Imagine finding the perfect opportunity to trade, and just as you confirm the trade, the price falls because of an interest rate change or other economical factor that you didn’t anticipate. This is way more common than you can imagine. While you can’t control many external factors, you can anticipate many of those events and create a trading strategy. That’s where the forex economic calendar can help you.
If you want to manage the risk in forex, keeping up with the forex news events and the economic calendar with macroeconomic events is vital. In this post, we will walk you through everything that you need to know about the economic calendar and how to use it for forex fundamental analysis.
What Is A Forex Economic Calendar?
In forex trading, choosing the right time to determine whether your risk will result in profit or loss. The forex economic calendar is the guide that tells you about the major news for trading forex. The advanced news helps you determine which currencies will be affected and how significant the potential impact could be.
Some of these news affecting currency values are bank interest rate decisions, employment reports, inflation readings, GDP releases, and other indicators released by government or public and private institutions. When these reports and events take place, the forex market immediately shows the impact: low, medium, and high.
Therefore, keeping a keen eye on this economic calendar with forex news events should become a habit if you want to make profitable trades.
What Are The Key Components Of A Forex Economic Calendar?
At first glance, the forex economic calendar may look like a blur of currencies, event names, and numbers. However, they are easier to read and essential to make high-risk investment decisions.
Once you understand each element on the economic calendar, forex fundamental analysis becomes easier, and you can make decisions based on facts rather than instinct.
Date & Time
The first and most important components are the date and time of the events. This helps you set a reminder regarding the events in advance. Thus, you can track the event and its live impact on the forex market to make better trading decisions.
Country & Currency
The calendar highlights the country that is hosting an event or releasing a report. This helps you understand which currencies will be affected the most.
Event Name
This highlights the names of the forex news events and releases from critical organizations. You can markup your calendar to get reminders and check them before making trade decisions.
Impact Level
Impact level refers to the movement of the price based on a particular event. It is measured as high, medium, and low impact news. If you want to take high-risk, you should focus on high impact forex news.
Previous, forecast, and actual values
The economic calendar highlights the change in values of interest rates, GDP, and more. These values are listed in three formats: previous, forecast, and actual.
While the previous focus was on existing numbers based on current and past trends, the forecasts are rough estimates. The forex traders need to make their decision based on the previous and forecast values, as the actual values are updated after the event occurs.
You need to track the market indicators and other geopolitical and economic events closely before making a high-risk trade decision based on forecasts in the economic calendar.
Benefits Of Using The Forex Economical Calender
Following the economic calendar is vital because some major reports and high impact forex news can lead to 200 to 300+ PIPs movement. This can lead to major profits or losses.
The following are a few more advantages of using the forex economic calendar:
- Avoid unexpected volatility in the market by tracking the high impact forex news
- Understand how the money and market move by focusing on these major events
- Find the right trade opportunities before and after the forex news events
- Build a structure pre-trade routine to manage your risk
How To Trade Using The Economic Calendar?
At Alpha Trading Academy, you’ll find one of the best forex economic calendars available for everyone.
You can choose a country you prioritize and track all the major events that affect your desired currency pair. In our forex calendar, you can filter the events based on their impact as well. You’ll find the previous, forecasts, and actual values for past and upcoming events. Add the most important events reminder directly to your digital calendars (like Google Calendar) to get reminders.
The following are a few tips to use the economic calendar to avoid high-risk trade:
- Review the calendar on weekends to mark all the major news for trading forex
- On trading days, set an alarm for all the important events based on their release time
- Don’t enter new trader 30 minutes before and 20 minutes after the event release, and avoid panic trading
- Compare the actual figure against the forecast to determine the currency strength and its impact on the currency
- Combine the insights from news trading, forex and forex fundamental analysis techniques to determine the right entries
If you are a beginner, checking the forex content calendar should become your habit to make a well-strategized trade entry. Learn how to trade efficiently with our practical and live forex classes. Check our forex courses now!
Conclusion
The forex economic calendar is like a risk management system that helps you identify events that affect the currency values the most. Check the calendar every day before making trade entries to know what is coming, understand which pairs are at risk, and plan your trading day around the data. Our economic calendars help you choose the countries and set reminders for forex news events in your calendar. Learn how to integrate our free economic calendar into your forex fundamental analysis to reduce high-risk trades. Contact us to know more.
FAQ
Why is the economic calendar important for forex traders?
The following are a few reasons why economic calendars are important for traders:
- Track macroeconomic data that affects currency values
- Make a data-backed decision based on the impact of these economic factors
- Develop a strategy for high-risk trade by identifying the highly volatile events
What are the must‑watch economic calendar events for traders?
A few of the highest-priority events to track on any forex economic calendar are:
- The U.S. Non-Farm Payrolls (NFP) is released on the first Friday of every month
- FOMC interest rate decisions and the accompanying Federal Reserve press conference
- Consumer Price Index (CPI) reports from various countries
- GDP releases from major economies
- Foreign exchange reserve levels
- Interest rate reports from various national banks in different countries
How to read an economic calendar?
Each row in an economic calendar for forex represents a single event related to the chosen country. The columns represent the date & time of the event and previous (last reading), forecasts (expected value), and actual (real value after the event occurs) value that the event represents. A country flag and currency label tell you which currency will be most affected. The larger the gap between Forecast and Actual, the larger the market reaction is likely to be.
What is the difference between forecast and actual in an economic calendar?
The forecast value is also known as the consensus or expected value, as they are determined by analysis of past data and the current situation. You need to consider this before making a trade entry based on a particular event. The actual values come after the event happens. These are the real values announced during the event. A result significantly above forecast is bullish for the currency; a result significantly below forecast is bearish. Learn more about the economic calendar with our beginner’s forex courses. Check our website to know more.
