The economic calendar is one of the most important tools for any forex trader. Learning how to use economic calendar is completely necessary for anyone who wants to trade in the forex or derivatives market.
At its core, the economic calendar is a list of economic events that will likely affect the price action in the world’s biggest financial markets. Data drives price action, so paying attention to important economic events isn’t optional.
Once a trader learns how to read economic calendar, keeping clear of wild price swings in the forex market will be much easier. The forex news calendar is simple to understand, and totally free to access.
What is the Economic Calendar?
There are numerous events that move global markets. Some of them are unexpected, but many are scheduled well in advance.
The forex economic calendar gives traders a list of all the secluded economic events that can move markets, graded by how likely they are to have an impact. The economic calendar is created with the event, the time of release (generally given in UTC) as well as a grade of the importance of the information.
While reading an economic calendar isn’t a guarantee of trading success, ignoring it isn’t a smart move for traders who want to make money in the forex markets.
The events on an economic calendar are usually divided into three categories, based on how likely they are to move the forex markets. Most economic calendars have green, yellow, and red events, with red being the most likely to create big market moves.
It is important to know what events will be moving markets in the days and weeks ahead, and an economic calendar gives traders all that information in an easy to understand format. Instead of having to sift through information that has already been digested by another person, the forex economic calendar makes it easy to spot important moments in the markets.
Why is the Economic Calendar so Important?
There is no denying that data moves financial markets.
Some of the events on the economic news calendar can make the markets whipsaw, which is why professional traders have strategies with the volatility that generally accompanies big events like the US nonfarm payroll report.
Failing to understand the events on the economic news calendar isn’t an option for a trader, because the events on the forex news calendar can have such an outsized effect on the global markets. If there is a GDP report from a major economy or inflation data, traders need to know what is happening.
Even if a single trader doesn’t think a specific event will have a big effect on the markets, other traders might push the price of a currency pair around during important economic events. The best way to stay informed is an economic calendar.
Indicators Used with the Economic Calendar
An economic calendar is a set of many important indicators that are required to make an informed trading decision:
- Personal Income & Outlays Reports;
- Producer Price Index (PPI);
- Productivity report;
- Purchasing Manager Index (PMI);
- Inflation rates;
- Central bank meetings;
- Gross domestic product (GDP);
- Labor market statistics (including Nonfarm payrolls or NFP).
Benefits of Using a Forex Economic Calendar
Once a trader learns how to trade forex using economic calendar, they are far more likely to be ready for major economic events. Many professional traders won’t take on big positions around sensitive economic news, as the risk of getting washed-out of a position is high.
It is easy to see the kind of market action that a US Fed rate decision drives, which is why it is important to watch a forex economic calendar for important events. Using an economic news calendar to time trades is a good idea, and can keep your positions from being swept up in wild market swings.
Trading Tips Economic Calendar
Numerous market strategists use a trading tips economic calendar to time the advice they give to their clients. Instead of opening a position at any given time, a trading tips economic calendar offers advice on market direction, and when the optimum time to open a position may be.
FXOpen Broker is a Solid Partner
Unlike most forex brokers, FXOpen Broker was started as an educational platform for forex traders. Learning about how to use an economic calendar is much easier when you deal with a broker like FXOpen broker.
In addition to great educational resources, FXOpen Broker offers a range of account types that can be opened with as little as $100 USD. It also offers full ECN accounts for more advanced traders, which feature industry-leading spreads.
If you want to learn more about all the account types and educational resources that FXOpen Broker has available, please click here. Working with a trustworthy counterparty is one of the most important parts of any trade, and FXOpen Broker clearly fits the bill.
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