%. While the quarter-percentage drop seems small, forex traders
took it as a sign of the bank's fear of inflation and immediately withdrew funds, or
sold the currency and bought others - even if those others had lower interest

Figure 2: The NZD/USD drops in response

to a rate cut by the Bank of New Zealand
Source: DailyFX

The NZD/USD dropped from .7497 to .7414 - a total of 83 points, or pips, over
the course of five to 10 minutes. Those who had sold just one lot of the currency
pair gained a net profit of $833 in a matter of minutes.

As quickly as the NZD/USD degenerated, it wasn't long before it got back on

track with its current trend, which was upward. The reason it didn't continue free
falling was that even though there was a rate cut, the NZD still had a higher
interest rate (at 8%) than most other currencies. (Learn how commodities
influence the New Zealand dollar in Commodity Prices And Currency

As a side note, it is import to read through the actual central bank press release
(after determining whether there has been a surprise rate change) to gain
understanding of how the bank views future rate decisions. The data in the
release will often induce a new trend in the currency after the short-term effects
have taken place.

The Bottom Line

Following the news and analyzing the actions of central banks should be a high
priority to forex traders because as they determine their region's monetary policy,
currency exchange rates tend to move. As currency exchange rates move,
traders have the ability to maximize profits - not just through interest accrual
from carry trades, but also from actual fluctuations in the market. Thorough
research analysis can help a trader avoid surprise rate moves and react to them
properly when they inevitably happen.

For related reading, see Formulating Monetary Policy.

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Forces Behind Interest
By Reem HeakalAAA |

An interest rate is the cost of borrowing money. Or, on the other side of the coin, it
is the compensation for the service and risk of lending money. Without it, people
would not be willing to lend or even save their cash, both of which require
deferring the opportunity to spend in the present. But prevailing interest rates are
always changing, and different types of loans offer various interest rates. If you
are a lender, a borrower or both, it's important you understand the reasons for
these changes and differences.

Lenders and Borrowers

The money lender takes a risk that the borrower may not pay back the loan.
Thus, interest provides a certain compensation for bearing risk. Coupled with the
risk of default is the risk of inflation. When you lend money now, the prices of
goods and services may go up by the time you are paid back, so your money's
original purchasing power would decrease. Thus, interest protects against future
rises in inflation. A lender such as a bank uses the interest to process account
costs as well.

Borrowers pay interest because they must pay a price for gaining the ability to
spend now, instead of having to wait years to save up enough money. For
example, a person or family may take out a mortgage for a house for which they
cannot presently pay in full, but the loan allows them to become homeowners
now instead of far into the future. Businesses also borrow for future profit. They
may borrow now to buy equipment so they can begin earning those revenues
today. Banks borrow to increase their activities, whether lending or investing, and
pay interest to clients for this service.

Interest can thus be considered a cost for one entity and income for another.
Interest is the opportunity cost of keeping your money as cash under your
mattress as opposed to lending. If you borrow money, the interest you have to
pay is less than the cost of forgoing the opportunity to have the money in the

How Interest Rates are Determined

Supply and Demand

Interest rate levels are a factor of the supply and demand of credit: an
increase in the demand for credit will raise interest rates, while a decrease
in the demand for credit will decrease them. Conversely, an increase in the
supply of credit will reduce interest rates while a decrease in the supply of
credit will increase them.

The supply of credit is increased by an increase in the amount of money made

available to borrowers. For example, when you open a bank account, you are actually
lending money to the bank. Depending on the kind of account you open (a certificate
of deposit will render a higher interest rate than a checking account, with which you
have the ability to access the funds at any time), the bank can use that money for its
business and investment activities. In other words, the bank can lend out that money to
other customers. The more banks can lend, the more credit is available to the economy.
And as the supply of credit increases, the price of borrowing (interest) decreases.

Credit available to the economy is decreased as lenders decide to defer the re-payment
of their loans. For instance, when you decide to postpone paying this month's credit
card bill until next month or even later, you are not only increasing the amount of
interest you will have to pay, but also decreasing the amount of credit available in the
market. This in turn will increase the interest rates in the economy.

Inflation will also affect interest rate levels. The higher the inflation rate, the more
interest rates are likely to rise. This occurs because lenders will demand higher interest
rates as compensation for the decrease in purchasing power of the money they will be
repaid in the future.

