Admirals' Forex Calendar allows you to follow the economic agenda in real time and, therefore, take into account fundamental events that tend to impact the markets.
The stock market and Forex are driven by two main factors, technical aspects of the market and its fundamentals.
That's why the majority of traders start the day by looking at the Forex news in the calendar for the next session - so they can adjust their strategy in the best possible way.
Important news will lead to interesting trading opportunities, particularly when they induce increased volatility in the markets.
Table of Contents
Forex Economic Calendar | Introduction
Forex Economic Calendar | Trading in Real Time
Economic Forex Calendar | Risk Management
Forex Economic Calendar | When to Open a Position?
Best Trading Style
Interpreting the Forex Calendar
Global Economic Forex Calendars
Economic Calendar | Conclusion
Forex Economic Calendar | Introduction
The Forex news calendar summarizes the announcements and events expected during the upcoming trading sessions
This is key information that will influence currency prices on the markets. For this reason, the FX calendar is one of the most important tools for traders wishing to stay ahead of the fundamental news affecting currencies.
Traders will receive the following information:
The time of publication, in their local time
The country of origin of the announcement
If, for example, the USD/CAD is one of your trading pairs, you will want to be on top of the real-time economic calendar of Canada and the United States
The level of importance
Specifically, the impact on the financial asset in question. Some news will have little impact on the markets, whilst others can induce a great deal of volatility and re-alignment.
The level of importance is reflected by the following colors:
Green: not very relevant
Yellow: medium relevance
Red: important information that can cause large movements
Its nature
In other words, the description of the news, which will allow us to judge the importance of this event, whether it is a speech by Christine Lagarde of the ECB or unemployment data from the US.
The results
Together with the forecast statistics and previous results, we make it easy to evaluate differences in the data and compare them with the market consensus.
With all this information, the trader can follow the trends in the markets in real time and take advantage of the opportunities presented by trading with the economic calendar.
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Forex Economic Calendar | Trading in Real Time
To determine how to trade news in Forex, you should consider the importance of the news that may affect your trading pairs and compare the actual results with the expected market consensus.
It is very important to determine what position you are going to take based on the economic news that is to be published, so let's look at the possible scenarios:
Expectation of results
In this scenario the trader would open a position in advance of the news in line with the market consensus.
This approach is not recommended in intraday trading (short term), but can be used more confidently when swing trading (medium/long term).
Buy/Sell Approach
This approach downplays the importance of the content of the release and simply captures the volatility caused by a major event in the economic calendar. The trader places orders above and below current prices to enter the market at the time of the news announcement.
Pure performance tracking
In this case, trades are carried out based on the actual announcements to benefit from the effect of the news and the price direction induced by the new fundamentals.
Waiting
Once the immediate effect of the news has passed, you can either join the resumption of the previous trend or the start of a new trend triggered by the new information
Finally, another option is possible, and that is to not trade the markets around unpredictable news, which is also smart trading!
Can we only trade with the FX Calendar?
Trading with a real time economic calendar can be very useful for those who don't want to use charts and perform support and resistance analysis, or determine trends based on technical analysis.
In fact, some traders never look at the charts and take positions in the markets solely on the basis of economic indicators.
They usually do so with a medium to long-term time horizon based on anticipated announcements or fundamental analysis. In this case, traders often rely on key or psychological levels to determine their risks and objectives. However, a combination of both technical and fundamental analysis may be more effective.
Either way, the Forex news calendar is an essential tool for the trader in the medium and long term.
We will now move to the more technical aspect of this article, starting with...
How to trade with the economic calendar?
The economic calendar can be used in several ways.
Economic Forex Calendar | Risk Management
A swing trader who operates in the markets with a daily timeframe, for example, will focus his or her attention on the economic currency calendar to see if his or her current positions are exposed to the risk of an economic announcement, and if so, how much.
The weekly economic calendar will allow you to manage your positions over a relatively long period of time.
For example, for a foreign exchange trader, the Forex economic calendar will be essential to determine in advance when the ECB might change rates or for any news related to quantitative easing and, more generally, to the ECB's monetary policy decisions.
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Forex Economic Calendar | Opening a Position
Combining a forecast with the economic calendar can help traders locate and find the right time to enter the market.
These traders will look for future announcements that could affect currencies, indices such as the DAX 30 or commodities in order to take advantage of the volatility caused by publication.
In this case, the real-time economic calendar will be key to the daily sessions.
