What the market cares aboutThe few numbers that move price right now.
The market only weighs a few pieces of data at any time. Find the ones that matter today, treat the rest as noise, and notice early when the focus moves on.
More information than you can use
There is more market information out there than you could read in a lifetime: news alerts, opinions, forecasts, 100 indicators. Most of it does not matter for your next trade. The trader who tries to follow all of it usually ends up following none of it.
Most of that flow is noise. It moves your attention, but it does not move the market, or only for a few minutes. Sorting the useful from the noise starts with knowing what the market is paying attention to.
The market weighs a few numbers at a time
At any moment, the market only pays attention to a few pieces of data. Right now it might be inflation, because everyone wants to know when interest rates will come down. A few months later it might be jobs, or growth.
The skill is finding what the market is weighing today and ignoring the rest. While inflation is the focus, an inflation report can move a currency hard and other releases barely register. Once the focus moves to jobs, a similar inflation number can pass almost unnoticed.
Historical and real-time data
The data in question is economic: the real numbers behind a move, such as inflation, jobs and growth. Chart patterns, the shapes traders draw on price charts, are a different topic. You look at the economic data in 2 ways.
Historical data tells you how a kind of number moved the market in the past: which releases caused big reactions, and which ones were ignored. Real-time data tells you what is coming out right now. Put together, they show you where the opportunities and the risks are, and they help you see a move coming instead of only reacting to it.
The look back is quicker than it sounds. The Session Recaps list the releases that mattered in each session, together with the market’s reaction.
Which releases moved the currencies you trade in recent weeks?
Which 2 or 3 came up most often?
When is the next release of each one?
Everything else is noise until it starts to move price.
Your market decides what matters
Which numbers matter also depends on what you trade. A US inflation report matters most to a dollar trader, and much less to someone trading the euro against the yen.
Good software does a lot of this sorting for you. Instead of reading every headline, you get the handful of numbers that matter for your market, which saves you hours you can spend on your strategy and on placing the trade well. Try it below: the morning feed stays the same, but switch the market and see how different it looks.
US CPI on Wednesday
ECB member: no rush to cut
BoJ minutes show debate on yield control
USD/JPY up 0.8% in Asia
Bank note: euro area growth stabilising
Oil jumps on supply concerns
US retail sales on Thursday
EUR/USD flat for 3 sessions
4 of 8 items matter for USD. Read those first.
The focus keeps moving
The market also keeps changing. New trends appear, new technology arrives, and things that nobody watched suddenly matter. A number that drove every move last year can barely register today.
If you keep checking what the data says, you notice the shift early and adjust. If you don’t, you end up trading last year’s story with this year’s money. There is no fixed rhythm to these shifts, so check the list every week. A later lesson shows how the focus moves with the economic cycle.
You don’t need more information. You need the right few numbers, and the discipline to ignore everything else.
Keep your list current
Check how the last few releases of the same number moved the pair. If it barely moved price before, don’t build your trade around it.
If a number you used to ignore starts moving the market, add it to your list and drop one that no longer does. Keep the list short.
In short
- The market only weighs a few pieces of data at a time. Find those and treat the rest as noise.
- Historical data shows how a number moved the market before, and real-time data shows what is coming out now. Together they help you see a move coming.
- The focus keeps moving, from inflation to jobs or growth. Check it every week so you don’t trade last year’s story.
Key terms
- Noise
- Information that moves your attention but not the market, or moves the market only for minutes.
- Inflation
- The rate at which prices rise. Central banks usually aim for about 2% a year.
- Key interest rate
- The rate a central bank sets for lending to banks. It drives borrowing costs across the economy and is one of the biggest drivers of a currency.