The government has a say in how interest rates are affected. The U.S. Federal
Reserve (the Fed) often makes announcements about how monetary policy will affect
interest rates.

The federal funds rate, or the rate that institutions charge each other for extremely
short-term loans, affects the interest rate that banks set on the money they lend; the rate
then eventually trickles down into other short-term lending rates. The Fed influences
these rates with "open market transactions", which is basically the buying or selling of
previously issued U.S. securities. When the government buys more securities, banks
are injected with more money than they can use for lending, and the interest rates
decrease. When the government sells securities, money from the banks is drained for
the transaction, rendering less funds at the banks' disposal for lending, forcing a rise in
interest rates.

Types of Loans
Of the factors detailed above, supply and demand are, as we implied earlier, the
primary forces behind interest rate levels. The interest rate on each different type
of loan, however, depends on the credit risk, time, tax considerations (particularly
in the U.S.) and convertibility of the particular loan.

Risk refers to the likelihood of the loan being repaid. A greater chance that the
loan will not be repaid leads to higher interest rate levels. If, however, the loan is
"secured", meaning there is some sort of collateral that the lender will acquire in
case the loan is not paid back (i.e. such as a car or a house), the rate of interest
will probably be lower. This is because the risk factor is accounted for by
the collateral.

For government-issued debt securities, there is of course very little risk because
the borrower is the government. For this reason, and because the interest is tax-
free, the rate on treasury securities tends to be relatively low.

Time is also a factor of risk. Long-term loans have a greater chance of not being
repaid because there is more time for adversity that leads to default. Also,
the face value of a long-term loan, compared to that of a short-term loan, is more
vulnerable to the effects of inflation. Therefore, the longer the borrower has to
repay the loan, the more interest the lender should receive.

Finally, some loans that can be converted back into money quickly will have little
if any loss on the principal loaned out. These loans usually carry relatively lower
interest rates.

As interest rates are a major factor of the income you can earn by lending money,
of bond pricing and of the amount you will have to pay to borrow money, it is
important that you understand how prevailing interest rates change: primarily by
the forces of supply and demand, which are also affected by inflation and
monetary policy. Of course, when you are deciding whether to invest in a debt
security, it is important to understand how its characteristics determine what kind
of interest rate you can receive.

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1. How to use an Economic Calendar?

2. What Indicators are used in Economic Calendar?

3. Why Economic Calendar is needed for traders?

1. How to use an Economic Calendar?

In the unpredictable world of Forex, to know why the market is moving in a certain way and be able to
anticipate these moves is one of the major keys for successful Forex trading. Although the reaction of the
market to the world events fluctuates daily, experienced traders try to analyze future economic events in
order to foresee currency movements. Trader needs to stay way ahead of event announcements and act
accordingly so that by the time an announcement is made, he/she has already priced the value of their
currency pair. On the whole, the biggest market-moving events tend to be the release of key economic
data such as the US nonfarm payroll number.

The easiest way to manage the information from announcements is to follow an Economic Calendar.
Through using this efficient economic tool, you can track key indicators which will present you where the
market is headed and what may impact your currency movements. The knowledge of future economic
and political indicators and coming events is not only beneficial, but crucial factor for a good trader.

To make the picture clearer, lets assume that the Bank of England and the European Central Bank plan
to meet later next month to discuss the policy of interest rates. You can forecast whether the rate will be
raised or lowered through the knowledge of this meeting. An experienced trader will take long or short
positions in both GBP/USD and EUR/USD respectively. If however interest rates are expected to remain
the same, traders will check other factors out that might affect the direction of a currency pair.

There are alternative ways to keep an economic calendar. You can search for main indicators online and
create your own calendar by inputting the information manually. Otherwise, there are many online
calendar platforms provided by different brokers or financial organizations that update indicators
automatically and will endow you with all necessary information. It is also possible to copy the indicators
from the calendar and paste the whole list of them into a document, highlight important events and delete
the ones you consider to be less important.

After you have obtained the information, inputting it in your calendar and you are keeping track, you need
to act. You notice from your calendar that an announcement date is approaching. What is to follow is that
a consensus will be forecast as to what to expect from said announcement. As a forex trader you will
begin to price the new data and adjust your trades accordingly.
Go to Economic Calendar

2. What Indicators are used in Economic Calendar?

The US dollar accounts for a large proportion of global currency trades and has the biggest influence on
currency prices.

