We scan the calendar, look for economic events and data releases, and know which ones are important for the Central Bank (CB). We single out all events that have the potential to create volatility. How do we know which events are important? Because Central Banks offer forward guidance and make it clear what economic data they are eyeing the most. If a particular data is on a consistent growth path, then they will unlock their chest of monetary tools and reward a flourishing economy by driving the currency higher.
It’s like your parents asking you to make your bed every morning and put the bin out at night. If you kept up with your chores, you can expect positive feedback from them and a responsive attitude when you’re asking for money. Should you fail to keep your chores up, or had mixed results, then it is reasonable to see that reflected in their feedback too.
So just like your parents, the CB make future actions contingent on current performance. That’s why we expect positive pricing on the release of better than expected data. Data that was previously well communicated and high profile is important. But let’s go into more details.
Let’s take inflation, for instance, it’s the most watched core data release point for a lot of CBs. Inflation on the economic calendar is shown as Consumer Price Index (CPI). From country to country there are variations, but higher CPI needs to be accompanied by higher wage growth. This is understandable, you don’t want goods to be dearer without consumers buying power increasing. So it goes without saying that data releases surrounding these two economic events (CPI and wage growth) are scrutinized by traders if there is a trend in place, regardless of up or down. Then it’s a surefire way to anticipate how the next CB meeting will unfold.
Understanding all of this unlocks the potential to trade for massive quick profits. The dynamic is simple. The CB wants to see better numbers before committing to a hawkish tone. The trend in better data is tracked and the currency priced in accordingly. There are data releases every week which contributes to market volatility. If a clear trend in data is evident, then it’s a very easy money making opportunity for us. These opportunities are frequent and teachable, and most importantly, actionable.
Here is how you can do it
Scan the weekly economic calendar. Mark all important releases scored 3 stars, highlighted red or marked as important. Then, check for consistency in better than expected or under expectations numbers. If it has been mixed ignore it. We go in much deeper analysis and identify on a weekly basis, which events are tradable and which ones are better left alone in the Speculators Course.
There is almost always a holding pattern prior to important releases. It makes sense, as investors don’t want to commit before the unknown becomes known. For instance, if a CB communicated that higher wage growth will accelerate their rate hikes, it becomes obvious that investors, hedge funds, speculators, and institutions will aggressively buy after a better than expected print.
The anticipated results are massive spikes and rapid moves. However, it is not uncommon to see a snapback in price as news traders take profits. In the following sessions, flows will be tilted towards higher prices.
On a personal note, I’ve struggled for years to find a pattern and tactic that will produce consistent weekly returns for me. Relying on complex candle break patterns and quick profit targets have never fulfilled that dream. It didn’t give me sustainable success. See, we don’t have to trade incorrectly for years to understand what we’re doing isn’t working. We trade when and where market guarantees volatility, in a predictable direction, in a consistent way. This approach has offered me and all our members unimaginable success. And success in trading is rewarded with money from the market into our bank accounts.
Trading weekly data releases and events based on sentiment and expectations are logical and repeatable. The best way to learn how to do it is by actively tracking it. Trading offers an experience-based learning curve. If that is the direction you’d like to take in your trading career, I’d like to invite to take our course sneak peak Start here .