Canada GDP and Retail Sales

Pair: GBP/USD
Bias: Flat
Result: No Trade
Spread: 15 pips

Deviation not big enough, no trade. Not much else to say, spread at 15.

Forex25 Comments
This is made up of 2 numbers as well. It is mostly about the GDP as the retail sales hardly ever trade. If we get both in the same direction then it’s safer. If only one then its probably a high risk category.

GDP Description
Gross Domestic Product (GDP) measures the total value of all goods and services produced by the economy. A rising trend has a positive effect on the nation’s currency. GDP is the broadest measure of activity and the primary gauge of the economy’s health. To foreign investors, a strong economy is viewed favorably because it spurs investment opportunities in the domestic stock and bond markets. More importantly, the central bank is more likely to raise interest rates in the face of a strong and growing economy. The combination of these effects can have a large impact on the demand for the nation’s currency.

Core Retail Sales Description
Derivative of Retail Sales that excludes the Automobile Sales component. Automobile Sales make up roughly 25% of Retail Sales, but they can be very volatile from month to month and can distort the picture. Retail Sales with the exclusion of this volatile component is thought to be a better indicator of the underlying trend in consumer spending.

UK GDP and Current Account

Pair: GBP/USD
Bias: Long
Result: No Trade
Spread: 25 pips

Not enough deviation to make a trade. Oanda put their spreads up to 25 for 5 seconds at release time. They have shown that it is pretty much impossible to news trade with them at this time. I will therefore stop live trading until it settles down and we have a clear direction as to how to trade the news. With 25 pip spreads and the risk of big slippage it is impossible to trade the news now without losing money.

If you find a good consistent broker please let me know – consistency is the key.

Forex25 Comments
This is made up of 2 numbers. if both GDP and Current account are in the same direction then it’s pretty safe. If Current account is the same and GDP moves then it’s worth 30. If GDP stays the same and Current account deviates by a lot then it’s pretty safe.

Description
Gross Domestic Product (GDP) measures the total value of all goods and services produced by the economy. A rising trend has a positive effect on the nation’s currency. GDP is the broadest measure of activity and the primary gauge of the economy’s health. To foreign investors, a strong economy is viewed favorably because it spurs investment opportunities in the domestic stock and bond markets. More importantly, the central bank is more likely to raise interest rates in the face of a strong and growing economy. The combination of these effects can have a large impact on the demand for the nation’s currency.

USA PPI

Pair: GBP/USD
Bias: Flat
Result: Sell
Spread: 15 pips
Profit: -41 pips
Peak spike move: 40 pips

I’m starting to get concerned now as the spreads have remained high and the slippage seems to be repeating itself. I placed my order immediately on the sell call and the triangle that you can see in the screenshot appeared on screen before the candle spiked.  I looked at my account and saw that I got filled at 08:30:02 which is pretty good, but obviously not good enough. Most other people on the service lost on this trade, however some managed to grab 10 or so pips. I think I took the prize for losing the most as I didn’t want to get out of the trade too early in case it took off again which can often happen with news trades.

Forex25 Comments
This number can be a little hit and miss on the distance. the only clear pattern is it will usually go at least 25 pips. so even if things go a little wrong (slow fill) it should be worth the risk if you are fast. From records I see that is usually does not snap back after spiking 25, it usually continues on for another 25. I only took avount of historic trades that would be the same deviation that we will trade on tomorrow. Risk: Minimal deviation should push this for 25 to 30 pips. Good deviation can push it 30 to 50. One time it went 70 but this is not the norm so dont expect that unless we get incredable deviations.

Description
The Producer Price Index (PPI) measures the rate of inflation (i.e., the rate of price changes) experienced by manufacturers when purchasing goods and services. A rising trend has a positive effect on the nation’s currency. When manufactures pay more for goods and services, they are likely to pass the higher costs to the consumer, so PPI is thought to be a leading indicator of consumer inflation. PPI is highly regarded, and at extremes will have a market impact equal to that of its CPI counterpart.

USA CPI and Industrial Production

Pair: GBP/USD
Bias: Flat
Result: Buy
Spread: 10 pips
Profit: 48 pips
Peak spike move: 70 pips

These were two separate trades, but I’ve bundled them together because they were only 45 minutes apart and I was still long when the second number was released.

Oanda seem to have fixed the slippage issue. Also a nice spread – things are looking rosy all of a sudden. Was filled before the spike moved which was nice and it spiked up pretty rapidly and then hung around waiting for the Industrial Production numbers 45 minutes later. When the industrial production came out (a no-trade) the numbers were slightly worse which sent the market down gradually. Took out my stop to lock in a nice 48 pips.

