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Forex Economic Calendar

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What is the Forex economic calendar, and how to use it in trading?

The Forex and stock market economic calendar summarizes news and other important publications to be published during trading sessions. These are the fundamental data that affect the prices of small and large markets. This is why the economic news calendar is one of the first-tier tools for real time analysis if you decide to trade foreign exchange.

How to use the economic calendar?

In addition to its unique importance for fundamental analysis and forecasting, as mentioned above, the Forex live economic calendar serves as an indicator for news trading in the Forex market. If you are engaged in exchange trading and seek advice regarding opening positions, the calendar can serve as a reliable source of information.

For this purpose, there is a well-tried algorithm for using the Forex calendar, suitable for all investors.

1. At the beginning of a new trading day (or the day before), a trader opens the economic calendar and notes the important macroeconomic news. Of paramount importance is the news marked in the calendar with three exclamation points.
2. In case you are experienced enough, they perform the analysis of previous macroeconomic data, as well as the reaction of the main market players and how it reflects in the dynamics of asset quotes. It is also important to get acquainted with the opinion of market experts and more experienced traders, get general market commentary and advice from independent experts on the Internet, including FXOpen blog.
3. Immediately after the news release and its evaluation in the economic calendar, the trader reconciles the released data with the forecast, and makes a decision to invest money according to the conclusions made. Please note that you need to carefully consider your investment objectives under any circumstances.

  • In case the news is positive, i.e. its value is higher than the forecast median, a decision can be made to buy the currency, the quotes of which are most sensitive to the macroeconomic news content.
  • In case the news is negative, i.e. its value is lower than the forecast median a decision can be made to sell the currency, the quotes of which are most sensitive to the macroeconomic news content.

However, news trading is not the only way to use the economic calendar. Very often, published news is of great importance not only for Forex trading, but also for the world economy. There are events like changes in the level of discount rates made by central banks (regulators), or the release of statistics on inflation, the number of employees, etc. Such data, if published, is able to channel the quotes of Forex market assets, stock and commodity markets into long-term trends. Such manifestations arise directly or indirectly, and fall into the domain of interest of investors who can use the economic calendar for long-term forecasting and investments.

What to pay attention to when using the Forex economic calendar?

The following data may be crucial when you explore the economic calendar.

  • The time of publication according to the trader's location.
  • Origin of the news (in which country the event occurred and what is the source of publication). For example, if USD/CAD is one of the pairs you trade, you should pay attention to the Canadian and US economic statistics.
  • The importance of the news, namely, the impact on the relevant asset. If the impact is low, the price of the relevant currency is likely to be unaffected. On the other hand, if important news is published, there will be high volatility in the financial asset.
  • The nature and wording of the news will make it possible to judge the nature of this event, be it Mario Draghi speech or the U.S. unemployment statistics.
  • Results and forecast statistics: historical data will allow you to assess the evolution of events and compare them with the market situation at the moment, and maybe even take a different perspective on the initial investment.

Note that reliance on such information should be somewhat limited and not be the only source of decision-making. Risks associated with foreign trading can never be reduced to zero, no matter what analysis method you use. Always keep in mind the amount you can afford to lose if you decide to open a trade according to news, and that Forex economic calendar contents do not constitute investment advice.