Economic
indicators are snippets of financial and economic data published by
various agencies of the government or private sector. These statistics,
which are made public on a regularly scheduled basis, help market
observers monitor the pulse of the economy. Therefore, they are
religiously followed by almost everyone in the financial markets. With
so many people poised to react to the same information, economic
indicators in general have tremendous potential to generate volume and
to move prices in the markets. While on the surface it might seem that
an advanced degree in economics would come in handy to analyze and then
trade on the glut of information contained in these economic
indicators, a few simple guidelines are all that is necessary to track,
organize and make trading decisions based on the data. 
Know exactly when each economic indicator is due to be released.
Keep a calendar on your desk or trading station that contains the date
and time when each stat will be made public. You can find these
calendars on the N.Y. Federal Reserve Bank Web site using this link http://www.ny.frb.org/,
and then by searching for "economic indicators." The same information
is also available on many other sources on the Web or from the company
you use to execute your trades.
Keeping
track of the calendar of economic indicators will also help you make
sense out of otherwise unanticipated price action in the market.
Consider this scenario: it's Monday morning and the USD has been in a
tailspin for three weeks. As such, it's safe to assume that many
traders are holding large short USD positions. However, on Friday the
employment data for the U.S. is due to be released. It is very likely
that with this key piece of economic information soon to be made
public, the USD could experience a short-term rally leading up to the
data on Friday as traders pare down their short positions. The point
here is that economic indicators can effect prices directly (following
their release to the public) or indirectly (as traders massage their
positions in anticipation of the data.)
Understand what particular aspect of the economy is being revealed in the data.
For example, you should know which indicators measure the growth of the
economy (GDP) vs. those that measure inflation (PPI, CPI) or employment
(non-farm payrolls). After you follow the data for a while, you'll
become very familiar with the nuances of each economic indicator and
what part of the economy they are measuring.
Not all economic indicators are created equal.
Well, they might've been created with equal importance but along the
way, some have acquired much greater potential to move the markets than
others. .
