Tuesday, November 26, 2013

Parabolic SAR Indicator Forex Indicator

Parabolic SAR Indicator
Parabolic SAR (Stop and Reverse) is an indicator developed by J. Willes Wilder to discover and exploit profitable trends in all kinds of markets. It is a popular tool among technical traders, and a straightforward and as a simple mechanism for analyzing the markets, it offers some unique advantages over other tools.
Below we have a chart of the EURUSD pair depicting the Parabolic SAR in action. We observe that the indicator was able to capture many small reversals with remarkable accuracy. And in those cases where it failed, we see that the thrust of the market action was strong enough to place it into a correct configuration, thereby minimizing the potential losses of a faulty trade.

Calculation of the Parabolic SAR
Parabolic SAR is calculated by a recursive formula which ties the prices of one period to another through simple arithmetics.
SAR of Today = SAR of Yesterday + a (EP- SAR of Yesterday)
SAR of Tomorrow = SAR of Today + a(EP-SAR of Today)
EP is the maximum recorded during the time period in consideration. If during each period of analysis a new record is broken, the EP will be updated accordingly, and the SAR value will change.
"a" represents the acceleration factor. It is set at 0.02 in the beginning, and reset each time a new EP is achieved. This is to ensure that the indicator's value will come closer to the EP value every time a new record is broken, but the maximum value for the EP is usually set at 0.2 in order to prevent it from becoming too large and distorting the analytical picture. Due to the higher volatility of the forex market, traders prefer to give an initial value of 0.01 to the acceleration factor on the basis that frequent fluctuations, leaps and bounces in the price action do not justify attaching a lot of significance to arbitrary price highs.
Once the SAR value is calculated one of two courses will be taken in order to derive the signal from the indicator. If tomorrow's SAR remains within today's or yesterday's price range, the indicator is set at the lowest price during that time period. For example, if the SAR is slightly above yesterday's opening lowest price, or close to, but below, yesterday's high, the indicator will be set at today's lowest price.
If on the other hand, tomorrow's SAR value is within tomorrow's price range, the indicator will switch sides. If it is below the price action, it will move to the upside, and if it was on the upside it will come below, signifying a trend switch.

Trading with Parabolic SAR
Parabolic SAR is generally regarded as a trend indicator, since other types of markets tend to generate false signals leading to whipsaws and fake breakouts. The best way of trading the Parabolic SAR is to first gauge the direction of the market by using simple tools like trend lines, moving averages, or tools like the average true range, before using Parabolic SAR to trade the shorter-term fluctuations that can be exploited within a longer term framework.
When it is drawn on a chart, the Parabolic SAR will indicate a bullish market if it remains below the price, or supports it, and when it is above the same it is regarded to be suppressing the prices, indicating bearish conditions. Not only is it possible to regard this phenomenon as a signal for the opening of a position, but it also makes sense to use the Parabolic SAR as a stop or take profit level in each trade. For instance, when the price action is bearish, and we have a sell order, one can choose to exit the position when the price action approaches the SAR level by a predetermined number of pips. When the market action is bullish on the other hand, we can use the Parabolic SAR as a support level, and when the price gets too close to it, we can liquidate the trade. It is also possible to use a time-stop while trading with this indicator. In this case, there is no necessity of a market reversal. Instead we determine a timeframe during which the trade will be kept active, but when that period is out, we'll liquidate it even if the Parabolic SAR indicator is indicating positive conditions. This course of action is justified on the basis that in a strongly trending market where this indicator is most useful, lack of progress can be a sign of approaching reversal.

