Making Sense of Economics

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Every week we see loads of economic data that may move markets in either direction, but ever wonder how to make meaningful sense of it?

Here is my latest book recommendation and addition to OP’s reading list. This book is a classic MBA economic text book but I think a worthwhile to be included into every investor or trader’s library.

Introducing “Guide to Economic Indicators- Making Sense of Economics” by famous publication “The Economist”.

This guide is a pocket-size powerhouse, packed with explanation of literally every economic indicator you may think-of. To use the words from the book itself:

Written for the non-specialist, this highly accessible guide provides the keys to interpreting all the major and many lesser economic indicators that relate to:

• GDP and GNI
• Growth, trends and cycles
• Population and employment
• Industry and commerce
• Money and financial markets, etc.

The guide clearly explains the underlying economic realities of today’s world. It is an invaluable reference for anyone in business and studies.

Now you may think of why to buy when there are tons of free websites that can offer explanation of each term. If you are like me, then you would love to keep this as a very quick reference guide in your bookshelf that you can refer to every weekend before data is announced following week. Now how to use this for option trading:

1. Download the economic calendar from Bloomberg
2. Refer to the calendar and interpret which are the market moving indicators (though Bloomberg identifies that, but you may wanna derive your own conclusions)
3. Assess risk to your portfolio and prepare adjustments plans in advance (for instance, before FED meeting, I generally prefer to be out of Iron condors depending upon how far my short options are).

Don’t expect this book to tell you how a perticular indicator will affect the markets. Think of it as dictionary and one will have to develop his or her own perspective. Albeit, I think this is invaluable tool and you may wanna include this in your “must have” reading list.

Profitable trading, OP

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