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  • Trading Around Economic Data

    Fundamental AnalysisEconomic data can trigger wide moves in the prices of indices, shares, commodities, forex and metals, which can be lucrative to spread bettors if you pick the market move correctly but it can be equally risky too.

    As prices can move quickly and strongly depending on how strong or weak each piece of economic data is, it is important that you consider risk management tools to help ensure any additional risk is mitigated.

    See our Market Analysis section to find out more about economic data or find out how you can look to spread bet around the release of major pieces of data such as a US non-farm payrolls or GDP release.

    What is Economic Data?

    Economic data refers to the release of official statistics on multiple segments of an economy such as jobs, growth, retail sales and manufacturing. Traders utilise each piece of economic data to gauge the overall health of an economy and also interpret likely monetary policy.

    What Pieces of Economic Data are Most Important?

    The most important pieces of economic data are those that help investors to gauge the strength of a country’s economy. These can best be summed as those pieces of data which refer to the labour market, GDP, retail sales and factory or manufacturing activity.

    Top Five Pieces of Economic Data to Watch:

    • 1. GDP
    • 2. Non-farm payrolls
    • 3. Retail sales
    • 4. PMI manufacturing
    • 5. Consumer price index (Inflation)

    Trading Around Economic Data

    Trading around economic data can be both lucrative and risky. Economic data releases can often trigger volatile price reactions depending on how big that piece of data deviates away from market expectations and the likely consequences of what that data means.

    For example, the US non-farm payrolls release is one of the most hotly anticipated data releases each month and can trigger violent price moves in the market. If a payrolls release is much worse than expected, this can typically trigger a bearish reaction in the markets as it indicates that the health of the US economy is not as strong as expected.

    Through 24-hour access to your Finspreads spread betting account, you can take advantage of these price swings as and when data is released. However, whilst volatile markets can create trading opportunities, they can also increase your trading risk as prices can move quickly against you as well as in your favour. As such, it is important to consider a guaranteed stop loss order as part of your trading strategy to help minimise your trading risks. To learn more about risk management, see our managing your risk section.

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