This indicator is most useful in a trending market. It is best to use it in combination with other indicators that establish the general direction of the trend at a higher level, while trading short-term volatility with the SAR. The advantages of this technical tool are its simplicity, clarity of signals, ease of interpretation, and tendency to generate concrete points of action during a trending market. These same strengths are also the weaknesses of the indicator. It is sometimes the case that the solid signals of the SAR indicator lack any practical basis. To avoid such conditions, we suggest that you use the SAR indicator with oscillators that signal emerging divergence/convergence scenarios, so that the common problem of whipsaws are reduced in frequency. Ultimately, of course, our best guide should always be money management and prudence in trading, beyond any single technical indicator

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Alligator Oscillator Forex indicator

Alligator Oscillator Forex indicator 

Alligator Oscillator

The Alligator oscillator is very similar to the Gator oscillator which we have examined previously in these pages. The difference between the two indicators lies almost entirely in the presentation of data. While the Gator oscillator presents any valid signals in a histogram below the price chart, the Alligator chart provides the oscillators in a raw form so as to enable wider and deeper analysis.
The Alligator oscillator, like the Gator oscillator, was developed by Bill Williams.

The chart looks very similar to a moving average chart, and that is what it is. The profitable phase of the market action is thought to exist between two contractions of the indicators. Every time the three components (jaw, teeth, lips) come together, and the mouth closes, an opportunity to open or close a position is presented. Trader lore states that the indicator emits correct signals about 30-50% of the time.

The Alligator indicator is really a very simple tool once you understand what it is. Three smoothed moving averages plotted on a price chart and shifted by a few bars into the future create this indicator, and the slower and the less sensitive the moving average is to market action, the further into the future it is shifted.
Jaw, or the blue line, is the 13-period smoothed moving average shifted 8 bars into the future. It is also the slowest indicator.
Teeth, or the red line, is the 8-period smoothed moving average shifted 5 bars into the future.
Lips, or the black line (although it is commonly depicted in green by charting software), is the fastest 5-period smoothed moving average, moved 3 bars into the future.
As it us the case with the Gator oscillator, the interaction between these three SMMA's determines the trade signal.

This indicator is constructed on the notion that each trend, and its phases (or mini-trends), consist of waves that coincide with start, development, culmination and exhaustion, akin to the logic behind the Elliot Wave Theory. Similar to the Gator indicator, the four phases of the alligator's life must be identified.
Alligator Waking: When the green, or black line falls above or below the blue line, (or when the teeth rise above or below the jaw) after a period of contraction, the alligator is said to be waking up. This is the typical indication of a beginning phase for a trend.
Alligator Eating: At this phase the mini-trend is well-established, and we see the teeth breaching through the lips, and 'eating' signifying that the trend is soon to reach its climax.
Alligator Sated: We now see the teeth coming back or below the blue line, and the three lines beginning to contract to a smaller area, as the price action decelerates, and the trend has run its course.
Alligator sleeping: At this phase the smoothed moving averages come together, or in more colorful language, the mouth closes as the jaw, lips and teeth adhere to each other once again. This phase signals that the current trend has exhausted itself at least in its present configuration, and it is time to sit back and reevaluate the situation.

Let's recall what the alligator oscillator oscillator is. It is three smoothed moving averages drawn together on a chart and shifted to the left a little with the purpose of identifying profitable scenarios. As such, very little distinguishes it from a standard moving average strategy, and the differences that exist do not exceptionally favor this indicator.
The Alligator oscillator is most suitable to a trending market. It can be used in shorter timeframes in the context of an overarching range pattern, but it will surely generate many false signals in a ranging market. The best indicators to supplement it are support/resistance lines, or Fibonacci indicators to determine price targets if you happen to be beginner. Just keep in mind that trends are violent will easily invalidate any imaginary line on the charts, however strong it may appear.

If you wish to use moving averages in your trend analysis, make use of the alligator instead. Otherwise, the ichimoku cloud, also covered on this site, may be a better choice for greater clarity and depth of analysis.

Monday, November 25, 2013

Forex Indicator CCI

The CCI has a crossover line at zero, and an overbought level at 100, while values below -100 are regarded as signaling an oversold condition. The CCI is an oscillator.

Note: Past performance is not indicative of future results.
Here we see the indicator in action in the price chart above. It is interesting to note that the CCI gives many false signals even at extreme values. For example, the lowest value for our indicator, at -283.576 was recorded during a very minor, and passing bottom on the chart. As with most high sensitivity indicators using the ATR requires a lot of practice and patience in mastering it.

