The main task of any trader is to buy an asset cheaper, and after time - to sell more expensive and earn on the price difference. For successful investment and trading in the financial market (including the Forex market) the secret is the ability to analyze the current position of the asset quotes properly and make an accurate prediction about the future dynamics of its movement. And if a trader correctly determines the direction and potential of the future price movement, then it is only a matter of time before a high profit is earned. However, intuition in determining the driving market factors, the mood of the major players in the Forex market, as well as medium- and long-term prospects, is not enough. That is why the economic calendar, which includes all essential macroeconomic indicators of the leading countries in the world, is one of the most popular analytical tools of modern traders and investors.
What is an economic calendar
The Economic Calendar of Events and Economic News is an interactive table that provides information on the exact time of publication, previous and current results of all significant macroeconomic releases published by competent authorities around the world. That is, precisely those indicators on which the mood and direction of trading positions of Forex market participants depend, which set the course and volatility of exchange quotations. Therefore, the macroeconomic calendar is an analytical tool of paramount importance, which can become the basis for making trading and investment decisions by beginners and professional traders.
The generally accepted statistics also evidences this. More than 66% of the main participants of Forex exchange trading are engaged in high-frequency trading (also known as trading on the news). After all, macroeconomic news is the primary signal of improvement or worsening of fundamental positions of financial assets and their investment and trading attractiveness. As all exchange assets - currency pairs, indices, securities and commodities - react to the news release to a greater or lesser extent!
The main task of the economic calendar
The mission of the economic calendar is:
to signal to traders and investors in advance about the preconditions for the appearance of factors that can affect the dynamics of quotes (in the macroeconomic calendar, data on the news release, which sphere it belongs to, which asset will be most affected, its previous and forecasted value is published in advance);
to signal about the current change in the macroeconomic situation in a particular country (on a specific exchange asset).
Thus, the economic calendar is best understood as a chronological compilation of most global economic events. Thanks to it, traders and investors can set up their investment and trading plans in advance, make adjustments and take precautions in current and future trading operations. And this unique analytical service, which has no analogues in importance, is available for use free for everyone!
The main questions that you can easily find answers to in the economic calendar are:
which exchange asset of the Forex market will be most affected by future macroeconomic news
how similar macroeconomic news has affected Forex asset quotes in the past.
what are the forecasts about the impact of the future macro release on the value of financial assets
what the actual result is.
How to use the economic calendar
In addition to its unique importance for fundamental analysis and forecasting, as mentioned above, the economic calendar serves as an indicator for news trading in the Forex market. All that remains is to learn how to use it correctly and make a deal in the direction of the main number of trading positions of other market participants.
So, until the news is published in the Forex economic calendar, a trader sees only the forecast and historical data. Actual macroeconomic indicators are published immediately after the news release - on predetermined days and times, which due to the economic calendar, a trader knows in advance. The only thing left is to get the current macroeconomic data and make a forecast of further price movement dynamics.
For this purpose, there is an algorithm of using the calendar worked out by years and hundreds of thousands of traders, including - an algorithm of trading on the news:
At the beginning of a new trading day (or the day before), a trader opens the economic calendar and notes for himself the macroeconomic news, which he is interested in trading. As we remember, the most important is that news, which is marked in the calendar by three heads of bulls. That's what you should choose for further analysis and trading.
If you have additional knowledge and experience, the trader performs the analysis of previous macroeconomic data, as well as the reaction of the leading market participants to them and its expression in changes in the dynamics of asset quotes.
A few minutes before the release of the selected news, the trader opens the economic calendar and trading platform (in case the trader is going to perform high-frequency trading).
Immediately after the news release and publication of its value in the economic calendar, the trader checks the released data with the forecast and:
in case the news is published positively, i.e. its value is higher than the forecast median, the trader concludes a deal to buy currency, the quotes of which are most sensitive to this macroeconomic news.
In case the news is negative, i.e. its value is lower than the forecast median - concludes a currency sale transaction, the quotes of which are most sensitive to this macroeconomic news.
Do not hesitate, taking into account that macroeconomic news is the primary factor in the formation of a bullish or bearish mood among Forex traders. The release of macroeconomic news above or below their forecasts is always perceived as a signal for action, which means that the quotes of a trading asset will undoubtedly start its predictable dynamic movement!
If macroeconomic news is released within the framework of its forecast, it has no value and no practical application for news trading, as it has already been laid down in advance in the current dynamics of asset quotes.
IMPORTANT! As we know, in the Forex market, trading is carried out on currency pairs and action - "buy currency", for example, USD, on currency pairs USDCAD, USDJPY, USDCHF will mean the conclusion of a deal on BUY. While on the currency pairs EURUSD, GBPUSD, AUDUSD, NZDUSD - buying USD - it will be a deal on SELL.
However, news trading is not the only way to use the economic calendar. News can be important not only for the Forex market but also for the world economy. In essence, the change in the level of discount rates by central banks (regulators), the release of statistics on inflation, the number of employees, etc. All of this can direct the quotations of Forex market assets, stock and commodity markets into long-term trends. And this already falls into the sphere of interest of investors, who can use the economic calendar for long-term forecasting and investments.
In any case, the value of the economic calendar is incomparable with any other analytical tool of a trader or investor. Therefore, by adopting macroeconomic statistics, your trading decisions will always be made in a balanced way and based on fundamental data, which means - bring the profit for which we all came to the financial market!