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Using Economic Calendars For Timely Profitable Trades – It’s a long-held belief that marketing and investment timing are mutually exclusive, but the two strategies work well together to deliver solid returns over several years. The effort requires a step back from the buy-and-hold mentality that characterizes modern investing and the addition of technical principles that assist with entry timing, position management and, if necessary, early profit taking.
Look back and you’ll notice that bull markets ended in the sixth year of the Reagan administration and in the eighth year of both the Clinton and Bush administrations. The Obama/Trump bull market has been strong since 2009. These historical parallels and cycles can mean the difference between better returns and missed opportunities. Similar long-term market forces include interest rate fluctuations, the nominal economic cycle, and currency trends.
Using Economic Calendars For Timely Profitable Trades
Financial markets also grind through annual cycles that support different strategies at certain times of the year. For example, small caps show relative strength in the first quarter that tends to evaporate in the fourth quarter. Many people think this is the time of year when speculation about the new year sparks renewed interest. Meanwhile, tech stocks tend to do well from January through the summer and then sag into November or December.
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Both cycles roughly follow the market adage of “sell in May and go away,” a strategy based on the historical underperformance of stocks in the six months starting in May and lasting through October versus November through April.
Markets tend to trend higher or lower about 25 percent of the time during any holding period and get stuck in sideways trades the other 75 percent of the time. A quick review of monthly price patterns will determine how the prospective investment ranks along this trend axis. This price trend follows the old market wisdom that “the bigger the move, the wider the base.”
If you are trying to enter and exit trades in time to maximize your profits, you need to rely on a variety of indicators and tools to increase your chances of success. A great place to start is the Academy’s technical analysis course, which includes interactive content and real-world examples to help you improve your trading skills.
The worst thing an investor can do is get emotional after an earnings report, using it as a trigger to initiate a position without first looking at current prices in relation to monthly support and resistance. The most profitable trades come when buying a stock that has reached an all-time high or is coming out of a deep base on high volume.
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The iShares Russell 2000 (IWM) exchange-traded fund (ETF) broke out of a two-year trading range in 2012, gaining 45 points in 16 months before breaking into a new range that lasted another 16 months before returning to a new rally. Investors felt bullish in the upper half and bearish in the lower half of the 2014 range, although buying into the most negative sentiment at the bottom of the range offered the most profitable entry.
Traders are taught not to average down or catch falling knives. However, investors benefit from building positions that have fallen hard and fast but show the ability to bottom out. It is a logical strategy that sets the optimal average of the entry and acquisition prices, buying phases around the magic number while the instrument works through the basic pattern. If the floor is broken, execute an exit plan that disposes of the entire position at or above the capitulation price.
Shares of Apple Inc. ( AAPL ) rose above $100 after a strong rally and entered a steep correction. Prospective investors can draw a Fibonacci grid stretched over the four-year trend and identify harmonic levels that could generate strong buying interest. support for buying the first phase of a new position when the decline reaches the 38.6 percent retracement at $66.
The decline continued to the 50 percent level at $56, while monthly stochastics crossed oversalt levels for the first time since 2009 and the price settled at the 50-month exponential moving average (EMA), a classic long-term support level. Investors had four more months to build positions within the developing base, ahead of the rally that reached all-time highs in 2014.
Weekly Market Update
Algorithmic cross-staging between stocks, bonds and currencies defines the modern market environment, with massive swing strategies in and out of related sectors on a daily, weekly and monthly basis. This exposes the portfolio to increased risk because seemingly unrelated positions can sit in the same macro basket, bought and sold together. This high correlation can destroy annual returns when a “black swan” event occurs.
Reduce this risk by linking each position to a related index or ETF, performing two studies at least once a month or quarter. First, compare relative performance between the position and the related market, and look for strengths that identify a sound investment. Second, compare related markets to each other and look for relative strength in the groups you’ve chosen to own. You are firing on all cylinders when both studies point to market leaders.
In a passive approach, investors sit on their hands regardless of economic, political and environmental conditions and trust statistics that promote long-term profitability. What the numbers don’t tell you is that they are calculated using indices that may have no correlation to your exposure. Just ask the shareholders who bought into the coal industry during President Obama’s time in office. Therefore, it makes sense for investors to identify the capitulation price for each position.
Your profitable investments may also require an exit strategy, even though you initially intended to hold them for life. Consider a multi-year position that finally reaches an all-time high between five and 20 years. This high price level marks a major resistance that can turn the market around and send it lower for years – so it makes sense to take the profit and use the money in stronger long-term opportunities.
Powerful Economic Indicators That Directly Affects The Forex Market
Market timing principles using classical technical analysis benefit investments and other long-term positions by finding the best prices and times to take risks to book profits. In addition, these timeless concepts can be used to protect active investments by raising red flags when underlying market conditions change dramatically.
The offers that appear in this table are from partnerships that receive compensation from. These benefits may affect how and where listings appear. does not include all offers available on the market. The data produced from the Economic Calendar is extremely powerful, providing traders, investors and analysts with the ability to monitor and keep up with important releases, announcements and events in economic data. The calendar boasts a schedule of upcoming economic indicators, including economic growth, inflation, employment data and consumer confidence, which can have a significant impact on financial markets and the global economy. In this article, we review the importance of the economic calendar to the world’s financial institutions, explore its inner workings and how it operates.
The economic calendar is important to financial institutions, including banks, hedge funds and other financial institutions, as it provides critical information for making investment decisions. It allows them to understand the current state of the economy and predict its future trajectory, which can have a tremendous impact on their investment holdings. By monitoring the release of economic indicators, financial institutions can identify market trends and quickly react to market changes, allowing them to make well-informed investment decisions and manage their risk exposure more effectively.
The economic calendar plays an indispensable role in global financial markets and provides a comprehensive framework for investors, traders and analysts to evaluate the release of economic data from different countries. This information is particularly important for the currency market, where exchange rates are influenced by the release of economic data from numerous countries. For example, the release of strong US GDP data could cause the US dollar to appreciate against other currencies, leading to greater profits for traders and investors.
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The Economic Calendar is a frequently updated schedule of upcoming economic information and events, classified by importance and impact on financial markets. The calendar is usually organized by country, and each economic indicator is assigned a color-coded rating based on its importance. For example, red indicates high-impact news that is expected to cause significant market volatility, while yellow indicates low-impact news that is unlikely to have a significant impact on financial markets.
The economic calendar is generally divided into three categories of economic indicators: macroeconomic indicators, market indicators and political events. Macroeconomic indicators include GDP, inflation and unemployment, while market indicators consist of stock market indices, commodity prices and exchange rates. Political events can include elections, referendums and central bank policy announcements.
The roots of the economic calendar can be traced back to the beginning of modern finance. In the past, economic data was distributed intermittently, with key indicators released at different times, creating a constant struggle for investors to stay informed of the latest developments. This lack of transparency created inefficiencies and market volatility that plagued the financial sector. The US government launched the first official economic calendar in 1935, a weekly report that showed a mosaic of economic indicators, from industrial production to retail sales and the unemployment rate. The report was originally published in bulletin form and was later sent electronically. Subsequently,
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