The most important indicator is GDP (Gross Domestic Product) as this measures the sum of all goods
and services in a country. Industrial production measures how much is produced in a nations factories,
mines, or utilities. PMI (Purchasing Managers Index) monitors manufacturing conditions.

Other two important indicators to measure the inflation are the Producer Price Index (PPI) and Consumer
Price Index (CPI), which measure the average prices for sellers and buyers.

Here is the list of the most important economic indicators that can be found from the Economic

Consumer Confidence Index (CCI)

Released: 10am EST Last Tuesday of each month

This survey of over 5,000 US households intends to show the financial health, spending power, and
confidence of the average American consumer. It consist of three headline figures the Index of
Consumer Sentiment, which reflects how people currently feel, Current Economic Conditions, which
reflects how people feel the economy is going, and the Index of Consumer Expectations, which reflects
how they think the economy will be in six months time. Despite the subjectivity of this survey, it can be a
big market mover on the forex markets, because the confidence of consumers is key to the economic
performance of a country as a whole, and therefore directly affects the value of its currency.

Consumer Credit Report

Released: 3pm EST, About five weeks after months end

This monthly Fed report estimates changes in the dollar amounts of outstanding unsecured loans to
individuals, which tend to be used to purchase consumer goods. Its not a big market mover, but it can be
a good indicator of the future spending levels of consumers, and can therefore be used to inform traders
of the positions they should take when trading the Personal Consumption and Retail Sales reports.

Consumer Price Index (CPI)

Released: 8.30, Monthly, approximately mid-month

This is the main benchmark for inflation in the US economy, covering the prices across a basket of
commonly bought consumer goods and services such as groceries and haircuts. It is perhaps the most
important economic indicator there is, because it is always taken into account in Fed decisions, and
because it is used to make adjustments to cash flow mechanisms such as pensions, Medicare, and cost
of living adjustments to insurance policies.
Durable Goods Report
Released: 8.30am EST On or around the 20th of each month (advance release; revised release about six
weeks after period end with Factory Orders)

The Durable Goods Report, which is released by the US census bureau, consists of data on new orders
from thousands of manufacturers of durable goods, which are higher-priced goods with a useful life of
over three years such as cars, consumer electronics, and turbines. Rises in this number usually occur
ahead of general economic expansion, although sample error can affect the figure considerably so it is
best to consider a moving average that takes into account previous releases when evaluating these

Employee Cost Index (ECI)

Released: 8.30am, last Thursday of April, July, November and January

The Employment Cost Index (ECI) is a quarterly report that reflects changes in wages, bonuses, and
benefits from the previous quarter on a per-hour basis. Because employee costs are such a large part of
corporate expenditure, they will often be reflected in the price of goods and services. Therefore, it can be
used to gain an insight into future inflation trends, and can be a major market mover if it deviates from
analysts estimates.

Employment Situation Report

Released: 8.30am EST, First Friday of the month

This broad-based indicator, released by the Bureau of Labor Statistics (BLS), consists of two surveys.
The establishment survey, which samples over 400,000 businesses, presents important statistics such
as non-farm payrolls, hours worked, and hourly earnings. The household survey samples over 60,000
households to produce a figure representing the total number of individuals out of work, from which the
national unemployment rate is derived. As we stated in yesterdays article, the non-farm payrolls figure is
one of the most hotly anticipated and widely traded indicators among forex traders. The other most
eagerly-awaited number here is the unemployment figures from the household report, which are
considered a lagging indicator of the health of the economy. The report as a whole is perhaps the most
influential in determining Fed policy, and if the figures surprise analysts, it can move markets in a very
dramatic way.

Existing Home Sales

Release Date: 8.30am EST Fourth week of the month

This report from the National Association of Realtors shows the number of existing (as opposed to new-
build) homes that were closed during the month, the average selling price, and the length of time it is
currently taking to sell off the entire housing inventory. These figures represent the aggregate demand
among consumers for housing. This report, when used in conjunction with the Housing Starts report, can
be a good leading indicator for the general health of the economy.

Factory Orders Report

Released: 8.30am EST, First week of the month

This report combines the Durable Goods Report with information about non-durable goods sales such as
food and clothing. It is less vague than the Durable Goods report, but because much of the information is
already known, it doesnt tend to move the market much upon its release, although the inclusion of
forward-looking data such as inventory and new orders makes it an important leading indicator for
forecasting GDP.