Forex25 comments (CPI)
This is the most important trade this week It will be watched for inflationary reasons and therefore is important to investors. It may move a very long way.

Forex25 comments (Industrial Production)
Everything depends on what happens with the CPI trade. We will most probably only watch this trade if we are in a CPI trade or if the CPI does not deviate and investors are waiting to get this out of the way to get the market moving. I will advise after the CPI.

Description (Core CPI)
Derivative of the Consumer Price Index (CPI) that excludes the Food and Energy items. Food and Energy account for roughly 25% of CPI, but they can be very volatile from month to month and can distort the overall picture. CPI with the exclusion of these volatile components is thought to be a better indicator of the underlying inflation trend.

Description (Industrial Production)
Measures the total value of output produced by factories, mines, and utilities. A rising trend has a positive effect on the nation’s currency because high levels of production are a sign of a strong economy. Industrial Production reacts quickly to the ups and downs of the business cycle and can be a leading indicator of manufacturing employment, average earnings, and personal income. Traders pay special attention to Industrial Production because it’s one of the few growth indicators that is produced directly by the Federal Reserve.

UK Retail Sales

Pair: GBP/USD
Bias: Long
Result: No Trade
Spread: 15 pips

Small deviation, no trade. Not much else to say, market didn’t respond to the news either, spread back to 15 pips.

Forex25 comments
Depends on deviation. During the trade i will call Minimal which means that it is worth a 30 pip move. If I call good, then it will be worth 30 to 45 pips

Description
Measures the value of sales at the retail level. A rising trend has a positive effect on the nation’s currency because Retail Sales make up a large portion of consumer spending, which is a major driver of the economy. Retail Sales can have a high market impact because it is usually the first significant indicator of the month that relates to consumer behavior, making it susceptible to surprises.

NZ Retail Sales

Pair: NZD/USD
Bias: Long
Result: No Trade
Spread: 12 pips

Very small deviation resulting in a no trade. Spreads have come down slightly from the widening recently which is encouraging.

Forex25 comments
If the number is late this is risky. And the number is often late. Be sure to draw horizontal lines on your chart 20 above and below price to highlight any early spikes.

Description
Measures the value of sales at the retail level. A rising trend has a positive effect on the nation’s currency because Retail Sales make up a large portion of consumer spending, which is a major driver of the economy. Retail Sales can have a high market impact because it is usually the first significant indicator of the month that relates to consumer behavior, making it susceptible to surprises.

USA Core Retail Sales

Pair: GBP/USD
Bias: Long
Result: Sell
Spread: 15 pips
Profit: -14 pips
Peak spike move: 56 pips

Again, more horrible slippage from Oanda. Trade placed at 08:30:03 EST when price was at 1.9700. Filled at 1.9678 – slippage of 22 pips including spread. Price spiked down to around 1.9675, then retraced up to 1.9690 pretty fast. It looked like it was going all the way back up so I closed the trade for a 14 pip loss. 30 secs later the market sold off and dropped to a low of 1.9641 on the 5min chart. Price dropped another 30 pips or so over the next hour.

I will be keeping my lot sizes small until the oanda situation is clarified. Mood right now: not happy.

Forex25 comments
This trade can sometimes do odd things. We will be ready to take profit fast unless the number is out of this world. Remember to keep your lot sizes small while we establish the situation with Oanda and possible slipp

Description
Derivative of Retail Sales that excludes the Automobile Sales component. Automobile Sales make up roughly 25% of Retail Sales, but they can be very volatile from month to month and can distort the picture. Retail Sales with the exclusion of this volatile component is thought to be a better indicator of the underlying trend in consumer spending.

USA Trade Balance

Pair: GBP/USD
Bias: short
Result: Sell
Spread: 10 pips
Profit: -35 pips
Peak spike move: 35 pips

A sell was called and I immediately pressed my sell hotkey and a sell triangle appeared 35 pips below the current price. There wasn’t even a candle printed. 2 secs later the candle appeared and my sell order was right at the tip of the candle. I had been slipped big time. This has only happened once before so I am hoping it is a technical issue with oanda and not them playing forex cowboy games.

I will keep an eye on them over the next week or so – 25 pips slippage is not acceptable, even at news time.

There was a big deviation from forecasts so the price should have continued downwards, but it retraced all the way back up, so a double whammy for me. Not too pleased. This is the first “normal” report that has resulted in a loss.

Forex25 comments
Bottom Line on this trade is if a buy is called and the spread is 15 you should probably not trade it if you cannot tolerate a loss. If it calls a sell then i think it may be quite safe on a 15 pip spread.

