How to use the economic calendar in trading

Knowing upcoming news and financial events that can shape Forex trading fundamental analysis can be hardly imagined without using an economic calendar. With this tool in hand, you can plan your trades ahead, manage risk, and make strategic trading decisions. Most platforms, such as mt4 pc, have computer software for download with a built-in economic calendar for traders. Let’s see, how spending literally 1 minute a day with it can make you a profitable trader.

What Shows an Economic Calendar?

The economic calendar helps you keep track of upcoming events or data releases related to the economy and financial markets. A forex broker can find their data on GDP growth rates, interest rate decisions, and other information that can affect the deal.

The calendar data is constantly updated and each event is evaluated according to the degree of impact on the market. Based on these markers, the trader determines important news or data releases that are likely to significantly affect the market and require caution.

Most Important Announcements

You can easily get lost in numerous financial news and events. Surely, you can’t be informed about every announcement, so monitor events connected with:

  • Central Bank Interest Rate decisions;
  • Consumer Price Index;
  • Unemployment Rate;
  • Gross Domestic Product indicators;
  • Consumer Confidence Index.

These figures can be an essential component for any long-term analysis for Forex traders and investors. Knowing the upcoming events connected to the abovementioned indicators you can anticipate potential price turbulence.

How to Manage Risks Using the Economic Calendar?

Around key economic calendar events, you can expect a period of volatility and the market’s swing regardless of whether the data comes out above, below, or right in line with market expectations. So traders can sit out this period and cancel their pending orders, and avoid taking new trades until after the data has been released.

Others are closing out their Forex, stock, or futures positions several minutes before the high-impact data’s release because it’s hard to predict how many orders will come into the market upon its release in a reduced-liquidity environment.

As you see, financial and economic events cause the period of risk to increase, and when you are aware you can plan and prioritize your trades accordingly. Check your economic calendar each morning before you start trading, and jot down the times of the major data releases to prevent a high risk of slippage.

Leave a Reply

Your email address will not be published. Required fields are marked *