So the previous topic was a very general high level summary of economic news events. Now we're going to become a little bit more specific. And we're going to look at what exact news events that we want to be trading because some will move the markets more than others. So as a quick overview, let's have a look at by all means to us. So as we saw in the last section from the calendar examples that we saw, there are many many news events released each week. However, not every single one is going to move the market we want to identify and therefore trade the economic data points, which have the largest potential to move the markets, because that's how we make our profit we need the markets to move to generate our profits.

Now generally speaking, there are data points which the big institutions will focus more on than others. We'll talk about these in a second because we want to know what the big institutions are trading, because if they're not interested in a particular data point, the market won't really move. And that's the last thing we want to be doing. Now, data points can also be nation specific meaning that if the central bank of a particular nation comes out and communicates to the market, that certain data points are more important than others, then naturally, the big banks and the big institutions will focus in on those, for example, back in 2014, late 2014, when the eurozone was in a bit of trouble, the ECB came out. And we're very explicit by saying the key data point that we're concerned about is inflation. Inflation is very, very low.

And if it doesn't improve, we are going to have to take action, ie, we're going to have to weaken our currency. So when they said that every single inflation figure had some massive moves because the market the big market participants We're focused on that, because the central bank had confirmed that they were focused on that. So sometimes data points are very nation specific. Sometimes they're just general. Now we will use as we've seen briefly, a free online economic calendar called forex factory.com. As this will give us visibility every single week of what news and eyes news announcements are coming out, What's also great about that calendar is it will tell us and help us filter the highest impact news events from the medium and the low impact.

So that gives us the ability to then become very, very focused on certain data points, rather than trying to trade absolutely everything, which would be pointless. Okay, so in regards to forex factory, he want to concentrate on the red impact news events because these have the potential tential for the greatest reactions in the market, the greatest movements, so we want to focus our attention and time on trading these high impact red flag news events. Now, as a trader, we want large moves from these news events because that helps us push our trades into a profit which is essentially our end goal. So the greater the movement, the greater the profit or the quicker we obtain a profit as a trader. That's exactly what we want to do. We want to obtain as much profit and as quickly as possible.

So when we get the news announcements, right and we trade those that have the potential for the greatest movements, this more often than not happens as we saw in the previous topic. We saw the example of the New Zealand dollar the kiwi dollar sorry, the kiwi dollar, the dollar CAD and the Aussie dollar, huge, huge moves over 100 pips on the kiwi dollar 100 pips on the dollar CAD and over 60 pips on the Aussie dollar. That was because all of those moves came off the back of red impact news events. So you've seen firsthand examples of the reactions you can get when it's a high impact event. Now, I'm going to go through a full demo separately in a separate video going through forex factory in a lot more detail than you're getting it now. So don't worry about how you filter and getting familiar with the website because I'm going to go through that in a video in a separate video which is purely dedicated to giving you a full in depth summary of how to use forex factory COMM But it's a fantastic piece of kit, something that's a massively important tool to me that I use every single week to plan my trades.

Also, so we want to concentrate on the red impact events but what we also want to concentrate on is events which relate to statistical data. to own numerical data, because sometimes you can get news events where there is no physical, numerical or statistical release, ie for example, if it's a speech, it could be high impact, but there's no number released. There's no statistics released. We want to avoid these four. Now we can trade them later down the line. But for now, we're going to avoid these because statistical releases or numerical releases are much more black and white.

It either tells you it's a good release or a bad release with a with something like a statement or a speech. You can get conflicting, conflicting opinions within that which make it a lot harder to trade and, and more gray. We want things to be black and white of which numerical data if it comes in better than expected, it's very black and white. If it comes in worse than expected. It's very black and white either. Gives gives a currency strength or weakness.

So what do we want to focus in on? We want to focus in on these following eight data points. And these will be relatable across all different nations and the following our interest rate decisions. This is where a central bank will make the decision on whether they're going to keep an interest rate on hold, whether they're going to raise rates or whether they're going to cut rates, raising rates is good for the local currency. Cutting rates is bad for the local currency. Secondly, we've got CPI and core CPI, which are inflation readings.

Inflation when inflation is worse, it is bad for the local economy and the local currency. If inflation is rising and improving, then that is good for the local economy and good for the local currency. GDP figures which are gross domestic product, again, if it comes in better than expected, good for the world. local currency and the local economy, bad, bad from the local currency and bad for the local economy. Same with employment figures manufacturing exactly the same better readings are good for local currency worse readings are worse. trade balance again, same thing, consumer confidence exactly the same thing in retail exactly the same thing.

