Economic calendar

The economic calendar is an important tool for conducting fundamental analysis. It includes information on macroeconomic indicators of individual countries and regions, as well as the period of news release about their changes (reports of Central Banks and others). An economic calendar is necessary for those traders who develop a trading strategy based on news.

Economic calendar from TradingView

Why do you need an economic calendar in the Forex market?

A calendar of economic events is necessary for every Forex trader. This tool provides access to important information that influences the movement of rates.

The Forex economic calendar is suitable for both technical and fundamental analysis. The reason is that this tool regularly shows the news necessary to build a trading strategy. The economic calendar helps traders respond in a timely manner to currency fluctuations and quickly make changes to their chosen strategy.

At the same time, the tool is also suitable for trading based on news. The economic calendar for traders provides information with which you can make a profit after the release of important messages.

Features of the economic calendar

An economic calendar is a tool that regularly displays news statistics regarding one or more currencies. This information is necessary to make successful transactions. Without news statistics, it is quite difficult to predict the direction of price movement.

The economic calendar provides information on macroeconomic indicators and reports on upcoming events (summits, board meetings of Central Banks, etc.) that can affect market volatility. These data are grouped according to significance into:

• important;
• medium importance;
• insignificant.

This gradation makes trading easier. Traders are not able to track all the information that affects the foreign exchange market to one degree or another. Therefore, most market participants pay attention only to significant news, skipping the rest. And with the help of the economic calendar, you can significantly speed up your work on the foreign exchange market.

What does the economic calendar show?

The economic calendar provides macroeconomic indicators:

• economic growth rate;
• inflation rate;
• business activity index and other similar information.

This data, when used correctly, helps you profit from Forex trades. However, you need to understand how the data provided affects the market.

For example, according to the economic calendar, information on business activity indices will be published in the near future. If the indicators exceed those predicted, we should expect an increase in the value of currencies and securities. Otherwise, the rate usually falls.

An equally important indicator that should be taken into account when making a forecast is the level of employment of the population. An increase in unemployment indicates a deterioration in the economic situation in a particular country. In such cases, the local currency depreciates (depreciation).

Today, many countries use so-called unemployment targeting. This means that regulators are seeking to reduce this indicator by available means.

In addition to these factors, when working with the economic calendar, you need to pay attention to the time of the meeting of the board of central banks (the Federal Reserve in the USA). These events have a significant impact on the currency. If the board of central banks intends to pursue monetary policy, then we should expect rates to rise or fall. Moreover, after the release of such news, sharp jumps are often observed within one day.

News trading rules

Each macroeconomic calendar is built on the basis of certain parameters. When working with this tool, it is necessary, first of all, to focus on the currency with which the specific news is associated. Usually, events occur every day that affect the course of the so-called majors. The latter include the most popular currencies, which are marked in the economic calendar with a country flag or designations such as EUR, USD, and so on.

It is also necessary to pay attention to the time of news release. This approach helps determine the moment to enter the market. In this regard, it is recommended to set a time zone in the economic calendar.

In addition, it is necessary to track three indicators: previous and current value, forecast. Before information about changes in a particular index is released, the calendar displays past data and experts’ expectations. Accordingly, the trader compares previous values ​​with the forecast, draws certain conclusions, builds a strategy based on this and opens a deal at the time the news comes out. However, it is highly not recommended to use this approach exclusively, since experts’ expectations are often justified, and the exchange rate moves in the predicted direction.

An example of working with an economic calendar

As an example of working with a calendar, we will consider a way to make money on binary options.

Information regarding the economic situation in Germany is scheduled to be released at 10:30. Moreover, one of the data groups is marked with three heads (maximum degree of significance). The first column of the calendar shows current (new) indicators, the second - predicted ones, and the third - previous ones.

In the above example, the economic data turned out to be higher than the indicators from both the second and third columns. That's why they are marked green on the calendar. The release of such information indicates a likely increase in the euro exchange rate.

Immediately after this data appears, you need to open a transaction to buy a binary option, choosing EUR/USD as the currency pair, indicating the end time of the transaction in 5 minutes and setting the rate movement UP.

Essentially, working with the economic calendar allows you to find the optimal moment to enter the market. That is, using this tool, you can trade binary options only during the period when important news appears.

Recommendations

If a trading strategy is built on the basis of news information, it is recommended to use only the data marked with three heads. Before publishing statistics, earlier information and forecasts should be analyzed. Often, experts’ expectations are not met even if the new indices ultimately turn out to be positive. This means that the market does not always react adequately to emerging news.