Description
Measures the difference in value between imported and exported goods and services. A positive Trade Balance indicates that more goods and services were exported than imported over a given period. A rising trend has a positive effect on the nation’s currency. When higher levels of exports are sold to the world, demand for the nation’s currency is elevated as foreigners convert their native currency to purchase these exports. The Trade Balance also has a sizable impact on GDP because high demand for exports creates increased employment and production as domestic factories work to fill this demand.

UK CPI

Pair: GBP/USD
Bias: Slightly short
Result: Buy
Spread: 15 pips
Profit: 11 pips
Peak spike move: 20 pips

A small deviation from the forecast but enough for a buy. Price took off after I placed my order (I love that), and only moved 20 pips before hitting resistance. To be expected as the deviation was small.

Took profit by accident by hitting the sell hotkey. I had configured the ‘S’ key on my keyboard as a SELL_MARKET order and went to type something in another window with ‘S’ in the text which triggered my Sell order. I will now configure my hot keys to use the function keys instead so this mistake doesn’t happen again. Got 11 pips profit by mistake – could  have got around 18 pips if I hadn’t made the mistake.

I am using free auto hotkey software to speed up my trade entry. When configured correctly it is very good as positions can be entered and exited using one key press on the keyboard instead of clumsily clicking around with the mouse. Recommended – but make sure you configure and test it properly before using it on your live account!

Forex25 Comments
CPI is usually worth around 35 pips. Here are some stats:
10/17/2006 Initial spike = 37
9/12/2006 Initial spike 17 pips but drifted up to 50 in 10 minutes.
8/15/2006 Initial spike 43.

Description
Derivative of the Consumer Price Index (CPI) that excludes the volatile Food, Energy, Alcohol and Tobacco items. CPI with the exclusion of these volatile components is thought to be a better indicator of the underlying inflation trend and the central bank uses it as their primary inflation gauge, aiming to keep it at an annualized rate of 2%.

UK PPI and Trade Balance

Pair: GBP/USD
Bias: Flat
Result: No Trade
Spread: 15 pips

Not much of a chance of this one moving. Again, not much deviation from forecasts and most economists pretty much predicted the same number with not much deviation among them.

Forex25 comments
Two reports released at the same time causes the probability to reduce as the numbers have a better chance to conflict. IF they both go the same way we will have a nice trade.

PPI Description
The Producer Price Index (PPI) Input measures the rate of inflation (i.e., the rate of price changes) experienced by manufacturers when purchasing goods and services. A rising trend has a positive effect on the nation’s currency. When manufactures pay more for goods and services, they are likely to pass the higher costs to the consumer, so PPI is thought to be a leading indicator of consumer inflation. PPI is highly regarded, and at extremes will have a market impact equal to that of its CPI counterpart.

Trade Balance Description
Measures the difference in value between imported and exported goods and services. A positive Trade Balance indicates that more goods and services were exported than imported over a given period. A rising trend has a positive effect on the nation’s currency. When higher levels of exports are sold to the world, demand for the nation’s currency is elevated as foreigners convert their native currency to purchase these exports. The Trade Balance also has a sizable impact on GDP because high demand for exports creates increased employment and production as domestic factories work to fill this demand.

US Non-Farm Payroll

Pair: GBP/USD
Bias: Slightly short
Result: Sell
Spread: 15 pips
Profit: -35pips
Peak move: 9 pips

Well, we were warned that this would be a roller coaster trade with very high risk, the riskiest trade out of all the releases we trade. I have only ever had one loss with this service before and that was a non-farm payroll report. A sell was called and price spiked downwards and we waited for the momentum to keep going, but it came right back up, so I moved my stop to the top of the spike candle. Price retraced pretty much right to the top of the candle and then started moving down again, I went short once more betting on the momentum finally gathering to the short side. A few minutes later price started coming back up again, and then shot right up over 100 pips. I have no idea why this happened, if you know please contact me.

Snippet from forex25 comments prior to trade
This is a very dangerous trade. DO NOT over trade your account on this report.

Description
Measures the number of new jobs created in the previous month, excluding the farming industry. A rising trend has a positive effect on the nation’s currency. The number of new jobs being created is one of the most important indicators of the economy’s health because consumer spending, which is highly correlated with labor conditions, makes up a large portion of GDP. This report is the first of the month that relates to labor conditions, making it susceptible to big surprises.

UK Interest Rates

Pair: GBP/USD
Bias: Long
Result: No Trade
Spread: 15 pips

There was not much of a chance of this deviating from forecasts, so I joined the room just in case (you never know) there was a surprise hike in rates. No trade, no change in rates. The currency barely reacted to the news, it rallied very gently and then resumed the prior downward trend.

Forex25 comments
If the number hit it will be a big suprise and it will fly and trend well as well.

