Powerful

GDP Forex Indicator

Logikfx's 'GDP Forex Indicator' calculates the predicted Net Gross Domestic Product Differential (NGDPD), between two distinct national economies. 

Using GDP to predict forex prices was a retail trader fantasy, 'till now.

- Marcus, Director at Logikfx

Forecasted

Change in GDP (%) Differential from previous year

GBP/USD

-2.50

Forecasted

Change in GDP (%) Differential from previous year

USD/JPY

0.40

BEST FOREX AUTOMATION TOOLS

FOR RETAIL TRADERS, 2019

E-Forex Magazine

INTERESTING AND INNOVATIVE TECHNOLOGY, 2020

Trust Pilot

BEST NEW FOREX EDUCATION AND TRAINING UK, 2020

Global Banking and Finance Review

Purpose of GDP in Forex

The gross domestic product (GDP) is a common monetary benchmark of the total production within a country. It simply is an easy way for traders to estimate the growth, and value of an economy. It is considered a lagging (backwards looking) indicator, as it is calculated using historical surveys, reports and trade flows. As such, traders must use GDP growth forecasts to help with their trading decisions.

Currencies are heavily influenced by the GDP growth rates each year, and are a strategic tool essential in every forex traders tool box. It's common for traders to then compare the GDP growth between countries, to determine which economy is growing faster or slower.

Typically, it's sensible to compare GDP% Growth rates between 2 economies (GDP Differential) to quickly gauge the long-term money flow - Marcus, CEO

For example, if a trader is considering the currency pair GBPUSD, a comparison between the United Kingdoms GDP Expected growth and the United States Expected growth will help decide which economy will be growing faster than the other.

The idea suggests, if an economy is growing fast than another, generally the money will flow to that economy.

How The Indicator Works

The GDP Forex Indicator uses the Net Gross Domestic Product Differential formula, using forecasts issued by the International Monetary Fund (IMF).

What is Net GDP Differential (NGDPD)?

Net GDP Differential (NGDPD) in the forex markets is the difference between the GDP Growth rates of two countries.

For example, if the U.S. dollar has a 4% growth rate, while the Japanese Yen has a 1% growth rate, the NGDPD would be the difference between 4% and 1%, equalling a 3% differential.

How does Indicator Predicts Forex Price

  • If the differential is positive, this is a long bias on the currency pair

  • If the differential is negative, this is a short bias on the currency pair

Therefore, continuing the above example, a positive differential of 3% would generally signal to forex trade that the currency pair GBPJPY will long.

What The Indicator Looks Like

Best ways to use the indicator

The GDP Forex Indicator is best used as tool within a larger strategy, like the 'Global Macro Approach' taught in the logikfx academy. Here are a few tips to get you going: 

  • Always calculate macro currency strength first: It's important to understand the influence of all other economic indicators for each individual currency, before comparing interest rates. This will help increase the confidence level of each forex trade, and the macro currency strength meter does that for you.

  • Check market positioning before entering a trade: Once you have an idea to long or short using the Interest Rate indicator, and currency strength, you need to determine if there's enough fuel in the market. Generally traders use the Commitments of Traders (COT) Report to do this.

  • Manage the risk: To maximise the profit made from using the interest rate meter, always set your targets and stop-losses based on the the average volatility of the currency pair.

Finally, as with any tool, meter or indicator, it has its limitations, and should be used as part of a wider, more complete system.

Start Using The Interest Rate

Forex Indicator Today

LITA Technology 2.1

Master the markets with real fundamental analysis tools

£189/ Month

Forex Opportunity Rankings

Updated weekly

Macro Currency Strength Meter

Updated weekly

GDP Forex Indicator

Updated on change

Interest Rates Forex Indicator

Updated on change

Commitments of Traders Analysis

Updated weekly

background strip 4.jpg
Featured In
Will you be the next Lita trader?

Do you want better trades?

Hey, we're Logikfx. We're determined to make consistent trading a reality for all. Get email notifications of all our up-coming trade ideas and much more. The question is, are you ready?

 LEARN TO TRADE 

 COMPANY 

logikfx.com

Logikfx is a leading source of financial trading education, technology and indicators, ranging from macro currency strength to forex and stock related videos, articles, webinars, and courses.

Recognition

Featured as a 'Top Trading Platform Company in the UK (2021)' - by Daily Finance

 

Nominated as ‘Best Forex Education & Training UK 2021’ - by Global Banking and Finance Review

 

Nominated as ‘Best New Forex Education & Training UK 2020’ - by Global Banking and Finance Review

Macro Currency Strength Meter ranked as 'best automation tool for retail traders' - by E-Forex Magazine

©2017 - 2021 Logik Fx Ltd

1/1

Headquarters

Logikfx

The Colmore Building, 

20 Colmore Circus Queensway, 

Birmingham 

B4 6AT 

United Kingdom

Business Hours

Mon - Fri: 8am to 11pm

Sat: 6am to 11am

Sun: Closed

Disclaimer

Trading in securities can lead to significant losses, that may exceed your initial investment. You should seek advice from a licensed professional to determine if trading is for you. Logik Fx Limited is not an investment advisor. Further, owners, employees, agents or representatives of Logik Fx Limited are not acting as investment advisors. All persons and entities (including their representatives, agents, and affiliates) contributing to the content on this website are not providing investment or legal advice. Nor are they making recommendations with respect to the advisability of investing in, purchasing or selling securities, nor are they rendering any advice on the basis of the specific investment situation of any particular person or entity.

 

All information on this website is strictly informational and is not to be construed as advocating, promoting or advertising registered or unregistered investments of any kind whatsoever. All of the information on this website is for educational purposes only and is not to be construed as investment or trading advice. ​For the full disclaimer click here.