Good infrastructure is essential in trading like in anything else, so before we are going to dive into the way we can trade around economic events, let's start with the basics, to make sure that we understand a release and the implications.
Specification of an Economic Event
Currency - The currency of the country that this event is based in.
Impact - In the spectrum of low, medium, high, measures how important this event is for traders.
Expectation (EXP)- For almost every economic event there is an expectation. The expectation is the average forecast of the top 50 analysts. This number is very important because this is the reference threshold you can use to judge the Actual release.
Actual - This is the actual value when the release occurs.
These cards represent the information available before and after the release
Let's say GDP of USA will be released at 8:30 EST. Prior to this moment, all the fields (Currency, Impact, Expectation) are available except the Actual. The actual value will be released at 8:30 EST by the government agency responsible for this measurement.
As traders, we only care about the surprise - the difference between the actual and the expectation. That is what drives the markets, the new piece of data.
