Trade Balance

Trade Balance: The difference between a country’s imports and exports. This balance can be described as either a surplus if the country exports more than it imports, or a deficit if it imports more than it exports.

Trading Before & After Data Releases

Trading before & after data releases - text

Once a figure is released a trader must assess whether the figure has come within the analysts expected range, or it is outside of expectations.

If it is within the expected range then the markets will have a little to no move as it would have already taken into consideration the expected report and priced accordingly.

The moves will occur if the figure comes out much higher or lower than analysts’ expectations.

Take Crude oil for example, if a weekly inventory figure is similar to what analysts predict we see little change in the market price.

However when we see a larger difference, in this case, a higher than forecasted supply of gas stocks we see the price fall accordingly. As traders we are looking out for these changes in level of supply based on the reports of various commodities.

So always be aware of analysts’ expectations.

Another factor to take into consideration is that analyst’s expectations vary from analyst to analyst. We have a broad spectrum of expectations. What you need to be aware of is what is the low end of expectations and what is the high end of expectations – what are the lowest figures analysts are expecting, and what are the highest they are expecting.

Once the figure is released, if the figure comes out higher that the highest expectation then you should expect a bigger or more significant move as this would have caught all analysts off guard. The same thing will apply if the number comes out below the lowest expectation then you should expect a significant move too.

Taking these into consideration then you are able to judge how much weight to give each trade, how much size to put on each trade and how long to hold the trade. If a figure is a long way away from market expectations then you should expect a longer and more sustained move.

This could then in turn become a medium to long term trade if it is way above or below market expectations.