So as you're seeing all of these data points, because then numerical if they come in better than expected, good for the local currency, good for the local economy, if they come in worse than expected, bad for the local currency, bad for the local economy. So these are very powerful, powerful news events. The first four are what are deemed as tier one. So the highest impact you will get from these events. The second four are still high impact, but they're tier two so they're slightly lower. So if I had a preference, it would be to trade the first four because these generally speaking create the Biggest movements, but I will trade all eight announcements so long as we get a big deviation from what is expected, as we'll see in due course.

So as the bullet points say each of the above releases will provide a physical number, which makes the result very black and white for you as a trader, it's either a good result, a bad result or indifferent. We obviously want the good or bad result, because that will create strength or weakness, which we will trade. The first four data points are generally seen as the high impact news events and the latter for our tier two. The outcome of each data point will affect our trading decision, as you will see in later topics because remember, I've already said once and I'll keep repeating this is we're looking to trade a strong currency against a weak one. If the data comes out and gives us the ability to determine whether a currency is weak or strong, that helps us with pairing strong against weak to find the greatest The highest probability opportunities.

And when a release happens, it comes in the following format. There are three key elements. There is a previous number. And this is simply the figure, which came out last time the economic outcome was issued. So for example, last month, what was the employment figure? So the market already knows that that's not really that important to us, then there's an expected so this is where a group of analysts will give their opinion on what they expect, the number will be in the forthcoming release.

So they will make an expected decision in terms of the data output. So the analysts from the top banks, what did they expect the figure to be this time around and this is normally given a week before the release. So the market in advance of the actual release already knows what they should expect from the release so they have an idea of what they expect. And then finally, is the actual figure. And this is released at the exact time and date as projected on the economic calendar. This is the final outcome.

So as we can see here, I've just identified on economic announcement, just to show you what it looks like on the calendar. So as we go through them first and foremost is the date, Tuesday, July 7, the time that it's coming out at 5:30am GMT, the currency it's going to be impacting, which is the Australian dollar. The red flag means that it's high impact. The cash rate is showing us that it relates to the interest rate decision. And then on the right hand side here we have the actual the forecast and the previous columns. So coming into that event, we already had these two figures here.

We knew that last time the interest rate was 2%. The analysts from the big banks expect it to be to this month and then when the actual figure was released at 530 on July, the seventh It came out as expected. So that's just a give you an example of how it looks on the calendar, we already get the forecast and the previous, we just wait for the actual and what we want to see with the actual is a deviation from the forecast. So in this example here, we probably wouldn't have got much of a reaction to this particular announcement because the market knew it was expected at 2%. When it came in at 2%. There was no real surprise there.

So what does actually create a big movement in the previous example, probably not much of a movement because the expected was the same as the actual what creates a big movement. And what we are always looking for as a trader, is when we get a deviation between the actual figure and the expected figure. So as it says here, when the actual figure is different to the expected, we get a big reaction To cut that down into more specifics, when the actual figure is better than the expected, generally the currency will strengthen. If the actual figure is worse than the expected, generally the currency will weaken. And as it says at the bottom, this is really important, the more significant the deviation, so the bigger the surprise, the greater the movement. So we're always wanting to look for the biggest deviation possible, because it's almost like the market gets shocked.

And that creates these big movements. So the greater the deviation, the greater the movement. Sometimes you will get no movement whatsoever and no reaction even to high impact events. What normally causes this is when the actual figure comes out, as expected. The markets not shocked. They knew that was going to happen.

They expected that and we will not expect too much of a move from that. On these occasions, we would not look to trade anything, because when there's no movement, your profit potential is capped. So there's just no point taking a trade where the probability of a move taking place is very, very low, we want to get those big deviations between the actual figure and the expected figure. So just to summarize this, you only trade statistical or numerical data because it's very black and white. It's either better than expected, worse than expected, or the same as we want to concentrate our efforts on the highest impact statistical data, which we know how to obtain we go into forex factory, and we look for the high impact events, specifically concentrating on those eight data points that we looked at what that we looked at on an earlier slide.

Reason why we concentrate Those is because they are the highest impacts, they give us the potential for a bigger move, which is obviously going to equate to a larger and quicker profit. Now, we always, always look for a deviation from the expected figure, ie either a better or a worse figure than what was expected. As this will create the movement that we need to generate our profits. The more significant deviation in the data, the greater the reaction will be. Generally speaking, good data will strengthen the currency affected by the news bad data, weaken it. So that will give us an idea of whether we believe a currency is going to strengthen or weaken, which will then be used in our trading plan or our trading idea to determine which currency pair we will trade.

Us for forex factory every single week it will become your best friend for a full calendar of the news events coming out so you can plan well in advance as to what you want to trade and when you want to trade it in a separate video in this same section, you will see a separate video which will give you a full rundown on how to use forex factory to your advantage and to get yourself set up so you can start looking at it from literally now