To maximise your chances of making a profit from trading forex, it is advisable to learn about a key economic theory. Theories that tie into macroeconomic data are essential, as it is that data that has a huge impact on how much currencies across the globe are traded. This data includes numbers such as interest rates, unemployment rates and purchasing power parity.

One branch of economic theory that will prove useful is natural unemployment. It differs from the actual unemployment rate in a number of ways, the main one being that it is the lowest form of unemployment an economy can possibly reach. Natural Unemployment rates are determined by the number of jobs that are available in a nation’s economy.

How natural unemployment rates can be used to guide forex trading activity is easier than you might think. If you know how to create code, all you need to do is time each automated trade with the announcement of unemployment figures from the countries of your chosen currency pair.

Writing Your Algorithm

To set up an automated trade system, you need to do the following before starting:

    ●   Find out what the natural unemployment rate is for the country

    ●   Check an economic calendar for any dates when unemployment numbers are released. 
     Most countries announce them on a monthly or quarterly basis

    ●   Take into account historical data for both the natural unemployment rate and currency
     values before determining the direction of your first trade

    ●   Write the appropriate code using the correct language e.g. C=

You also need to choose a forex trading platform that allows you to use automated trading. One such as metatrader 4 will let you compose your code, allowing you to sit back and wait for the data on your currency pair to come in.

Being Prepared

It is important that you have at least two algorithms ready - one for buying, the other for selling. This will cover your back in case unemployment figures drastically change in case of a major employer making thousands of staff redundant or if a multinational announces new jobs. The UK, for example, recently reached its natural unemployment rate.

For your algorithms, you can upload them and change the numbers if you feel that a currency will go up or down by a certain number of pips. This can be done simply by copying and pasting the code you have for one scenario.

Algorithms can also be written to predict which direction a currency will go in. It can take into account historical data taken from a chart, be it for employment figures or the currency you are trading on.