Analytical methods for predicting future foreign exchange volatility by analyzing “basic elements of the economy" such as interest rate policy or employment statistics.
The value of the economic indicators is predicted as follows. First, experts such as financial institutions or expert advisory groups will make predictions, next information providers such as Reuters will collect and summarize, then aggregate as a market forecast.
In addition to this predicted value, the actual published value (foreign exchange movement will follow the prediction or will be different from expected) is also very important and it will become a major cause of market volatility after the announcement of the predicted value.
Foreign exchange immediately after the announcement of the economic indicators will have high probability of fluctuating on one side in a few minutes, so taking advantage of this fluctuation you can make money from Forex trading.
How to profit from the announcement of GDP (Gross Domestic Product)
The gross domestic product is the total amount of value- added goods and services bought in one country in one year.
A country’s Growth rate of GDP is a basic indicator to measure the overall economic growth of that country.
The GDP growth rate is announced quarterly, semi-annually and annually.
Growth rate of the GDP includes a real growth rate in coordination with nominal growth rate and price fluctuation, but a real growth rate tends to attract attention in the foreign exchange market.
High GDP growth rate and positive economic growth will cause a tendency to buy the country’s currency.
In contrast, if negative economic growth is announced and positive GDP growth rate shrink compared to the previous year, return on investment will be no longer expected as investors continue switch to other countries with higher growth rate.