Description
The central bank’s governing body, the Bank of England (BOE) Monetary Policy Committee, releases an Interest Rate Statement each month. The statement contains the latest decision regarding changes to the nation’s short term interest rate (“Bank rate”). A rising trend has a positive effect on the nation’s currency. Short term interest rates are the paramount factor in currency valuation; traders look at most other indicators merely to predict how interest rates may change in the future. What makes interest rates so important is that high rates attract foreigners looking for the best “risk-free” return on their money, which significantly increases demand for the nation’s currency. The primary objective of the central bank is to achieve price stability; when inflation rises above an annualized rate of approximately 2%, they will respond by raising interest rates in an attempt to bring prices down. This is what makes inflation-predicting indicators so important. Traders know that rising prices will lead the central bank to raise interest rates, which ultimately leads to a more valuable currency.

Australia Employment Figures

Pair: AUD/USD
Bias: Long
Result: Buy
Spread: 15 pips
Profit: 10 pips
Peak move: 29 pips

I missed this one as I was too tired and the trade would have been at 12:30am UK time. Slightly disappointed that I missed it as there was a small amount of profit to be taken. The price drifted up nicely for several hours after too – see screenshot.

Forex25 comments
Dont trade above 10 pips spread. Well after last month suprise drop to -30 this month should come in better based on the research I have done. The biggest growth would be in construction and mining. One interesting stat I saw was there is a sharp decline in job advertising in Australian newspapers and online. This will have no effect this month as the numbers lag but suggests a slow down in the job market in the future.

UK Industrial Production

Pair: GBP/USD
Bias: Flat
Result: Sell
Spread: 15 pips
Profit: 38 pips
Peak move: 56 pips

Despite the 15 pip spread I got a great fill (High of the opening bar was 1.9693, and I got filled at 1.9686, a slip of 6 pips). My order was filled before the market moved at all, it spiked about 5 secs later. Nice trade.

Forex25 Comments
Dont trade above 10 pips spread. This has been a nice little trade in the past. Let’s hope it hits.

Description
Measures the total value of output produced by factories, mines, and utilities. A rising trend has a positive effect on the nation’s currency because high levels of production are a sign of a strong economy. Industrial Production reacts quickly to the ups and downs of the business cycle and can be a leading indicator of manufacturing employment, average earnings, and personal income. Traders pay special attention to Industrial Production because it’s one of the few growth indicators that is produced directly by the Federal Reserve.

Australia GDP

Pair: AUD/USD
Bias: Short
Result: No Trade
Spread: 10 pips

Too tired to trade this as it was 12:30am so didn’t get up for it based on the judgment that it would likely be a no-trade. I’m glad I stayed in bed!

Forex25 Comments
Dont trade above 10 pips spread. The Australian market is starting to show signs of slowing mostly in the housing market, chances are the GDP will be worse than expected or at least wose than last month. We need the suprise number and as most economists are predicting a worse number than last month, I suspect they will be quite accurate. Let us hope they are a off by enough for a trade. In any account I’m quite sure this will be a worse number, therfore a short.

Australia Cash Rate

Pair: AUD/USD
Bias: Flat
Result: No Trade
Spread: 10 pips

I missed this trade as I was out with the family. Screenshot below for your info.

Forex25 comments
Dont trade above 10 pips spread. There is probably more chance of my meeting Elvis in my local bar than this number changing. I am rethinking the methodology for trading interest rates to only those where it’s expected. Then trade an unexpected number. For example, everyone may be expecting a 1/4 point and it’s raised by 1/2 point.

Canada Cash Rate

Pair: USD/CAD
Bias: Flat
Result: No Trade
Spread: 10 pips

A small spike but not enough for a good spike trade. There was a nice drift up afterwards that I couldn’t predict beforehand so a no-trade.

Forex25 comments
Dont trade above 10 pips spread. There is probably more chance of my meeting Elvis in my local bar than this number changing. I am rethinking the methodology for trading interest rates to only those where it’s expected. Then trade an unexpected number. For example, everyone may be expecting a 1/4 point and it’s raised by 1/2 point.

Canada Employment Figures

Pair: USD/CAD
Bias: Flat
Result: No Trade
Spread: 15 pips

Spreads widened more than usual today which is not a good sign. Not much deviation so a no trade. Price did spike down slightly and then moved upwards, glad I didn’t get into that.

Forex25 comments
Dont trade above 10 pips spread

Description
Measures the number of new jobs created in the previous month. A rising trend has a positive effect on the nation’s currency. The number of new jobs being created is one of the most important indicators of the economy’s health because consumer spending, which is highly correlated with labor conditions, makes up a large portion of GDP. This report is the first of the month that relates to labor conditions, making it susceptible to big surprises.