Calculation of the CCI
To understand how the CCI is calculated, we need to understand three different, yet simple mathematical concepts. The first is the typical price, otherwise known as the pivot point, which is the average (mean) of the high, low, and close for a trading period.
Pivot Point, Typical Price = H + L + C)/3
The mean absolute deviation (MAD) is the sum of the differences between the typical prices and their moving averages over the indicator's period divided by the same. So,
MAD(TP) = Sum of (TP-SMA(TP))/Indicator Period
The indicator is then calculated according to the formula below:
CCI = (TP- (SMA (TP)/ 0.015*MAD(TP))
Here what we do first is subtracting the simple moving average of the typical price from the typical price itself (TP-SMA(TP). If you've used moving averages, it's very easy to understand why this is being done. Remember, if the price is above the SMA, we usually interpret this as a sign that the trend is an upward one, although its momentum will be a matter of further analysis. Thus the first component (TP- (SMA (TP) determines the relationship of the price to its moving average - and also whether the indicator value is a negative or positive number. The denominator of the equation serves the purpose of comparing this difference to its historic average. Finally, the 0.015 factor is for amplifying the fluctuations in the indicator, so that the changes are easier to note visually.
So what we do is in fact just comparing the today's equivalent of the MAD with its historic value, thus gaining an indication of how extreme today's price is in the context of the past price action.

Trading with CCI
The CCI is used mainly as an overbought/oversold indicator similar to other indicators like the RSI. The overbought/oversold levels exists above 100, and below -100, respectively. Many traders prefer to focus on divergence/convergences between the price and the indicator with the purpose of reducing the number of trade signals, and avoiding whipsaws.
The CCI was designed for the commodity market, but any market where prices show a tendency to move in cycles will prove to be fertile ground for its use. The forex market, with its cycles dictated by interest policy, and the economic boom bust cycle, is a suitable field for the application of the CCI.
It is most important to remember that the CCI is a highly volatile indicator, and causes a lot of whipsaws. Traders need to be conservative about their risk management strategies when using it.

CCI is not as widely available as some other indicators of the same type, such as the stochastics or RSI indicators. MetaTrader, DealBook, TradeStation systems of major brokers do offer it, but due its lesser popularity among forex traders, it is a good idea to check beforehand with a demo account if it happens to be your favorite indicator.


CCI can be very useful with a few additional rules for validating its signals. As with the Williams Oscillator, you can choose to act on a signal only if it remains valid for a period of 10 days or so, leading to better, and more convincing overbought/oversold signals. Or you can combine the CCI with other indicators of different types for filtering out faulty signals. The key to using the CCI successfully is a careful approach to risk controls. It is volatile, so you should be prepared for unexpected outcomes and set your trading scenarios up in accordance.

Daily forecast 25/11/2013 www.forexpipssignal.com

Daily forecast   25/11/2013  www.forexpipssignal.com

SELL: 1.3540 TP: 1.3485 SL: 1.3575
Trading Range: SELL 1.356 to 1.347

BUY: 101.74 TP: 102.29 SL: 101.39
Trading Range: BUY 101.54 to 102.44

SELL: 1.6222 TP: 1.6167 SL: 1.6257
Trading Range: SELL 1.6242 to 1.6152

BUY: 0.9087 TP: 0.9142 SL: 0.9052
Trading Range: BUY 0.9067 to 0.9157

Using the Moving Averages

Using the MovingAverages

Although there are almost countless improvised, and professionally created strategies based on moving averages, there are three typical methods that lie at the basis of most of the strategies and methods.

Crossovers arise when the price rises or falls below the moving average, signaling the end or the beginning of a new trend. Crossovers are some of the most common occurrences in technical trading, and as such, do not grant us a great deal of predictive power in the evaluation of the market action. They are used best in combination with other tools and techniques when we seek to evaluate the price action with greater confidence.