Gross Domestic Product (GDP)

Released: 8.30am EST advance release: four weeks after quarter ends; Final release: three months
after quarter ends

This is the most widely quoted and most influential economic indicator there is, representing the market
value of all goods and services produced by the economy of the country being measured on a quarterly
basis. While the results are conclusive, and form a vital part of any analysis of economic trends, it is not
very timely, with much of the information contained within the report already being known ahead of its
release. Nonetheless, it is a figure that every trader should have a deep understanding of if they are to be
successful in analyzing the markets.

Housing Starts
Released: 8.30am EST, On or around the 17th of the month

This report is the result of a survey of homebuilders across the US that measures the amount of housing
starts, which are considered the laying of foundations for new homes, and approved building permits.
These are leading indicators for the health of the construction industry and the economy as a whole, and
while the report rarely sends shockwaves around the markets, the figures are useful for estimating other
consumer-based indicators, as people buying new homes also tend to spend money on other consumer
goods such as furniture and appliances.

Industrial Production
Released: 9.15 EST On or around the 16th of the month

This Fed report provides the monthly raw volume of goods produced by industrial firms such as factories,
mines and electric utilities in the US, as well as newspaper, periodical and book publishing. It is useful as
a leading indicator for inflation as industry is the first to feel supply shortages for basic materials, which
drive up prices all the way down the supply chain. While the shift away from industrial production towards
a service economy in the West means that the relevance of this figure is declining, it is often one of the
first indicators of an inflection point in the trajectory of the economy as a whole.

Jobless Claims Report

Released: 8.30am EST Thursdays

This seasonally-adjusted indicator shows the number of initial filings for state jobless claims across the
US. Because it is issued weekly, it provides an almost real-time account of the health of the economy.
Although positive results rarely have much of an impact on the markets, a surprisingly negative result can
have a huge, and often unexpected, impact across the board.

Money Supply
Released: 4.30pm EST every Thursday

This is an indicator of the amount of money that is floating around the economy and available for
spending. Because it is released every week, no single release ever causes much in the way of short
term market movements; there is a clear relationship between the money supply, inflation, and GDP
growth, so it is worth considering as part of a wider evaluation of the economic climate.
Mutual Fund Flows
Released: During market hours, about four weeks after months end

This report shows the amount of money that is flowing into or out of mutual funds at any given time. Many
analysts see a high figure as a false positive, in that influxes of money into mutual funds tend to peak
just before the market does. However, an increase in times of recession can be an indicator that the
economy is on the road to recovery. Although they are not a hugely important indicator, in that they cover
only one part of the financial sector, they can be a good gauge of investor sentiment.

Non-Manufacturing Report
Release Date: 10am EST, third business day of the month

This report, which is issued monthly by The Institute for Supply Management (ISM) is a useful indicator of
the health of the service sector, which is much larger than the manufacturing sector. Although it is a
relatively new indicator, having been introduced in 1998, it is very timely and consistent, and is fast
gaining influence among traders as a key indicator of the broader health of the economy.

Personal Income and Outlays

Released: 8.30am EST 4-5 weeks after months end

The Personal Income and Outlays Report is issued by the Bureau of Economic Analysis (BEA) every
month, providing insights into consumer behavior and total economic consumption. The two headline
figures, income and outlays, are measured in dollar terms, and are considered two of the most influential
indicators in terms of the future direction of the economy, even more so than the Consumer Price Index

Producer Price Index (PPI)

Released: 8.30am EST Second or third week of the month

This is a weighted index of prices measured at the wholesale, or producer level from the Bureau of Labor
Statistics (BLS), excluding imports. The most important number in this report is the PPI Industry Index
(finished) figure, which concerns final stage manufacturing prices, minus the volatile food and energy
components. It is a valuable leading indicator for inflation (i.e. the CPI numbers), and encouraging results
can have a positive impact on the markets.

