How to use Forex Economic Calendar
Correct methodology of reading and analyzing economic calendar for Forex Trading:
Scheduled national and worldwide events that are likely to affect the price and popularity of specific markets or assets are included on economic calendars, along with their possible impacts. The kind and date of each event on a financial calendar can be utilized as a trading indicator to maximize profit potential because some sorts of events have been known to have a significant, predictable impact on trade.
Frequent news occurrences are the most apparent indicators because their effects on trade sentiment and volume are predictable. Scheduled publishing dates for generally respected market statistics or surveys, as well as scheduled events such as federal interest rate, trade balance, and inflation decisions, are examples.
Although other foreign events can influence market volatility, single occurrences’ economic impact and timeline are less predictable, making trading them more difficult.
Although many free economic calendars are available online, designated trading platforms often provide account members with a more flexible and all-encompassing calendar. Before picking a forex economic calendar at random, keep in mind that the events on the calendar are only as valuable as they are relevant to the market you’ve chosen.
Because forex trading is so global, having a calendar that allows you to specify specific qualification criteria and filter results by country and currency utilized is useful.
The majority of economic calendars include a summary of each event as well as a value for “actual,” “prediction,” and “prior.” The “forecasted” amount, which can be stated as a percentage or currency value, shows the expected market impact, whether positive or negative. Before a news occurrence, this figure influences trading sentiment and behavior. The term “previous” refers to the change following the most recent news occurrence.
“Actual” tracks the objective price movement that occurs after an occurrence of this sort, and “historical” tracks the historical price movement.
A more advanced economic calendar will allow you to filter results by relevance to your chosen markets and let you analyze the impact of each event based on your specific qualification criteria, in addition to providing this essential information.
The Advantages of Using an Economic Calendar:
The primary rationale for using economic calendars is self-evident: The world’s financial news has a direct impact on your existing portfolio as well as the development of new trading chances if you’re a forex trader. An economic calendar helps you keep track of events and comprehend their possible impact on the global currency market by organizing them and providing context.
You can account for impending news and events while planning trades and looking forward to potential market movers when you have an easy-to-use calendar at your disposal. Traders that wish to think ahead and take a predictive approach to their business utilize economic calendars frequently in their strategies to trade.
While taking a forward-thinking approach to your trading strategy is typically good, it’s also crucial to avoid overreacting to forthcoming events or the discoveries of a recently issued news piece. Events on your economic calendar might cause rapid volatility in a currency pair or the forex market as a whole. Still, these overreactions can result in significant losses if you trade recklessly. Take a balanced approach to evaluate news as it breaks, and keep an eye on the larger macro-environment influencing a currency pair’s market.
It’s only a matter of time before you get burned when you try to make quick money by trading on other traders’ instinctive reactions.
As Trading Indicators, News Events:
Start by picking a big currency pair likely to be influenced by a major news event to profit from news happenings. Because the NFP data is a barometer of US markets, you should look for a critical USD currency pair when utilizing it as an indication.
After you’ve found a currency pair, deciding which direction to trade is a little more complicated, interpret this information in the context of your other technical indications and insights, rather than putting orders based just on anticipated figures or market bias.
Examine the current market trend, strength, and direction, as well as support and resistance levels, both before and after the news event. If a news event is expected to offer good market information, you may observe a sharp rise in price action leading up to the news release, followed by a sharp drop if the news disappoints.
Timing is crucial in any good trading approach. Day traders may seek to profit on price volatility induced by market biases in the run-up to important events, but long-term trading methods reward those who take a more cautious approach.
Traders can profit from the volatility created by the event by waiting until after it has occurred to enter a position and using the actual vs. projected values to predict reactionary market movement.