Economic Calendar And Why You Should Follow It
An economic calendar is something similar to a regular calendar you might have come across. When you think about the use of a calendar, people have various reasons. However, the most common reason is that it allows you to schedule to time appropriately.
For example, many people tend to use a calendar in the form of a diary to keep track of their daily appointments, holidays and any important reminders.
An economic calendar basically does the same job. However, unlike keeping track of your personal events, an economic calendar keeps track of the important events that will happen in the markets.
If you are a trader, regardless of whether you follow the fundamentals or not, it is essential to keep an eye out on the economic calendar. Without an economic calendar you are basically trading in the dark.
Sometimes, you might miss out some major trading opportunities that could have been avoided if only you followed the economic calendar. There are many different types of economic calendars.
For stock investors, an economic calendar gives details on the stock markets and the companies. For traders in forex, a forex economic calendar gives details on the economic events such as new events and so on.
What information is available with an economic calendar?
An economic calendar gives you some important information, mostly which are economic events that can eventually impact the volatility in the markets.
Have you ever taken a position where suddenly, due to a news release, the price jumps or falls sharply? The reasoning behind this is the news event that was responsible for it.
Without having an understanding about the events that will shape the day, it can get confusing for the trader.
There are many economic calendars that are available free of cost. However, among the many, the economic calendar at ForexFactory.com is one of the most widely used and followed by the forex trading community.
The economic calendar at ForexFactory offers you daily insights into what economic news events are scheduled. This will in-turn give you an idea of what to expect during the day. Sometimes, prices can drift in anticipation of the news release and this can lead to choppy markets for you. Read here how to use the forex factory calendar to your advantage.
If you are however aware about the upcoming economic events, you would be better informed and know the reasons behind why price is behaving in a certain way.
Types of news releases in an economic calendar
Not all news releases are important. There are three main types of economic news releases.
- Important: These are the most important economic news releases and they always have an impact on the markets. Some examples of such important news releases can be central bank monetary policy decisions, GDP reports, unemployment data and so on.
- Medium: These medium news releases have an influence on the markets to a certain extent but not in its entirety. Such releases can be flash inflation estimates, surveys that are forward looking and so on.
- Low: The low impact news releases are basically those that the markets ignore from time to time. These low impact news releases can be details such as a regional central bank giving its outlook on the economy and so on.
Besides the above three, news releases are also classified into speeches. Speeches from central bank officials are important in the context of the present day where interest rates are so low.
Forex economic calendar – Conclusion
In conclusion, a forex economic calendar is probably the best guide you can have. It helps you to not only understand what is happening in the markets, but also keeps you on the right side of the market.
Trading without the knowledge of an economic calendar is like trading in the dark and the markets can give a nasty surprise. Avoid this and become a better-informed trader by using an economic calendar.