Trading currency is not as easy as some online platforms claim. You need more than just your smartphone and some basic currency/economy knowledge. Overall, Forex trading would be the easiest way to get rich if it only involved buying and selling currency.

In fact, there are various economic indicators that must be studied and taken into account before attempting to trade Forex on a professional level. This IG Markets review will help you choose them as a broker only if you know all of the terms used in the review. In short, you cannot even choose a broker if you’re not aware of regulations, terms, and indicators.

Therefore, here are seven of the most important Forex economic indicators that every trader must know!

GDP – Gross Domestic Product

GDP is something we may come across once or twice a year as non-traders as well. This indicator measures a country’s economic health, and it is used for more than just foreign exchange.

The report related to this indicator is released on a quarterly basis. However, the data that it contains is usually known/predicted by traders – but not fully. Therefore, the release of the report can still affect the market.

Initial Jobless Claims

The next indicator on your list shows traders the number of people that applied for unemployment benefits – every single week. Believe it or not, this number affects the power/value of a currency. Moreover, the indicator also affects the NFPs that we’ll soon talk about.

NFP – Nonfarm Payrolls

NFP is known to move within the market similarly to GDP. It is changed by factors that affect GDP as well, namely business and employment cycles.

Nonfarm payrolls are released monthly and impact monetary policy. This is why Forex traders have to keep a close eye on them. Unlike GDP which can be easily predicted, NFP may take action and change the market immediately.

Retail Sales

The retail sales indicator shows the nominal currency value reported to the sales made within the retail sector. This report is released two weeks after a month ends. It also shows the change from the previous month as a percentage.

Basically, this report shows traders how powerful a certain currency was in its country’s retail sector.

Federal Funds Rate

Changes in the federal funds rate affect monetary policy directly. This means that a currency and the trades of a trader will suffer if they fail to accurately predict the outcome of the meeting that decides the federal funds rate.

Alongside FFR, the Federal Open Markets Committee also deals with changes that affect the interest rates of a certain currency.

Industrial Production Index

The IPI takes a year as a base and then compares the output level of a country to it. IPI refers solely to the material quantity and the amount produced – rather than to the currency amount and its implications.

For the Industrial Production Index report, three areas are considered – utilities (electric and gas), manufacturing, and mining.

Consumer Price Index

The Consumer Price Index indicator reveals the cost of services and goods within a certain country, over a period of time. Obviously, these costs are used to get more information on the speed at which prices rise and fall. Such information is extremely useful when dealing with inflation-like scenarios and trying to predict them.

The Bottom Line

Naturally, there are many more economic indicators that should be known when making a trade. Beginner traders may avoid learning too much about the Forex market as they are just getting started and experiencing it.

However, professional traders that look into trading hundreds of thousands of dollars at once should know all of the Forex economic indicators!