Understanding the Stock-to-GDP Ratio for Smart Forex Trading
The Stock-to-GDP ratio is a key measure of economic health in the world of Forex trading. It is calculated by dividing the total value of all stocks listed in a country’s stock exchange by its gross domestic product (GDP). This ratio shows how much of a nation’s total output is represented by the stock market, and serves as an indication of how well a nation’s economy is performing. Generally, a higher Stock-to-GDP ratio indicates an expanding economy and rising stock prices. Conversely, a lower Stock-to-GDP ratio can indicate a contracting economy and falling stock prices. Because of this, traders should closely monitor changes in the Stock-to-GDP ratio when planning their trading strategies.