Apart from trends in the price action itself, the moving average can also have its own trend at times. It is possible to take advantage of these trends for determining entry/exit points. Although not as reliable as the price trend itself when used alone, it can be an efficient way to confirm the price action when used in combination with it.

A divergence occurs when the trend is in ascendance, but the moving average is descending. A convergence happens when the market trend is bearish, but the moving average contradicts it by registering higher highs. These events are thought to signal a future reversal. When the price action is contradicted by the indicator values, the expectation is that the market is about to run out of energy, and it may be a good time to open a counter-trend position. It is important to remember that timing is very uncertain in all these formations, and that the anticipated reversal may never occur. Especially in strong trends, it is common to observe divergence/convergence phenomenon arise regularly without leading to any significant reversal. Still, it is the rarest, and most popular technical configuration preferred in the interpretation of a moving average.

We use this term to define a method of trading in which MAs of different periods are used as successive resistance levels for the price action to breach. For example, we expect an ongoing trend to first breach the 1-hour, then the 3-hour, then the 10, and 40-hour moving averages in succession, and may choose to open a position at each of these successive indicators. Since we anticipate continuity between levels indicated by these MAs, we will maintain our positions as the price hops, so to speak, between them.
We'll examine each of these methods as we discuss each moving average type in its own article. To learn more about how these calculations are performed you are invited to visit the relevant page.

The main weakness of the moving average is its lagged nature. In many cases, and especially for short term fluctuations, by the time a moving average captures a market event, it may have already ended. The moving average will only note a developing market pattern after it has been set up convincingly, and if the pattern is short-lived, it will not be possible to trade it, and we may suffer from whipsaws as well.
The strength of this indicator type is its ease-of-use, clarity, and simplicity. They can be easily incorporated into any overall strategy, and it is also possible to devise methods exclusively through the usage of the moving average as well. The great versatility of this indicator type makes it a valuable addition to any trader's arsenal of technical tools, regardless of trading style, or the preferred market type.

Sunday, November 24, 2013

Types of Moving Averages

Types of MovingAverages

There are a large number of moving averages available for traders. Some of them are:

The simple moving average is the most basic of these tools. It simply sums up the cloaisng prices over a specified time, and divides them by the duration of the period, reaching at the value of the indicator. No weighting is used, and no smoothing factor is applied.

The exponential moving average is one of a number of different moving average types that gives greater value to the most recent prices. As its name implies, the weighting is done exponentially. In other words, as we move to the left on the chart (towards past values), the weighting that they receive in the computation of the MA decreases rapidly (faster than it would be in a linear progression), and the most recent prices are far more significant, as a result, in determining the value of the indicator.

The smoothed moving average is similar to EMA, except that it takes all available data into account. The earliest price values are never discarded, but receive a lower weighting, and possess a smaller role in determining the value of the indicator. As its name hints, the smoothed moving average is mostly used to smoothen the price action, removing short-term volatility, allowing us a better understanding of the long term momentum of the market.

This moving average is similar to the MA, except that the weighting factors are linear, not exponential. For example, the price of the earliest period (n) is multiplied with 1, the following, more recent period (n-1) is multiplied by a factor of, 2, and the next one is multiplied by 3, and so on, until we reach the present timeframe. In this context, the most recent prices receive greater emphasis, and the latest fluctuations, rises or falls are depicted with greater clarity, aiding trade decisions.

Why Should I Use Moving Averages?

Why Should I Use MovingAverages?

Moving averages are some of the most useful and effective gauges of market action in a trending market. Crossovers, divergences, as well as trends of the moving average itself can be used to analyze and crystallize the signals that can be distilled from the market action, which can then be used to help us make future decisions about our trades.

Moving Averages: What Are They?

Moving Averages: WhatAre They?

Moving Averages are technical tools designed to measure the momentum and direction of a trend. The idea behind their creation is simple. Price action is thought to fluctuate around the average value over a period of time, and we can expect to be able to the represent the market's momentum by calculating if the current prices are above or below the market's average value. But since the total length of the time period that must be included in the calculation of the average is too large (are we going to begin in 1980, or the year 2000 while computing our time series?), we pick the period arbitrarily, and update the average as time progresses.

