By combining news trading with a proper technical analysis system, a trader diversifies his entry methods and will gain an extra edge to be profitable in the long run. It breaks down how to use the calendar in 5 simple steps and explains which news events produce the most volatility. Everything from how to configure the Forex Factory calendar to how to use it when trading price action. As such I would like to summarize some of the more important points to keep in mind when using the news calendar. This is obviously the safest place to be with major news around the corner.

From there, smaller banks, followed by large multi-national corporations , large hedge funds, and even some of the retail market makers. Central banks also participate in the foreign exchange market to align currencies to their economic needs. Trading financial markets in general, and the Forex market in particular, is subject to paying attention to detail, both from a technical and a fundamental point of view. It is said that technical https://forexanalytics.info/ analysis shows the direction in which price is moving, while fundamental analysis shows the reason the price is moving. These reasons are mostly economic events or news items that are known in advance, and therefore traders can adapt to their release, adjust portfolio, strategies, etc. The economic calendar is something that must be part of any trader’s toolkit, as it shows the potential outside factors that will influence the market.

The news that is making the economic calendar is known in advance and is repeated over and over again. Some of it is released monthly, and some on a quarterly or even yearly basis, and it refers to a specific economy. After all, trading the Forex market means buying or selling a currency pair, and the currency reflects the strengths or the weaknesses of an economy. At the end of the day, what a Forex trader is doing is comparing two economies and making a trading decision based on the outcome of his/her analysis. As a rule of thumb, the stronger an economy is, the stronger the currency should be. This is an understatement though, as monetary policy is a bit more complicated than that.

For instance, when the International Monetary Fund calculates the value of its special drawing rights every day, they use the London market prices at noon that day. Trading in the United States accounted for 16.5%, Singapore and Hong Kong account for 7.6% and Japan accounted for 4.5%. In developed nations, state control of foreign exchange trading ended in 1973 when complete floating and relatively free market conditions of modern times began. Other sources claim that the first time a currency pair was traded by U.S. retail customers was during 1982, with additional currency pairs becoming available by the next year.

Some Forex traders simply want to see what time and date the Forex news is going to be released and as that time is being approached, they exit all their trades. They may have made sufficient profits and don’t like the chance that the news might make the market go the other way and eat up their trading ADS Securities Forex Broker Review profits. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money. (5.54) Now if you go to the FX market today and you check the GBP’s reaction, you will see that it actually moved lower, not higher.

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Why Forex Traders Need Economic Calendars

These revisions tend to take place at the time when the actual reading is released. If the revision is significant, it will contribute to the effect the news has on the market. But most trends reverse at some point, and a change in the underlying economics could be the first sign of this. A more common news trading strategy is the non-directional bias approach.

• Similarly, if you see a forecast where the GDP growth rate of New Zealand going down compared to the UK’s, it would be a bullish signal for the GBP/NZD.
• You’ve also discovered how important economic events are, such as news releases.
• You have nothing at risk and you get to objectively analyze the price action that forms as a result of the news.
• You’ll also learn what the color-coding means, as well as what all those figures represent.
• News that suggests a more hawkish central bank tends to push forex pairs up in value relative to other currencies, while dovish news can cause a currency to depreciate.

The forecast column shows you what economists were forecasting BEFORE the news was to be released. Whether they were right or not not is determined by the “actual” figure that comes out in the actual column. (8.59) If the actual beats expectation, or if it doesn’t beat expectations. But China is the world’s biggest manufacturer, and demand from China for products, starting with Oil and ending with commodities and with everything you can imagine. That demand influences other major currencies that we can trade. You’ll see that today is Sept 29th,(note to voiceover – he circles the date on the left side) and these are the economic events for today.

Some brokers have what is called a variable spread and some have a fixed spread. Typically, employment reports, interest rate decisions, and GDP numbers are what is considered important news for a countries currency. These newsprints are important because they can bleed into the decision-making process of the Federal Reserve. In the example above, we determined that the main trend was downward, as the price was traded below the EMA50, confirmed by the OBV indicator. We placed a sell stop order only, one minute before the release, 10 pips below the current market price.

