As a trader, the forex economic calendar is one important tool you need to make good returns when trading the financial markets.
For forex traders, the forex calendar helps you trade with an advantage. It protects you from a volatile increase in prices and losses that might occur after some economic releases.
Despite the huge advantages the economic calendar offers, two categories of traders willfully ignore it. The first category is the technical trader whose faith is in technical analysis. The second category is the beginner trader.
Here we are going to discuss what you need to know about the forex calendar to improve your trading.
What is the Forex Calendar?
The Forex Calendar also known as the Forex Economic Calendar is a schedule of events in the economy that can impact the financial market and alter prices. As a Forex trader, you have to keep an eye on the forex calendar, seeing that it can affect your position in the market.
How To Read And Trade With Forex Calendar
In the digital age where you have access to any information you need, the Forex calendar can equally be found on certain websites. This calendar is not difficult to read and at the same time, they provide features to make your experience in analysis simpler.
This calendar contains major events and economic releases from different countries across the globe daily. You can decide on the timeframe to focus on. Whether a day, a week, or a month depending on your trading plan.
The Forex Calendar shows events like central bank interest rate decisions, GDP figures, trade balance data, inflation figures, and employment reports.
To make the most of your trading, you must understand how to use the forex calendar to your advantage. Here are some of the steps to take:
- Take advantage of your analysis of news events and fundamental releases to study market conditions and draw out predictions on future price fluctuations. This process as a whole is crucial in your forex trading strategy.
- Study geographical events and macro releases. This helps you interpret the calendar better and understand how these events impact a specific Forex pair. For instance, in the case of a macro release from the United Kingdom, it is likely to impact all the currency pairs that feature the sterling pound.
Forex pairs experience the widest impact when there is a geographical event and economic release from the United States since the US dollar is a reserve currency for the world. Also, 50 percent of all the major currency pairs feature the US dollar.
As a newbie trader who is not knowledgeable about how geographical events and economic releases impact some currency pairs, you can start by paying attention to just a few pairs and watch how they are affected by your judgment from macro releases and events. This is not yet the time to trade a variety of currency pairs, seeing that you are still building your trading skills.