Productivity Report
Release Date: 8.30am Approximately five weeks after previous quarters end

This quarterly report measures the level of output achieved by businesses per unit of labor, using
previously-released GDP and labor figures. Productivity gains have historically led to gains in real income,
lower inflation, and increased profitability at a corporate level. Because it is derived from already-extant
data, this release usually has little impact on the markets, although they can be useful to investors as they
provide the answers to complex calculations that might be difficult and/or time consuming to do on their

Purchasing Managers Index

Released: 10am EST, First business day of the month

The PMI is the headline indicator for the monthly report issued by the Institute for Supply Management
(ISM). It is derived from five sub-indicators, namely Production Level, New Orders, Supplier Deliveries,
Inventories, and Employment Level, and is an important sentiment indicator for manufacturing and the
economy as a whole. A rating of 50 or higher indicates that industry is expanding, and by association so
should the economy. A rate of 42 or above indicates that the GDP is likely to expand, whereas a rating
below this indicates that a recession may be on the way. It is a very timely leading indicator for GDP and
BLS reports, particularly when used in conjunction with more data-driven indicators such as the PPI and
GDP or the ISM Non-Manufacturing Report.

Retail Sales Report

Released: 8.30am EST on or around the 13th of the month

This is one of the most keenly anticipated numbers among economists and investors, tracking the dollar
value of merchandise sold within the retail trade, sampling both fixed point-of-sale and non-store retailers
of all sizes. There are two headline figures here, the total sales figure (and percentage change from the
previous month), and the ex-autos figure, which discounts auto sales, which can skew the overall figure
due to the high prices and historical seasonality. It is a good predictor of inflationary pressure, and has a
large bearing on Fed policy, and it can therefore be a big market mover, particularly if it differs greatly
from analysts estimates.

Trade Balance Report

Released: 8.30am EST around the 19th of the month

This is an important one for forex traders, as it is widely used by investors and policy makers to determine
the health of the US economy and its relationship with the rest of the world. The headline figure here is
the nominal trade deficit, which represents the current dollar value of U.S. exports minus imports. The US
has run a trade deficit for over 20 years now, and this is not necessarily a bad thing as long as the deficit
is balanced by an equal dollar amount of foreign investment in U.S. assets mainly treasuries. This
means that, when interest rates are low, US debt becomes less attractive, causing the value of the dollar
to drop in comparison with other currencies. If the data in the Trade Balances report is markedly different
to previous reports, it can move the markets in a profound way. While the report is notoriously difficult to
estimate, partly due to the high volatility of oil prices, it can give valuable clues as to future changes to
GDP that are not explained by internal consumption and production.

3. Why Economic Calendar is needed for traders?

Using an economic calendar allows you to know about future global events, news, announcements and
follow trends. You can make money when you have advanced information and you can predict the
direction a currency pair is going. The more you know and understand about the factors affecting the
Forex market, the better chance you have of gaining the profit.

To be highly effective in Forex trading, you have to consider all economic and political factors across your
currency pairs and go even further by keeping the bigger picture in mind. Indicators may arise from
economies whose currency youre not trading in but may affect those that you are trading. The economic
calendar provides the trader with all important aspects.

While the effect of economic indicators on prices can be unpredictable, it is still a significant value having
an idea of how you might generally expect the market to react, so that if it contradicts this, you can
examine the reasons why it might have done so and make right trading decisions.
meta trader 4 timing

20:57Kate Support: The time displayed in your MetaTrader is FXOpen trading server time
GMT +3 (Standard Time). Sadly, MetaTrader 4 does not allow you to adjust the time in MT4
to match your local time.
21:00tanvir ahmed: like right now my meta trader 4 is showing 2014.10.02
18:00 ... .and now gmt+0:00 is 15:00 ..
21:01tanvir ahmed: means metatrader 4 .. is 3 hours ahead of gmt .. correct
right ?
21:01Darya Support: it is GMT +3
21:01Darya Support: if GMT 0 15 00
21:01Darya Support: so GMT +3 18 000

How To Place Orders With A
Forex Broker
By Grace ChengAAA |
When you place orders with a forex broker, it is extremely important that you
know how to place them appropriately. Orders should be placed according to how
you are going to trade - that is, how you intend to enter and exit the market.
Improper order placement can skew your entry and exit points. In this article, we'll
cover some of the most common forex order types. (For the latest discussions
about forex, check out the forums at TradersLaboratory.com)

Types of Orders:
Market Order
This is the most common type of order. A market order is used when you want to
execute an order immediately at the market price, which is either the
displayed bid or the ask price on your screen. You may use the market order to
enter a new position (buy or sell) or to exit an existing position (buy or sell). (For
more insight, see The Basics Of Order Entry and Understanding Order

Stop Order
A stop order is an order that becomes a market order only once a specified price
is reached. It can be used to enter a new position or to exit an existing one. Abuy-
stop order is an instruction to buy a currency pair at the market price once the
market reaches your specified price or higher, which is higher than the current
market price. A sell-stop order is an instruction to sell the currency pair at the
market price once the market reaches your specified price or lower, which is
lower than the current market price.