That is – you will be able to see macroeconomic events that move the market and make Forex trading decisions based on the data. All the major economies release unemployment rate statistics on a monthly basis and the lower it goes; the better the currency’s valuation becomes. Partly because when the unemployment rate goes down below NAIRU, which is always near 4.0%, central banks start increasing the interest rate to reduce inflation and cool down the economy. This expectation of higher inflation and higher interest rate is highly correlated with a low unemployment rate. Hence, unemployment rate acts as a leading indicator of future monetary policy decisions.

#7: Retail Sales

Slight optimism about a ceasefire in Ukraine is also likely to aid sentiment. Main foreign exchange market turnover, 1988–2007, measured in billions of USD. Intervention by European banks influenced the Forex market on 27 February 1985.

Therefore it tells us a lot about the health of the housing market, of the construction sector and all the vertical and horizontal industries that develop in relation and so on. (1.50) This is the US time, and this was the exact time that the economic news hit the wire. This is the currency that will be affected by the economic news. (0.30) But as a matter of fact, you can simply google the economic calendar, and you will find out that it is offered by various other websites and by different forex brokers.

EUR/USD surged higher on Wednesday as the European Union discussed increased defence and energy sector spending ahead of the European Central Bank interest rate decision on Thursday. The pair recently traded at 1.1067, representing a 1.6% gain on the day – its biggest daily percentage gain since 3 February 2016. XM sets high standards to its services because quality is just as decisive for us as for our clients. We believe that versatile financial services require versatility in thinking and a unified policy of business principles. You can set up an individual notification for each and every economic event which will send you an email notification at the pre-determined time interval.

This would also happen if the actual report released an unemployment rate of 10.0%. The market players thought the unemployment rate would rise to 9.0% because of the consensus, but instead, the report showed that the rate actually decreased, showing strength for the dollar. So with this anticipation, big market players aren’t going to wait until the report is actually released to start acting on taking a position. These are the various types of indicators which have the potential to cause the greatest short term movements in the markets.

Forex News Trading Predictions

Measured by value, foreign exchange swaps were traded more than any other instrument in April 2019, at $3.2 trillion per day, followed by spot trading at $2 trillion. Another point for consideration is that there are considerable bouts of volatility immediately after a release, sometimes in the direction contrary to the general trend. Evaluating forecasts and being mentally prepared to execute the trade at the moment of impact of the news is a very difficult and risky task, as there is no guarantee that this strategy will work every time. That’s why a trader should mix news trading with his overall technical analysis system. In order to trade on news, it’s your job to consult an economic calendar.

All this information is freely available, so there’s nothing to hide. If you underestimate the impact of the report, or things don’t quite go as swing trading strategies planned, your account can be adversely affected. Once you figure out how a report will affect a currency, you can prepare for a live news trade.

You have nothing at risk and you get to objectively analyze the price action that forms as a result of the news. At this point you should have the Forex Factory calendar in front of you with each news event synchronized with your local time. Next we are going to set the event filter to determine the type of news and currencies to display. In this tutorial, we will get to the bottom of trading on news and economic releases. However, we have to warn you that potentially big profits always come hand in hand with bigger risks. Volatility spikes during these periods and prices may move in a disorderly fashion.

Economic Indicator Analysis

While it isn’t necessary to study the news, it is advantageous to know when news is expected. This is especially true for heavy-hitting news that can adversely affect the market. Not only can this type of news affect an open position, it can cause slippage and gaps that can wreak havoc for broker pending orders. You will have access to a demo account straight away to practise with virtual funds before depositing funds and placing live trades. Since spreads widen when news reports come out, it makes sense to stick with those pairs that have the tightest spreads, to begin with.

What Data Is Included In The Economic Calendar?

The Real-time Economic Calendar may also be subject to change without any previous notice. Most central banks try to limit inflation rate to 2.0% and use the CPI to measure it. However, the Federal Reserve, the central bank of the USA, uses the Personal Consumption Expenditureindex instead of CPI. Dollar and want forex to anticipate the future interest rate landscape, use the PCE index. If you have opened an economic calendar, you can already see which news higher impact on the market and others that you can easily ignore. Forex, also known as foreign exchange, FX or currency trading, trades in volume of $5 trillion per day.

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