1. Logon to www.forexfactory.com
2. Locate the tradable indicator ahead of the release time
3. Click on the Detail and you will see more info about the indicator, previous reports, what
you should be expecting etc.
4. Your focus should be on “Usual Effect” Actual > Forecast = Good for currency; This
simply means if the Actual figure is higher than the Forecast, then the currency of the economy that
we are expecting the report from will be stronger. E.g. the diagram above shows the report
(Retail Sales m/m) from Great Britain at 9.30am. The forecast was 0.1%, and the Usual Effect states
that if Actual > Forecast = Good for currency;
In this case, your next focus will be to check the History, check the past 3 month’s history and note the
Deviation. By definition, Deviation is a change or difference from what is usual, accepted, expected or
planned. Check the average deviation from the History to determine what deviation you would use for
your forecast.
Therefore, what is expected is the forecast. And if the Actual comes out to be higher or lower than the
forecast, that will tell you what to do in the forex market; either buy or sell. As for the Retail Sales m/m
that was released on the 17th of June 2010. The forecast was 0.1% while the Actual came out to be
0.6%. This shows that we should expect stronger GBP. And if you want to trade, you should be trading
(buying) any of these pairs; GBPUSD, GBPJPY, GBPCHF. Preferably GBPUSD.
5. Immediately it is 5 minutes to the release of any indicator, just go to
www.forexfactory.com or refresh the page if you have it opened. Or visit www.market watch.com to
watch out for the breaking news.
6. Once the ACTUAL is released and you are clear with the deviation. That is the difference
between the Actual and Forecast. Then, you can now follow the trend or direction of the market as
speculated by the Fundamental indicator.
Note: If you are trading FA, it is advisable to maintain risk and money management. You should
minimize your risk exposure in the market. Do not trade higher lot size than your account capacity. You
should be looking at exposing between 5 to 10 percent of your equity.
Thank you