How do you trade the expectations game?
Markets don't react to data; they react to data minus expectations. The trade is in the gap between the two — and the gap is knowable in advance.
What's your method?
- how you measure expectations before a release
- how you position for the surprise rather than the number
- the expectations gap you exploited or got burned by
Background: how to read an economic calendar covers the forecast column.
Background: How to read an economic calendar: actual, forecast, previous and impact
The economic calendar tells you when markets are likely to move. Here is what each column means and how traders use it to plan the week.
What does forecast mean on an economic calendar?
The median expectation of economists surveyed before the release. Markets usually price in the forecast, so prices react to the gap between the actual figure and the forecast.
What is a high-impact event?
A release that has historically caused large price moves, such as central bank decisions, CPI inflation and the US jobs report. Spreads often widen around them.
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