Fundamental Beans

GDP (Gross Domestic Product)


Jul.20.2013

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GDP is like an annual price tag for a country, showing how valuable the country’s economy is and how fast it is growing. GDP shows the overall market value of all the stuff (products and services) that a country produces and is usually gauged on an annual basis. If a country’s GDP grows compared to the previous year, that means that its economy has been healthy. It is no wonder that this has a direct relationship to the forex market.

---The country’s currency grows stronger when production and revenue (GDP) are high--

Therefore it important to stay up-to-date with the GDP for each of the countries whose currency you are trying to trade. Additionally, every time a country announces its GDP, its currency becomes volatile, giving forex traders an opportunity to ride a short-term trade. GDP growth leads to an uptrend in the currency rate.

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