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The economic calendar is a source that traders use in order to analyze essential economic information such as GDP, CPI (Consumer Price Index), Non-Farm Payroll, and so on. Besides, the economic calendar might also include the central bank meeting and other important news that will be very beneficial for traders to know about.
There are various ways that the economic calendar is used by investors. First of all, they can find out information about the potential directions of economic indicators. It is important to know that there are three major grades on the calendar including low, medium, and high. The traders are highly recommended to know how to read Forex economic calendar because it might be very beneficial for them in order to generate a big amount of profits. They should check the calendars daily and get the recent information about the news and activities going on in the Forex market.
On top of that, the economic calendar is also vital because in many cases, it has an opportunity to help traders learn about when is the bad time for starting trading and avoid opening positions at the given moment. The essential thing is that when the news or economic announcements happen, the market starts to change even faster, so these facts are very important to consider while opening or closing the positions in the Forex market.
In this article, we will further discuss the main features of the Forex economic calendar, what does it show and how can it affect the future trading of the investors. Besides, we will talk about the major advantages that the latter has and about the comfortable ways of reading the calendar.
Forex Economic Calendar View
As we have already mentioned, reading the economic calendar for Forex trading is very important for each investor as it might have a big impact on their future trading performance. Therefore, they are recommended to check it every day and find out every type of information related to the recent economic activities happening in the market. However, it should be noted that sometimes this information might be too loaded with unnecessary facts, this is why traders should know how to customize them and choose the reasonable ones among them.
In addition to that, another noticeable feature is that a lot of websites categorize the information into the economic calendar as low, medium, and high volatility. Low volatility includes the fact that that doesn’t have a big influence on the market changes, such as a little bond sales or other not very vital indicators. Medium volatility contains the information about news that is more important and that has a medium effect on the overall market performance. An example of what this category might include can be retail sales or household spending information. In terms of high volatility, this grade denotes very essential facts and announcements that have a very big effect on the market, for instance, CPI (consumer price index), Gross Domestic Products (GDP), and so on.
Besides, it should be stated that people can customize the economic calendar for trading by the date. They can click which time they want to choose, ‘Today’ ‘Tomorrow’ or ‘Next Seven Days’. The investors are also recommended to change the timezones into their preferable times and then to click the button ‘Importance’ in order to find out the most relevant activities and announcements happening around. They also are able to choose each event of their interest to find more information about it.
While talking about this issue, it is essential to know that there is no such thing as the perfect Forex economic calendar because it depends on the individual traders’ preferences and interests. So traders should search for the calendars according to their needs and select the one that will be the best option for them at the given moment.
The Advantages of Using a Forex Economic Calendar
Several important advantages need to be mentioned about using a daily Forex economic calendar. First of all, the most considerable fact is that with the help of the calendar, people can plan their future trades due based on recent economic activities. This enables them to prepare themselves for potential movements in price. When a specific event takes place there is a high probability that the Forex market will go into a very volatile area. With all this information traders have a chance to better assess the potential risks and start managing their opportunities better. Besides, the essential thing about the risk-management is that traders should evaluate the difference between the market entry price and the stop-loss price in order to find out how high the potential risks can be. The advantage Forex economic calendar is that the latter shows this information very clearly.
On top of that, another thing that should be noted is that the Forex economic calendar gives people an opportunity to plan their trading in advance. For example, if the current market situation says that some important activities are going to be released soon, the investor can assess the circumstances ahead. That way they will know that soon the Forex market will become very volatile so opening positions at this period of time might not be very beneficial for their potential payouts.
Another great advantage of using a Forex economic calendar for traders is that it enables traders to have access to additional and useful features for customization. For example, they can choose their preferable timezones, set some alerts, and filter the facts in order to receive the most relevant and appropriate information possible.
Most Essential Factors in the Forex Economic Calendar
In addition, there are several highly rated news and announcements that influence the most the Forex calendar as well as the overall market performance. One of these is the new decisions made by the central bank. Besides, in many cases, the statements said at the press conference by the leaders of important institutions and their members might also be very essential and influential at the same time.
On top of that, news related to The Consumer Price index (CPI) can also affect a great deal the market volatility. The recent CPI number can tell the traders various things including how the level of inflation can change and what reaction the authorities might have about this issue. Generally, inflation plays an enormous role in the Forex market and in its analysis, especially in terms of measuring different useful indicators.
Besides, one of the most important pieces of information in the live Forex economic calendar is the unemployment rate. The lowest rate can cause very significant changes in the current market conditions. On top of that, it is not surprising that the Gross Domestic Product (GDP) also has a huge impact on the Forex market changes. Other important factors in the economic calendar might include Non-Farm Payrolls, Consumer Confidence Index, Home Sales, Manufacturing Purchasing Managers Index, and so on.
How to Trade With the Forex Economic Calendar?
Some people think that when the economic calendar tells them that the big announcement is being released, it is a high time they opened positions in the market and started trading. However, in many cases, this is not an adequate view of this issue because the facts prove that case is very risky and requires a lot of experience in order to avoid potential losses and failures. Even professional traders choose to close their positions before such important events happen in the market because they know that the volatile market is a very risky business. That’s why they wait until the market starts to balance and open their positions only after that. The reason for all of these is that a lot of investors close their trading positions before the announcements so the market liquidity starts to decrease at that period of time. Even though sometimes this period might be beneficial for someone, it still is not worth risking.
While talking about how to trade the Forex economic calendar, it is also important to remember that in many cases, investors already expect the results of the news releases. So when the central bank decision is announced or the CPI data becomes available to everyone, the market is already ready for the changes so traders can have a very different reaction to all of this information than it naturally would be. So every professional trader recommends closing every position in the market when the high volatility period is expected to come soon. Besides, keeping track of the selected currency pairs’ price changes until the market dies down, is the best possible strategy that gives people a high chance of gaining profits in the future.
Moreover, the economic calendar can have other important usages in Forex trading. An economic calendar gives very clear information about the world’s major economic and financial news. The latter has a very big impact on the trader’s decisions and their trading opportunities in general. People can look at the calendar and say when the important events are planned and that way, they see ahead of the possible market changes that might take place in the near future. As we have already discussed above, this approach is usually very beneficial as it helps people generate a big amount of potential payouts.
However, not every news in the daily Forex economic calendar has the same importance. In the Forex market, there are several economic activities that have a higher influence on the overall market conditions than the other factors. Such significant announcements can include the Nonfarm Payroll (NFP) Reports, durable goods orders, retail sales index, the Consumer confidence index, the trading indicators, and so on.
The Bottom Line
In this article, we have already discussed what the Forex economic calendar means. It is a source that traders use in order to analyze essential economic information. The economic calendar can be used in various ways by investors. For example, they can plan their future trades due based on current economic events and other activities. This gives them an opportunity to prepare themselves for potential movements in price and assess their trading capacities in advance. Besides, a big advantage of the Forex economic calendar is that it enables traders to assess the potential risks in the market and act as it will be the most beneficial for them with avoiding possible failures and losses.
On top of that, it is important to mention that there is no such thing as the best Forex economic calendar because it depends on people’s preferences and needs. However, almost every one of them gives investors very clear information about the world’s major economic and financial news. That way they can assess the recent market conditions and choose which time is the best for opening positions and starting trading.
As we have already stated above, there are three major volatility categories on the Forex economic calendar including low, medium, and high. They represent in which volatility stage the market is in the given period of time. In addition to that, every trader is recommended to learn about how to read Forex economic calendar because it might become very beneficial for them in gaining substantial profits in the future.