What is an economic calendar?
An economic calendar is a resource that allows traders to learn about important economic information scheduled to be released. Such events might include GDP, the consumer price index, and the Nonfarm Payroll report. In today’s environment of fiscal cliffs and central bank intervention, it can be very helpful to know the date of the next central bank meeting or major news announcement. The events on the calendar are graded low, medium and high, depending on their likely degree of market impact. This is what the economic calendar in real time looks like:How to read the forex economic calendar
Knowing how to read the forex economic calendar properly is important to maximize your trading prior to and following the most important releases. Checking the calendar every morning will allow you to familiarize yourself with the upcoming events that matter.
In default mode, the calendar will show you every piece of economic news coming out for the major economies. For many, that will be information overload, so you may want to customize the look.
Customizing your forex economic calendar view
In order to customize the economic calendar, it’s advisable to change the time frame to what you’re most comfortable with. For most, it will be Eastern Standard Time. Next, click the ‘Filter’ button to look at the events that are of importance to you. This will be determined by country and importance.
For example, if you’re trading EUR/USD, you’ll want to focus on news coming out of the Eurozone and United States that is of high importance. Your filter would look like this:
Once you select the ‘Euro Area’ and ‘Americas’ buttons, you should only see the Eurozone and US news announcements that have a high propensity to move the market should the news surprise traders, economists and other market participants.
In the example in the image below, the search has revealed the upcoming Fed interest rate decision from the US, as well as key economic events for trading from the Eurozone.
Example of the results of a filter on the forex economic calendar
You can select each event of interest to learn more information about it, the surrounding news and analysis, and also to add it to your email calendar, which can be done by clicking the ‘Add to Calendar’ button. Below, we click on the Fed Interest Rate Decision event to find out about its relevance.
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Top Benefits of Using a Forex Economic Calendar
The top benefits of using the forex economic calendar include:
- Being able to manage risk effectively
- Being in a position to plan ahead
- Having access to extra, helpful features for customisation
Being able to plan your trades based on economic calendar events means you can ready yourself for potential turbulence in price. When an event listed on the calendar occurs, there may be expected a period of volatility if data is released well above, below or in line with expectations.
Understand the principle of risk management in regard to these trades. Risk is the difference between your entry price and stop loss price, multiplied by the position size. Traders should aim for this percentage to be less than 2% of account equity.
Planning ahead
The forex economic calendar allows for planning ahead. For example, if a Nonfarm Payroll report is set to be released, traders will know that this indicator has the potential to move FX markets substantially, so awareness of the timings means they can plan their forex trades accordingly.
Benefiting from features on the forex economic calendar
The forex economic calendar offers the added benefit of special features such as the customization option mentioned above, offering the facility to select specific timeframes, set alerts and apply filters to make it more relevant to your specific trading strategy. We also offer free trading webinars to help you plan around major news releases.
Other resources to help you trade the forex market
Read how to trade in the Forex market profitably and what are trading robots. Learn more about using news and events to trade forex and improve your knowledge of how fundamentals move currency prices.
It can also be helpful to understand the differences between Fundamental and Technical Analysis in forex trading, and how to apply them to your trades.
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