Types of Williams Indicators

Types of Williams Indicators

Larry Williams created a large number of indicators the rationale behind which is explained in his various books and articles. With his celebrity status in the trading community, it was not long before brokers incorporated his ideas into their own software and trading packages, and today the Williams Percent Range indicator, for example, is a part of the standard technical charting toolbox of just about any broker.

Williams Percent Range Indicator

Similar to the Stochastics indicator, Williams Percent Range Indicator is one of the most popular tools created by the famous trader. It is basically a volatile oscillator the signals of which are acted upon only if they last for a considerable period of time. Unlike the RSI, for example, one doesn't buy or sell at overbought/oversold levels, but awaits the consolidation of the price in these regions before any conclusion is reached.
The Williams Oscillator is widely available as part of most forex charting packages.

Williams A/D (Accumulation, Distribution) Indicator

Larry Williams has developed many ways of measuring the accumulation/distribution phenomenon in the markets in light of volatility, open interest, volume, and many other factors. These indicators are not as common as the percent range indicator, but they are popular and highly regarded by traders.

Williams Ultimate Oscillator

The Ultimate oscillator was created for the purpose of reducing the effect of short-term large movements on the signals generated. The indicator measures accumulation/distribution in the market, instead of focusing on the price directly, and can also be configured to fluctuate in accordance with three different time cycles corresponding to 7, 14, and 28-period measurements.
The indicator is used on the basis of divergence/convergences, and a signal is confirmed with a trend break,  which is a gap in the price indicating that the momentum of the price action has changed decisively. Positions are opened on the basis of highs or lows registered on the oscillator.

Greatest Swing Value Indicator

This is not so much as an indicator as it is a concept introduced by Larry Williams in one of his books. Used with simple bar charts, or in more complicated configurations, the Greatest Swing Value concept is used by swing and range traders for establishing trade patterns.
Blast Off Indicator
This indicator is not very common, since it is a proprietary tool, but Larry Williams will not hesitate to talk about it during his appearances in meetings or seminaries with other traders.


Needless to say, Williams indicators are very popular in the trading community. The trading record of the creator of these tools is enough in itself, for many people, to justify their use. Nonetheless, anyone who regards these tools as charmed items that will protect their users from error is likely to be disappointed in short order. As with any indicator, using the Williams indicators requires, above all, a reasonable degree of skepticism about their effectiveness. No indicator will eliminate the necessity of a diligent and focused approach to risk management. These tools are no exception.

In this group, the most popular ones are the Williams Percent Range indicator and the Ultimate Oscillator. Although we're going to examine both of them in greater detail in a separate article, we may note here that as  trend indicators that are volatile themselves, and will generate good results only if the signals emitted by them are used with great conservatism. In other words, pick the most convincing, and long-lasting signals, as you'll have plenty of them to act upon in any case. It is possible to do very well with these great indicators when one treats risk sensibly and does not get carried away by his successes, or allow his failures to chop off a large chunk of his account by trading too much.

Saturday, November 23, 2013

Larry Williams: A Trading Legend

Larry Williams: A Trading Legend

Born in 1942 in Montana, Larry Williams is one of the most famous traders of our time. His greatest claim to fame arises out of his success in the World Cup Championship of Futures Trading in 1987. During this contest, Larry Williams was able to turn $10000 to $1,1 million in about twelve months using techniques that he had developed earlier in his carrier. Since then, he has been the author of articles and books about trading, providing the public with interesting insight to his trading skills, and sharing the technical basis of his success with other traders. In 1997, his daughter Michelle Williams also gained the first place in the same competition.

Larry Williams Indicators

Larry Williams Indicators

As the name suggests, Larry Williams indicators are a group of technical tools developed and published by the renowned commodity and stock trader Larry Williams in a series of books and articles since the 80s.  In this article we'll present a brief overview of the most popular ones among the tools developed by him. The indicators themselves will be examined in their own articles at this website.

