How to Read the Forex Economic Calendar. The forex economic calendar is useful for traders to learn about economic events and news that can affect future asset (currency pair) price movements and serve as material for fundamental analysis.
This article will cover the economic calendar in depth, tips on how to read the forex economic calendar to plan trades, manage risk, and execute trading strategies with the following discussion points:
What is an Economic Calendar?
The economic calendar is a resource that allows traders to learn about important economic information that will be released. Among the important data to be released include GDP, consumer price index, and the Non-Farm Payroll report. Current conditions such as fiscal stimulus issues and central bank intervention, will be helpful to know the date of the next central bank meeting or major news announcements.
The level of data that affects the market is divided into low, medium and high effects, depending on the level of probability that affects the market.
How to Read the Economic Calendar
Knowing how to properly read the forex economic calendar is essential to making the most of your trading before and after the most important releases. Checking the calendar every morning will allow you to familiarize yourself with the important economic events of the day.
In default mode, the calendar will show you every economic news coming out for major economic countries. For many, that will be information overload, so you may want to customize the display.
How to Read the Forex Economic Calendar
The picture above shows some terms that need to be known in reading the economic calendar:
- Time: Fixed setting in GMT indicates the time when economic data will be released.
- Country / Country: The country that will release economic data or important events that affect the market.
- Events / Events: List of important economic data or economic events to be released.
- Importance: The degree to which economic data or economic events affect the market.
- Actual / Actual Data: Is the official data figures released.
- Forecast: The market’s forecast against the released economic data.
- Previous / Previous: Economic data figures released earlier. Usually on a weekly, monthly, quarterly or even yearly basis.
- Consensus / Consensus: Economic forecast or consensus on released data.
Key Benefits of Using the Forex Economic Calendar
Key benefits of using the JavaFX forex economic calendar include:
- Able to manage risk effectively
- Be in a position to plan ahead
- Have access to additional useful features for customization
Risk management
Studying and understanding the economic calendar will help you plan your trading based on the important events that fall on the economic calendar. Here you mean being able to prepare yourself for potential price turbulence. When an event listed on the calendar is released, there may be a period of expected volatility if the data is released well above, below, or in line with expectations.
Understand these trading-related risk management principles. Risk is the difference between the entry price and the stop price, multiplied by the position size. Traders should aim for this percentage to be less than 2% of the total account equity.
Future Planning
The forex economic calendar allows for forward planning. For example, if a non-farm payrolls report is to be released, traders will know that this indicator has the potential to move the market substantially, so awareness of timing means they can plan their trades on a regular basis.
Forex Factory is a site that provides forex calendar services in tabular form. Then, the table contains various economic news abroad that discuss currency price movements.
The news can have a big impact, and depends on the type and results of the news published in the table. That way, traders can help make decisions in transaction activities to get profit.
The trading technique used on the Forex Factory website is fundamental analysis by including information and news on the economic calendar. Currently, money market price movements are driven by economic news.
Some people may still be confused to see the information on the Forex Factory website. Actually, the site can be viewed easily. However, you must understand and understand forex news.
Setting Time on Forex Factory Calendar
Before reading and using the Forex Factory calendar, you have to set the time first. This is because the original time setting is not certain according to the applicable standards in Indonesia.
If you want to see if the time setting is appropriate or not, you can pay attention to the time instructions in the upper right corner on the Forex Factory home page. Then, compare it with your PC or laptop calendar.
How to Read Forex Factory Calendar
After adjusting the Forex Factory calendar time settings, the next thing is to read the schedule that has been displayed. Here is the explanation:
- Date: describes the date of occurrence of an event or the release of economic data.
- Time: the estimated time an event or data release will occur.
- Currency: currency symbol of the country where the event occurred.
- Impact: the estimated impact of an event or data to be released.
- Event: the name of the event or data that will occur.
- Details: information about related events. For example, publishing institutions, data content, effects, to reporting frequency.
- Actual: shows the economic data that has been released. If there is no release yet, then the column is empty.
- Forecast: shows the approximate number of data based on mathematical calculations.
- Previous: shows the figures obtained in the reporting of the previous period.
- Graph: displays a graph that displays data over time.
How to Use Forex Factory
The next step is to make use of the Forex Factory calendar in trading. However, you only need to pay attention to two columns, namely Impact and Actual.
If the Impact column is red, it means the event will have a high impact. If you don’t want high volatility, then don’t trade when the event occurs.
On the other hand, if you want to trade using News-Trading, then prepare a currency pair chart in the Currency column to trade.
When using News-Trading, also pay attention to the color of the Actual numbers. If it is black, then cancel the trade. Because the price movement will not be significant.
If it is red, it will likely have a bearish impact on the related currency. If it is green, it will likely have a bullish impact in the related Currency.
Even so, you must still be careful when using the strategies above. Not always the green Actual will have a bullish impact. Then, not always the red Actual will have a bearish impact.
Trading Forex with Economic Calendar News
The following are forex trading steps with news on the economic calendar. Check out the explanation below:
Partner with a Forex Broker
The first thing you should do is partner with a professional forex broker. This technique cannot be done without a professional broker. Then, it is also due to the rapid movement of economic news.
Access Website
You also need to access through a page or site that provides Forex Factory services. One of them is forexfactory.com.
You can get an international economic calendar with very precise economic analysis values.
Setting the Time According to Indonesia
The way to set the time is to look at the date on each economic calendar. The default time on the site is the United States (New York) with a difference of about 11 or 12 hours longer than Indonesia.
Do not let you misread the clock. Because, your trading time can also be wrong. To be more accurate, then you should be able to compare the economic calendar hours by accessing the newsforex.com site.
Vote for News with Red Emblem
The news with the red symbol on the Forex Factory website indicates, that the news has a big impact on the desired currency market.
Paying Attention to Forecast Value
In addition, you also have to pay attention to the forecast value of the three news that have a big impact on the Forex Factory page.
Beware of Certain News
You should also be aware of various news for currencies that are close in time. Then, the forecast results are opposite.
Waiting for News Until Officially Released
If the points above have been met, then we just have to wait for the news to be officially released on Bloomberg, CNBC, and Reuters.
Refreshing the Economic Calendar
If the official news has been published, then you can refresh the economic calendar on the Forex Factory website so that the actual values can be compared. We recommend that you trade if the news results have no actual value.
Compare Actual Value with Forecast and Previous
You can trade if the Actual value is out of the limit between the forecast and previous values. Therefore, do not forget to see the revision.
Understanding Currency Value Predictions
The currency value is estimated to strengthen if the actual result is better than the forecast and previous, then it is marked with a green symbol.
In addition, the value of the currency that is expected to weaken is marked with a red symbol. It is necessary to know to place a buy or sell position through the platform.
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