Forex Trading: Unconventional Data Sources

Forex Trading: Unconventional Data Sources

While no one can predict the Forex market with 100% certainty, most traders use the same set of information to make their decision on the market. The information could range between price action all the way to economic reports; many information can give a trader insight as to where the market will move next.

Some people however, adopt unconventional sources of information and incorporate it into their decision making. In this blog post, we will discuss some of these unconventional sources of information, and how some traders use this information as indicators to make decisions in the forex market.

First up, one of the more innovative data sources would be satellite imagery analysis. Some traders may analyse satellite imagery of industrial sites, shipping ports, agricultural areas and even oil wells to gauge economic activity. How does these images help? For example, the levels of oil wells can inform the trader whether there is a surplus or a deficit of oil, a gauge for these traders to buy or sell oil in the commodities market. Another example would be a lack of activity in an otherwise busy maritime port. The lack of activity can reveal that the manufacturing output is lower, and hence a possible early indication of contraction of economic growth of that country.

Another data source that traders are relying on to make their decisions would be social media platforms. Many social media platforms have become congregation areas for real time market sentiment. This is where opinions, news and rumors alike spread like wildfire. Traders can tap into this vast pool of wisdom and gain valuable insights into market psychology and sentiment dynamics. These social media discussions can help the trader gauge the prevailing mood of the market and capitalize on these sentiments by entering the market earlier. For example, if enough traders in a platform express positive sentiments towards a particular currency pair on social media, a bullish market sentiment is being foreshadowed and can prompt traders to consider long positions. While due caution has to be taken so that you are not taken for a ride, there is no doubt that it is a source of information that can be used to make decisions.

Thirdly, web traffic analysis can also offer insights into online activity and consumer interests that can help with decision making. Web traffic analysis can tell the user if there is a sudden uptick in traffic on certain sites, or if there is more sales of a particular product. Taking Taylor Swift’s 2024 ERAS tour for example, Singapore received a large uptick in travel websites and hotel websites. At the same time, accessory shops selling beads also see a large uptick in web traffic and physical footfall in preparation for the concert as well. What this means for Singapore could be a rise in people buying its currency, and that its entertainment sector would most likely see a larger growth compared to previous years. Some traders may take this information and consider long positions in the market when trading Singaporean currencies.

Last but not least, another data source that traders can use to make trading decisions could be patent filing activities. A patent refers to the exclusive right for an invention that provides a new way of doing something. By filing a patent, you reserve the right to sue for any infringement or imitation of your product. How patent filing activities can allow traders to make trading decisions would be via the fact that patent filing is an indication of innovation and future economic growth. An increase in patents being filed indicates to a certain extent that there is innovation going on in that country, and that signifies some growth economically. Traders can use this increase and adopt long positions as they expect the currency to get stronger as compared to other countries with lower levels of innovation, making a profit from it.

In conclusion, there are many other types of data sources out there that we as traders can utilize when we want to make trading decisions. While the data sources mentioned above do not encapsulate all the types of data sources a trader can use, it serves as an insight for us that there are many ways to observe information and extract it out for our own use. Keep in mind to evaluate each type of information for falsehoods so that you do not make the wrong trading decisions as well. As traders, we must do our due diligence and evaluate if the sentiment is fake, or if has been manipulated.