Been tracking LEI data for a few months now but still struggling to see how it translates to actual market moves.
Seems like the signals are there but timing is everything. What’s your experience with using these indicators for trade entries?
LEI gave me decent signals during 2022’s volatility, but man, the timing was brutal. I’d see the data pointing one way and jump in way too early.
What worked was using LEI as a filter for the bigger picture. When it’s declining, I skip going long on risk currencies like AUD or NZD. When it’s improving, I’ll hold USD shorts longer.
The real trick is pairing it with central bank sentiment. LEI dropping while the Fed’s still hawkish? That’s when I start looking for USD strength to fade. Saved me from some nasty EUR/USD longs last year.
Don’t trade the LEI release itself though. Market barely moves on it compared to NFP or CPI.
LEI is more about avoiding bad trades for me. I focus on trend direction instead.
LEI and other economic indicators lag behind what’s actually happening, so I use them more to confirm what I’m already seeing rather than for timing entries.
I get better results when I combine LEI with price action and volume. When all three line up, that’s when I’m comfortable holding longer-term positions.
Trying to trade just off economic data will get you burned on timing.
LEI works better for position sizing than timing entries.