Unemployment Numbers Definition


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Video Transcription:

Hello Traders! Welcome to the newest trading course at the third module news that move the market profitably enough for us to trade. In this lesson we are going to review unemployment numbers. When we talk about unemployment numbers, we want to focus on jobless claims and unemployment change. Normally jobless claims are the name of the unemployment event of the United States. Unemployment change is the event of unemployment event in other countries. Basically they are the same, and we must pay very close attention to them as they are an important indicator on the over all health of the economy.

Unemployment Numbers

Let’s start by defining what these jobless claims are. This is a report issued by the U.S. Department of Labor on a weekly basis. It refers to the number of individuals who have filed for unemployment to receive benefits during the past week. There are two categories; the initial jobless claims, which are the people who are filing for the first time, and the continuing jobless claims, which are the unemployed people who have been receiving unemployment benefits for a while. This is a very important difference to make because the initial jobless claims are more important than the continuing jobless claims. Not that the continuing jobless claims are not important, but what the initial jobless claims numbers are telling you are people are filing for unemployment for the first time. If this number increases from week to week, it will mean that more people are filing for the first time, which means the employment situation in the United States is declining and we might be in an economic stagnation.

How do you interpret this number? Well, it’s easy. Jobless claims and unemployment claims are an important indicator of the state employment situation and the health of the economy. A sustained increase in initial jobless claims would indicate a rise in unemployment which would imply a challenging economic environment. As we were saying before, unemployment numbers must be watched closely as they are a leading indicator on the over all health of the economy.

Now, unemployment numbers are very important to determine the overall health of the economy, thus the value of its currency, because employment is heavily correlated with consumer spending. The less people are employed, the less business are going to produce because there are less individuals willing to buy their products or services. This is the overall logic behind the initial jobless claims or the continuing jobless claims numbers. The less people are employed, the less the business are going to produce because there are less individuals willing to buy their products or services. The higher the unemployment numbers, the lower is going to be the consumer spending. Consumer spending is at the core of the development of a country’s economy.

Unemployment numbers

How are we going to trade this number? Now that we understand what this number means and the logic behind the data, I’m going to show you how to trade it. Remember, we are never going to front run the news. This means we are never going to buy on an expectation that the numbers are going to be less important than last week’s, and we are never going to sell on an expectation that the numbers are going to be greater than last week’s numbers. We are always going to wait for the release for us to be able to trade it. Jobless claims and unemployment numbers usually are the only release schedule and because of the nature of the data, we can expect a very clean move. This means that on your economic calendar you are going to see that these numbers are usually the only one released at the time that they are scheduled. We are going to expect a very clean move. Because of this we are going to use pending orders, buy and sell stuff to trade it. Even though we are going to see a surge in volume during the announcement, we are still going to use big levels as targets and stop losses.

Now, on the next lesson I’m going to show you the past initial jobless claims and how I trade them.

Adam

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Adam is an experienced financial trader who writes about Forex trading, binary options, technical analysis and more.

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