1. Stop orders are commonly used to enter a market when you

For example, suppose that USD/CHF is rallying toward a resistance level
and, based on your analysis, you think that if it breaks above that
resistance level, it will continue to advance higher. To trade this opinion,
you can place a stop-buy order a few pips above the resistance level so
that you can trade the potential upside breakout. If the price later reaches
or surpasses your specified price, this will open your long position.

An entry stop order can also be used if you want to trade a downside
breakout. Place a stop-sell order a few pips below the support level so that
when the price reaches your specified price or goes below it, your short
position will be opened.

2. Stop orders are used to limit your losses.

Everyone has losses from time to time, but what really affects the bottom
line is the size of your losses. Before you even enter a trade, you should
already have an idea of where you are going to exit your position should
the market turn against it. One of the most effective ways of limiting your
losses is through a predetermined stop order, which is commonly referred
to as a stop-loss.

If you have a long position on, say the USD/CHF, you will want to the pair
to rise in value. In order to avoid the possibility of chalking up uncontrolled
losses, you can place a stop-sell order at a certain price so that your
position will automatically be closed out when that price is reached.

A short position will have a stop-buy order instead.

3. Stop orders can be used to protect profits.

Once your trade becomes profitable, you may shift your stop-loss order in
the profitable direction so as to protect some of your profit. For a long
position that has become very profitable, you may move your stop-sell
order from the loss to the profit zone to safeguard against the chance of
realizing a loss in case your trade does not reach your specified profit
objective, and the market turns against your trade. Similarly, for a short
position that has become very profitable, you may move your stop-buy
order from loss to the profit zone in order to protect your gain.

(To read more about setting stops, see Stop Hunting With The Big Players.)

Limit Order
A limit order is placed when you are only willing to enter a new position or to exit
a current position at a specific price or better. The order will only be filled if the
market trades at that price or better. A limit-buy order is an instruction to buy the
currency pair at the market price once the market reaches your specified price or
lower, and is lower than the current market price. A limit-sell order is an
instruction to sell the currency pair at the market price once the market reaches
your specified price or higher, and it is higher than the current market price.

1. Limit orders are commonly used to enter a market when

you fadebreakouts.

You fade a breakout when you don't expect the currency price to break
successfully past a resistance or a support level. In other words, you
expect that the currency price will bounce off the resistance to go lower, or
bounce off the support to go higher.

For example, suppose that based on your analysis of the market, you think
that USD/CHF's current rally move is unlikely to break past a resistance
successfully. Therefore, you think that it would be a good opportunity to
short when USD/CHF rallies up to near that resistance. You can then place
a limit-sell order a few pips below that resistance level so that your short
order will be filled when the market moves up to that specified price or

Besides using the limit order to go short near a resistance, you can also
use this order to go long near a support level. For instance, if you think that
there is a high probability that USD/CHF's current decline will pause and
reverse near a particular support level, you may want to take the
opportunity to long when USD/CHF declines to near that support. In this
case, you can place a limit-buy order a few pips above that support level so
that your long order will be filled when the market moves down to that
specified price or lower.

2. Limit orders are used to set your profit objective.

Before placing your trade, you should already have an idea of where you
want to take profits should the trade go your way. A limit order allows you to
exit the market at your pre-set profit objective. If you long a currency pair,
you will use the limit-sell order to place your profit objective. If you go short,
the limit-buy order should be used to place your profit objective. Note that
these orders will only accept prices in the profitable zone.

Execute the Correct Orders

Having a firm understanding of the different types of orders will enable you to use
the right tools to achieve your intentions - how you want to enter the market (trade
or fade), and how you are going to exit the market (profit and loss). While there
may be other types of orders, market, stop and limit orders are the most common
of them all. Be comfortable using them because improper execution of orders can
cost you money.

To read more, see The Stop-Loss Order: Make Sure Your Use It, A Logical
Method Of Stop Placement and Trailing-Stop Techniques.

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