It is an important feature of your trading platform. It presents a roundup of all significant economic announcements and releases, as well as other fundamental events taking place around the world which might impact the market.
These events often have a significant impact on financial markets and currency volatility. An economic calendar allows traders to know what is going to happen when.
The forex market is most affected by monetary and fiscal policy announcements.
Traders use the calendar to plan trades and to be aware of any event risks that may affect any of their open trade positions. Traders can view the economic events that impact their forex trading.
What is the Economic Calendar?
One of the most important tools of a forex trader is an economic calendar for any currencies they intend to take positions in.
A global economic calendar will typically list all of the relevant events coming up on each trading day for each currency, their priorities in terms of their potential market impact, their release times, the market consensus, and what the previous result was.
Once the data is released, that should also show up quickly on the calendar.
Economic calendars usually focus on the scheduled releases of economic reports for a given country.
Examples of events that are listed on an economic calendar include GDP data, employment reports, central bank announcements, consumer sentiment surveys, and hundreds of other types of events.
The majority of the events listed fall into one of two categories:
- Reports on past financial or economic events.
- Projections of future financial or economic events.
Traders rely on the economic calendar to give them information and to provide trading opportunities.
Traders often time moving into or out of positions to correspond either with an announcement of some event or with the heavy trading volume that often precedes a scheduled announcement.
Following the economic calendar can be especially beneficial for a trader who wants to trade the news.
If news traders can guess correctly on the outcome of the news release, they can open the position immediately before the scheduled news and then close it within hours of the news.
Vincent Nyagaka is a Professional Trader, Analyst & Author. He has been actively engaged in market analysis for the past 7 years. He has a monthly readership of 100,000+ traders and has taught over 1,000 students since 2014. Vincent is also an experienced instructor and public speaker. Check out Vincent’s Professional Trading Course here.