Friday, November 22, 2013

Daily Forecast 22/11/2013 www.forexpipssignal.com

Daily Forecast 22/11/2013 www.forexpipssignal.com

BUY: 1.3471 TP: 1.3501 SL: 1.3431
Trading Range:1.3531 to 1.3431

SELL: 101.14 TP: 100.84 SL: 101.54
Trading Range:100.54 to 101.54

BUY: 1.6192 TP: 1.6222 SL: 1.6152
Trading Range:1.6252 to 1.6152

SELL: 0.9144 TP: 0.9114 SL: 0.9184
Trading Range:0.9084 to 0.9184

Tuesday, November 19, 2013

Daily forecast 19/11/2013 www.forexpipssignal.com

Daily forecast 19/11/2013 www.forexpipssignal.com


BUY: 1.3504 TP: 1.3559 SL: 1.3469

Trading Range: BUY 1.3484 to 1.3574


SELL: 99.91 TP: 99.36 SL: 100.26

Trading Range: SELL 100.11 to 99.21


BUY: 1.6098 TP: 1.6153 SL: 1.6063

Trading Range: BUY 1.6078 to 1.6168


SELL: 0.9126 TP: 0.9071 SL: 0.9161

Trading Range: SELL 0.9146 to 0.9056

Monday, November 18, 2013

Daily forecast 18/11/2013 www.forexpipssignal.com

Daily forecast 18/11/2013 


BUY: 1.3477 TP: 1.3532 SL: 1.3442
Trading Range: BUY 1.3457 to 1.3547

SELL: 100.24 TP: 99.69 SL: 100.59
Trading Range: SELL 100.44 to 99.54

BUY: 1.6124 TP: 1.6179 SL: 1.6089
Trading Range: BUY 1.6104 to 1.6194

SELL: 0.9147 TP: 0.9092 SL: 0.9182
Trading Range: SELL 0.9167 to 0.9077

Sunday, November 17, 2013

Moving averages indicator


If you believe in the "trend-in-your-friend" tenet of technical analysis, moving averages are very helpful. Moving averages tell the average price in a given point of time over a defined period of time. They are called moving because they reflect the latest average, while adhering to the same time measure.
A weakness of moving averages is that they lag the market, so they do not necessarily signal a change in trends. To address this issue, using a shorter period, such as 5 or 10 day moving average, would be more reflective of the recent price action than the 40 or 200-day moving averages.
Alternatively, moving averages may be used by combining two averages of distinct time- frames. Whether using 5 and 20-day MA, or 40 and 200-day MA, buy signals are usually detected when the shorter-term average crosses above the longer-term average. Conversely, sell signals are suggested when the shorter average falls below the longer one.
There are three kind of mathematically distinct moving averages: Simple MA; Linearly Weighted MA; and Exponentially Smoothed. The latter choice is the preferred one because it assigns greater weight for the most recent data, and considers data in the entire life of the instrument.

Saturday, November 16, 2013

Employment Report on Forex

In the US, the employment report, also known as the labor report, is regarded as the most important among all economic indicators. Usually released on the first Friday of the month, the report provides the first comprehensive look at the economy, covering nine economic categories. Here are the 3 main components of the report: Payroll Employment: Measures the change in number of workers in a given month. It is important to compare this figure to a monthly moving average (6 or 9 months) so as to capture a true perspective of the trend in labor market strength. Equally important are the frequent revisions for the prior months, which are often significant.

UnemploymentRate: The percentage of the civilian labor force actively looking for employment but unable to find jobs. Although it is a highly proclaimed figure (due to simplicity of the number and its political implications ), the unemployment rate gets relatively less importance in the markets because it is known to be a lagging indicator-It usually falls behind economic turns. Average Hourly Earnings Growth: The growth rate between one month's average hourly rate and another's sheds light on wage growth and, hence, assesses the potential of wage-push inflation. The year-on-year rate is also important in capturing the longer-term trend.

