do hello and welcome to this introduction of
our unique product called Event impact analysis you know that many traders follow very
closely what is happening in the news there are many news events that affect
stock prices and exchange rates and the values of commodities. some news
events happen unexpectedly like natural disasters or political
scandals but many important events happen a predefined dates and times like the state of the Nation Address and
budget speeches there are also well defined dates and
times when certain economic data is made available to the public. these events that we know are going to
take place, may hold potential trading opportunities, depending on what types of instruments
we hold. so autoChartist event impact analysis is
aimed at giving you a better understanding of how certain economic events impact
certain tradable instruments. I refer to it as the EIA for the rest
of this video. if I were to ask you how did the latest
non-farm payroll affect the Euro USD? how would you go about answering that
question? if you werent looking at the Euro USD
Price graph at that time, and can therefore not recall it from
memory you probably would refer back to your charting program to see what happened. but ,you would need to know at what point
in time the event took place exactly, so that you can give me a more accurate
answer. you would probably have to check what the date
was on the latest release, find it on your charting tool, and you
still may need to adjust it for your own time zone. this process can easily take 20 minutes
or more this is exactly what the EIA has
already summarized for you. and not only does it display a graph on
which the exact time of the latest non-farm payroll is illustrated, (with the blue line running down the
middle) but it also shows you the same for the previous 11 similar events. so now you will even be able to give me
an answer if I ask you “how does the non-farm payroll usually
affect the Euro USD?” but any trader with experience will ask, what time frame you are looking at because
some economic events caused huge volatility within minutes after the
event takes place, while other events may take hours or days
to be assimilated by the market. for this reason we’ve added three zoom
levels to the EIA. the finest looking at the next four
hours of five-minute data, the next up been 12 hours of15 minutes data and the broadest range showing the
two days of sixty minute data that follow the event. in each case we also provide an analysis
summary that relate specifically to the
difference between the consensus view of what the market expects the outcome of
the event to be, and that which is actually realized.
especially for economic events that are based around the release of data – there are several experts that make
projections based on the available information and try and predict what the actual
figures would turn out to be. sometimes they are spot on but sometimes
they really get it wrong. the difference
between the expected value and actual value was what we call the Delta which can be either positive
or negative or occasionally 0. since the Delta becomes known the moment
when the actual data is released, we can relate this difference from the
expectation to the way in which the market reacts on the price graph of an
instrument. here we look at a very simple linear
regression to determine whether the general trend that followed the event
was more upward or more downward. then at the top of the page we’ve given
you a summary of all this information. you see our reasoning is that much of
the information that is available around an event is built into price already, but if there
is a shocking difference between what the market thought they knew and what they have suddenly learned,
price needs to move to incorporate this new information. so from this summary we want to see
how often does price movement reflect the Delta or the surprise that the market suffered.
if there is a good correlation then this may create opportunities for
traders to take a calculated position as soon as the event takes place and the
Delta is realized. now we have even made a summary of the
summary. here’s how to interpret the summary of the summary – these two blocks indicate the degree a
positive correlation, meaning the Delta and the price after the
event tend to move in the same direction and these two blocks indicate the degree
of negative or inverse correlation meaning that the
Delta and price after the event tend to move
in opposite directions. the two percentages are inversely
proportional the closer they are to the fifty percent
the more we tend to conclude there really is no consistent correlation and that the price does not really seem
to be affected by any surprises that this type of event delivers. on the other hand the further these
percentages are from 50 percent mark we can conclude that there is a
significant correlation or significant inverse correlation and
that judging from past events you might statistically expect price to
move in a predictable way after this type of event gives us a
startling revelation of the gaps in our knowledge. of course we cannot
suggest to you that past events can accurately predict future events but what we can show you is an obvious
correlation or lack thereof and you need to decide how you want to
make use of this information we’re always at your disposal for
questions and feedback just email us on support at auto
Chartist dot com and we would gladly assist you in any
way we can