In the field of forex trading, there are certain tools available to traders that can help them be more successful in their endeavors. These include trading software, guides and journals. Another tool that is available for traders is the forex economic calendar.
If you have been trading for quite some time, you may already know that the latest economic news is an important forex trading tip, especially news that is currently trending. This is because trending or breaking economic news can give you a hint of what is to come, thereby putting you in a strong position when deciding whether to open deals and trades or close them.
Many traders can benefit from using a forex economic calendar because it helps them stay on top of what is happening around them in the world of business and forex trading. If you have not started using the forex economic calendar yet, it might be hard for you to understand the various columns that it includes. Here’s a look at what each column is meant to address.
The forex economic calendar contains six columns. The first column is the “date and time” column. This is very useful because it gives you the exact time that a major economic event takes place. Armed with this knowledge and in conjunction with the forex trading strategy that you are using, you will be able to trade right after or even right before the economic event in question takes place.
The second column is the currency column. This shows the currency that will be affected by the economic events. In forex trading and also CFD trading, you use currency pairs, but the forex economic calendar just shows one currency. It is important to keep in mind that the currency that is affected will also influence other currencies directly or indirectly.
The third column shows the type of data that will be affected. This column also gives you any other relevant extended information.
The fourth column is the “importance” column, and it uses three stars or bars to show the potential level of influence that the economic event will have on market data.
The fifth and sixth columns are the “previous” and “forecast” columns. The “previous” section will show the last recorded release data, while the “forecast” section will indicate the projected release date. The last column will provide you with all the details about the economic event.
There are many economic events that break out daily or even on an hourly basis. This means that if you decide to follow the forex economic calendar too strictly, you might lose out on valuable time. Therefore, you need to use the calendar efficiently and effectively by focusing more on the importance column. Before you take a look at any other column, head straight to the importance column. Check only for the high-level economic events and follow those. Do not waste your time looking at low-level economic events as these might have little to zero influence on the market data.
Other advice to keep in mind
The forex economic calendar can make a trader’s life easier, but if it is used incorrectly, it might prove to be the trader’s downfall. In order to prevent this, there are certain pitfalls that need to be avoided. For example, you do not need to place trades during the news, even in the midst of a major economic event. This is because the outcome you are expecting may not match what actually transpires. Sometimes, economic events may lead to illogical outcomes in the market. In short, the calendar is a useful guide rather than a crystal ball that can show specifically how world events will translate into changes in global financial markets.