Employment Cost Index on Forex

·         EmploymentCost Index (ECI)

Published quarterly, ECI measures changes in employment costs of money wages and salaries and non-cash benefits in non-farm industries. One of its major strengths is its ability to break down the changes in wages and benefits as part of total compensation, as well as its ability to point out the growth rate in these variables. Its superiority over other pay measures is also the inclusion of both hourly and salaried workers, and its breakdown by profession, industry and region. The ECI does not include federal government workers.

Forex Account information

Business inventories and sales figures consist of data from other reports such as durable goods orders, factory orders, retail sales, and wholesale inventories and sales data. Inventories are an important component of the GDP report because they help distinguish which part of total output produced (GDP) remained unsold. As a result, this presents us with important clues on the future direction of the economy. Before computerization allowed companies to trim inventories and use minimal stock on hand, inventory build up was indicative of falling demand and potentially a recession.

·         Capital Account
(now known as Financial Account) Records a nation's incoming and outgoing investment flows such as payments for entire or parts of companies (direct or portfolio investment), stocks, bonds, bank accounts, real estate and factories. The balance of payments is influenced by many factors, including the financial and economic climate of other countries. See Current Account

·         CBI Surveys
Britain's largest organization of business employers, aims at creating and sustaining favorable conditions for their optimal competition and prosperity. The CBI publishes monthly and quarterly surveys, on past, current and future assessments on the manufacturing and services sectors. The indexes reflect respondents' views on various items such as, output, sales, prices, inventories, and export/import orders.

·         Construction Spending
Construction spending measures the value of construction during the course of a particular month.

·         Consumer Price Index (CPI)
Measures the change in prices at the consumer level for a fixed basket of goods and services paid for by a typical consumer. Items included in the CPI reflect prices of food, clothing, shelter, fuels, transportation, health care and all other goods and services that people buy for day-to-day living. These items are divided into seven categories (housing, food, transportation, medical care, apparel, entertainment, and other), each of which is weighted by their relative importance. As in the case with the PPI, markets focus on the figure excluding food and energy items (called the core CPI) for a truer picture of inflationary forces. Since food and energy prices could fluctuate due to conditions that are unrelated to the economy-such as weather, oil supply or wars- it is important to break down the factors impacting the change in prices.

The most important part of international trade data. It is the broadest measure of sales and purchases of goods, services, interest payments and unilateral transfers. The entire merchandise trade balance is contained in the current account. See Capital Account.

Economic Indicators on forex

We have created a comprehensive glossary of economic indicators from the relevant markets. While these indicators are generally applicable economic terms, some of them are specific for the country of their release.
To see a definition of a term, click the box below or definition, and the definition will appear underneath.

The number of cars sold during a particular ten-day period. The timeliness of this indicator (released three days after the 10-day period) makes this the most current piece of US economic data. The size of the item in question and the timeliness of the release allow auto sales to be a useful leading indicator of retail sales and personal consumption expenditures data.

Complete summary of a nation's economic transactions and the rest of the world including merchandise, services, financial assets and tourism. The balance of payments is separated into two main accounts: the current account and the capital account.

·         Balance of Trade (Merchandise Trade Balance)
The difference between a nation's exports and imports of merchandise. A positive balance of trade, or a surplus, occurs when a county's exports exceed its imports. A negative balance of trade, or a deficit, occurs when imports surpass exports. Rising exports add to GDP while falling imports are subtracted from it. The US merchandise trade balance has been in a deficit since the mid-1970s. Rising deficits can be reflective of increased consumption, which can be a sign of a strengthening economy.

·         Beige Book Fed Survey

Officially known as the Survey on Current Economic Conditions, the Beige Book, is published eight times per year by a Federal Reserve Bank, containing anecdotal information on current economic and business conditions in its District through reports from Bank and Branch directors, and interviews with key business contacts, economists, market experts, and other sources. The Beige Book highlights the activity information by District and sector. The survey normally covers a period of about 4-weeks in duration, and is released two weeks prior to each FOMC meeting, which is also held eight times per year. While being deemed by some as a lagging report, the Beige Book has usually served as a helpful indicator to FOMC policy decisions on monetary policy.