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Best Trading Style
Every trader should act differently depending on their trading style.
A swing trader who usually performs technical analysis on his trades will most likely use the Forex calendar to manage his risk exposure. This would involve avoiding news trading, and therefore exiting positions before the announcements likely to affect markets.
Event-driven traders will rely on the calendar when managing their portfolios; potentially opening positions in anticipation of imminent announcements.
Scalpers will use announcements as indicators of potential volatility to benefit from.
In other worlds, the Forex economic calendar is useful whatever your trading style.
Interpreting the Forex Calendar
If you want to trade GBPUSD for example, real-time information from the markets will be a valuable asset if you know how to interpret the economic calendar.
A good understanding of the fundamentals of the market as well as the behavior of other market players is part of becoming a profitable trader.
For example, the GBPUSD economic calendar has been heavily influenced by all Brexit decisions.
Of course, it is not advisable to open a trend-riding position just before an important announcement. This simple understanding of the value of the information contained in the FX economic calendar will allow you to avoid large losses on your trading account.
Let's see what happened when the result of the Brexit referendum was announced in June 2016:
As you can see from the trading chart, this news had a great impact on the price of cable. Previous candlestick charts had shown bullish signals, so those unaware of the economic calendar could have taken big losses.
If you are attracted to the currency markets, the economic calendar allows you to be aware of the market's expectations, i.e. before an important event such as a decision on the monetary orientation of a country or an economic zone such as the European Union.
This knowledge allows you to avoid certain actions and risks and, therefore, potential losses for trend traders or reveal real opportunities for range traders.
Global Economic Forex Calendars
There are a multitude of economic indicators that go into the Forex calendar. All of them are shown in the calendar to help understand the possible impact of the news on a currency pair.
Below is a list of news items that are considered to be of high impact:
Economic Calendar - US Indicators
When looking at the US labour market, the most important indicators include:
Unemployment claims, which assesses the number of new claims and updates the corresponding total.
The unemployment rate, which represents the proportion of unemployed in the country.
The NFP - Non Farm Payroll
When assessing US growth, the macroeconomic indicators include:
GDP or gross domestic product, which is the measure of aggregate output, including goods and services of the United States economy.
Productivity indicators visible in the Forex news calendar include:
The ISM Manufacturing and Non-Manufacturing Index, which is an indicator of inflation and working conditions, to translate the health of the markets.
The Industrial Production figures, which are the production capacity used each month.
Orders for durable goods, representing orders placed with manufacturing companies in the country
Consumption measures are represented by:
Retail sales. This publication directly reflects consumer spending and consumer confidence.
Inflation indicators:
Consumer prices measuring a range of goods and services widely studied by market players.
Output prices composed of the prices of faced by the producers of goods.
For country's trade figures, the calendar includes:
The trade balance, which represents the difference between the country's imports and exports of goods and services.
Finally, information related to monetary policy includes:
Interest rates
The inflation rate, represented by changes in the consumer price index.
The minutes of the Federal Reserve's FOMC (Federal Open Market Committee) meeting.
Speeches and decisions on the Fed's monetary policy.
Economic Calendar - European Indicators
In terms of the ECB calendar, the most important Forex news in the economic calendar include:
Monetary policy meetings (key rate decisions, for example) and speeches by the European Central Bank and its representatives.
For Inflation:
The Eurozone CPI index provides an estimate of inflation in the area in question. This indicator is available for each country.
The employment indicators obviously represent variations in unemployment.
The elements for measuring activity and production in the European Union are also found in the economic calendar including:
German manufacturing orders, important given that Germany has the largest economy in the EU.
The German IFO index, which measures the level of economic activity.
The ZEW indicator (Zentrum für europäische Wirtschaftsforschung) - similar to the IFO index but related to the banking sector.
Economic Calendar - Japan Indicators
In addition to announcements related to inflation and GDP, Japan-related releases include information on BOJ (Bank of Japan) monetary policy and the publication of the interest rates and minutes.
Economic Calendar | Conclusion
The market does not always follow the logic of economic results. Market participants anticipate expected announcements and therefore movements that follow can be relatively calm, if expected, or wild, if inconsistent with previous expectations.
That's why using the FX economic calendar is so important.
If you want to learn how to trade using the economic calendar or trade with news to improve your strategy, take your time and try it first on a demo account. This will allow you to track the impact of the economic calendar on online trading and help you to learn how this data influences the prices of currencies and other financial instruments.
