If you want to analyse the market competently, then nothing will work without this calendar.
What is economic calendar?
Economic calendar forex is an indispensable tool that traders can use within fundamental analysis. Any strong movements in the financial markets begin with the publication of news: statistics have been released, some negotiations have taken place, force majeure has occurred — all of these will be reflected in the price chart.
The economic calendar looks like a tape of indicators for different countries. In it, you can also see the volatility of an event, the actual, previous and predicted value.
Most specialists adhere to an intraday trading strategy, as it allows you to make a profit during the day. One of the most common trading strategies is trading in economic news.
You probably know that important economic news can have a very serious impact on currency quotes. For example, if this is news about GDP, inflation, unemployment, or the level of business activity, then the currencies of the countries that published this news often react by increasing or decreasing their value.
In order not to miss a single important event, a person needs to study the economic calendar properly. It is useful even for those traders who deal in technical analysis, since in any case, important fundamental data must be taken into account.
The economic calendar reflects fundamental factors:
- political: negotiations, presidential or parliamentary elections, change of government;
- force majeure: military operations, revolutions, natural disasters, industrial disasters, etc.;
- psychological: rumours, expectations;
- economic: publication of macroeconomic statistics.
Many calendars also have special hints in a variety of various icons (stars, colour markers) that indicate the degree of importance of each news item and what currency pair it is directly related to.
What indicators should be taken into account?
The main directions can be distinguished:
- GDP: if GDP is growing, we can conclude that the state currency will also grow;
- consumer price index: if it rises, it will lead to a fall in the currency;
- unemployment rate: rising unemployment has a bad effect on the economy and the national currency;
- Nonfarm Payrolls(NFP): the indicator growth indicates the growth of the currency;
- retail sales: the growth of retail sales can be judged on the growth of the national currency;
- interest rate of central banks: the increase of interest rates is a positive factor for the national currency.
Much depends on the country where you’d like to invest. However, it is better to analyse several world’s major economies.
How to trade?
There are two ways to trade on the news.
The first and more risky, is proactive trading. That is, when a trader tries to predict how the market will react to a particular event. Only very experienced professionals can do it, because sometimes the market does not react the way we expect. In general, beginners are advised to avoid trading during news releases, as the volatility of currency pairs increases significantly during this period.
The second method is more reliable. It is trading with the trend, which is established after the market “works out” the news release. In this case, a few minutes before the release of important macroeconomic statistics, you need to place an order of “buy stop” or “sell stop” for 5-15 points.
This tool will help you invest profitably and analyse the financial situation around the world.
