How to read and use economic calendars in forex

Economic indicators are usually released by governments, international organizations and private research firms. An economic indicator is a statistic that conveys certain information about economic activity. Economic indicators allow investors to analyses the economic performance of a state, country or region, as well as make forecasts about future performance.

While this forward-thinking approach is generally beneficial to your trading strategy, it’s also important not to overreact to upcoming events or to the revelations of a just-released news report. Take a balanced approach to evaluating the news as it develops, and pay attention to the overall macroenvironment shaping the market for a forex pair. An economic calendar allows you to plan your trading stategy by learning which events are due for release in the coming days and weeks. You can also get the latest data on the crucial economic announcements, which can potentially impact the financial markets. These include US non-farm payrolls data, interest-rate announcements, inflation numbers, manufacturing figures, GDP and much more. The economic calendar refers to the scheduled dates of significant releases or events that may affect the movement of individual security prices or markets as a whole.

Understanding the Economic Calendar

He was one of the first traders accepted into the Axi Select program which identifies highly talented traders and assists them with professional development. Your bias at this point is the continuation, but as a technical trader, you will find it best to know which major economic release is coming up and then how it might play it if the news is positive. On the day of the price spike, you had the EU Brexit Summit, Germany’s Economic Sentiment, Europe’s CPI data and ECB’s Praet speech. Lagging indicators – Lagging indicators are the opposite of leading indicators, where instead of looking forwards you are looking back at whether the intended outcome was accomplished.

With the economic calendar you can plan your strategy because you will know what events are going to be published in the coming days and weeks. You can also get an update of the key economic parameters that influence financial markets. These include US Non-Farm payrolls, interest rate announcements, inflation data, manufacturing data, GDP, and more. An economic calendar is a list of scheduled national and international events and data releases organized in chronological order. It is a very important source of information for traders as the events it contains are likely to affect the price of financial assets and investor sentiment in a market.

Why the stock market will struggle to rally until debt ceiling, bank woes are in rearview mirror

An economic calendar is a useful tool for traders because it tells them when certain events are happening, and these can have an impact on their trading decisions. By understanding the monthly and yearly events that occur throughout the global economy, traders can use them as indicators for when to purchase or sell financial assets. An economic calendar not only lists daily events, but the volatility levels attached to them. A volatility level refers to the likelihood that a specific event will impact the markets.

Investors and traders use the economic calendar to plan trades and portfolio reallocations and to be alert for chart patterns and indicators that may be caused or affected by these events. The economic calendar for various countries is available for free on many financial and market websites. Traders can study the current market trend, price direction, and strength and identify support and resistance levels before the news releases. If positive numbers are expected, traders may see a surge in price action between these levels.

Import prices rise in April for first monthly gain this year

A lagging indicator is an observable economic variable that changes its direction and movement after the change has occurred in the target variable (economic cycle). Lagging indicators are used to gauge the trend of the overall economy, and investors, businesses, and government entities use them as signals for their strategies and operations. Following the economic calendar can be especially beneficial for a trader who wants to take a short position. If the trader guesses correctly about the nature of the announcement, they can open a position immediately before the scheduled announcement and then close it within hours.

For example, the European Central Bank (ECB) meets every month to discuss monetary policy and determine the appropriate interest rate. The ECB’s Governing Council announces the interest rate decision after the meetings. Investors use the announcement to not only hear about ongoing policy developments, but to forecast future ones.

This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by INFINOX or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. Once you’ve located a currency pair, determining what direction to trade in is a bit more nuanced. Rather than placing orders based on forecasted numbers or market bias alone, interpret this information in the context of your other technical indicators and insights. The dashboard pulls together a series of informative tables to help broaden your economic knowledge, offering a broad and comparative global view. Look up GDP, unemployment or interest rates worldwide, or find out about data such as corporate tax rates and foreign investment.

Benefits of using an economic calendar

These include the closely-watched US non-farm payrolls release, CPI and PPI data, plus manufacturing figures from major economies including the US, UK, eurozone, China and Japan. You can also obtain at-a-glance information on major announcements for economies such as India and New Zealand. When it comes to trading economic events, one of the most important things to consider is timing. In general, these announcements are best traded right before they occur or immediately after they have ended. This is because economic releases are often accompanied by large price fluctuations that can last for a short period of time. Therefore, it’s important to be aware of upcoming economic releases so that traders can position themselves to take advantage of any price swings that may occur.

It contains a schedule of data releases and news that relate to various sectors and economies. The best way to discover the features of our economic calendar is to use it! But here is a quick breakdown on some of the features which help improve traders experience when they view individual economic data releases. It doesn’t matter if you are using technical analysis or fundamental analysis when trading the global financial markets, referring to and using the economic calendar is critical to any successful trading strategy.

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Economic calendars are available for free or on various databases, such as the Bloomberg Terminal. The economic calendar for Forex generally follows the same events and releases as economic calendars for stocks with the addition of events and releases in the countries for the pairs being traded. Let’s see how high levels of interest and inflation rates have impacted the https://traderoom.info/ consumer. Demand concerns could intensify if we see a very weak retail sales print, leading to speculation the Fed may soon have to start loosening monetary policy again. The economic calendar is used to predict the moves of a currency pair. Various financial resources evaluate the state of the market before the release and suggest what numbers will be published.

In this way, an economic calendar becomes a customizable trading tool like an indicator alert. Traders and investors rely on the economic calendar to provide information and trading opportunities. Traders often move into or out of positions corresponding with an announcement of some event or with the heavy trading volume that often precedes a scheduled announcement. Persistently high inflation rates can make the central bank raise interest rates to reduce the money supply in the economy. As mentioned earlier, a rate hike will push the national currency up in the short term.

As a day trader, or even as a swing trader, the events marked red are the ones you need to be aware of. Volatility around the event is typical and expected, regardless of whether the data comes out above, below, or right in line with market expectations. You can filter dates by day, week or month to see exactly what’s happening and when. With the time frame you choose, you can also customise to check out the latest on the countries or economic events you’d like to monitor. Like the durable goods orders report, the retail sales index is released monthly by the U.S. A flag icon indicates the country of the data release, and next to it, its currency.

• Contracts for difference are popular assets for traders globally as they provide a way to access a wide variety of financial markets.
• One of the most important tools of a forex trader is an economic calendar for any currencies they intend to take positions in.
• Investors use the announcement to not only hear about ongoing policy developments, but to forecast future ones.
• An event with a volatility level of two is expected to impact the markets moderately, depending on other factors (e.g. other market-moving events, political factors, news items, etc.).

This economic calendar, powered by a trusted third-party, reveal the biggest financial news and events happening worldwide in real-time. Easy-to-use with filters to zoom in on the markets you care about most, this is a popular tool for fundamental analysts – as well as those who like to mix and match both fundamental and technical trading techniques. Alerts can be sent via email, as a pop-up, or as a push notification at a date of your choosing.

For example, as shown below, you can use data in the economic calendar to understand the trend. In this image, we see that the Bank of Japan has maintained negative interest rates since 2016. First, it helps them not to be caught by surprise when events come out. Without the calendar, many traders would be caught by surprise when important events like NFP and Fed decision happen. As a day trader, it is important to look out for the employment data from different countries. However, most people are more interested in the US nonfarm payrolls, which are released by the BLS on the first Friday of every month.

Brokers and market makers offer FXStreet’s calendar to their clients as a tool to trade. Get tight spreads, no hidden fees, access to 12,000 instruments and more. Get tight spreads, no hidden fees and access to 12,000 instruments. If you combine multiple strategies, having a calendar will help you determine the strategy to use.