The market reacts to the relevant macroeconomic news, because of this characteristic a good trader knows that investing just before the spreading of an important fact is extremely dangerous. The price in fact, undergoes changes sometimes unexpected at the exit of important data, this feature of the market is described very well in one of the fundamental premises of the technical analysis of financial markets.
The Market Discounts Everything
Stating that the market discounts everything means that investors move the market price according to their expectations. These expectations are projected to future, so the current price is full of expectations that also discount certain future macroeconomic events that, even if they have not already occurred, have already been provided.
Sometimes, Market Doesn’t discount anything
Not always the market discounts everything, there are cases where a particular datum was discounted in part, ie, analysts have predicted a result less than the real one. In this case, the release of economic datum increases the optimism of investors who’ll buy ( if the datum turns out to be higher than expected, and in any case we are talking about positive character data), increasing the price.
In this case we can say that a positive economic datum, not discounted, can move the price. This feature of the market can be exploited to our advantage. Let’s see, for example, what happened today in forex and how we could make use of it.
Market Analysis: FOREX 16/10/2012
The positive macroeconomic data of today are from overseas and related to quarterly Goldman Sachs, considered better than expected with increase in turnover and profits on the rise, moreover, were also increased dividends, which increased from $ 0.46 to action, to $ 0.5. Thanks to this outstanding performance of the U.S.A bank, the exchange rate of EUR / USD made a small, but substantial, leap up to increase to 1.3050.
In this case you would just be aware of the forecasts and the official data, these two would be enough information to take advantage of the intraday rally and earn a lot ‘of money. Henceforth, therefore, pay attention to the data.