Forex economic calendar is essential for forex trading. The calendar provides us with the news of all currencies. In this article, we will explore what a forex calendar is, how to read it, and the importance of using a forex calendar.
July 26, 2021, | AtoZ Markets-Every forex trader knows that the forex calendar is significant. Even traders who trade solely based on technical analysis also stay updated with economic news/events. On the other hand, fundamental analysts hugely depend on different financial data and news. For this, they need to rely on the forex economic calendar to keep track of important data and news releases.
All conscious traders spend enough time exploring and analyzing daily and future economic data and news to understand how it may affect the market.
Knowing about news events or economic data release time helps traders to make trading decisions. Sometimes it’s wise to sit out during high volatility caused by news events if you are not a news trader. Forex economic calendars can help you with that.
AtoZMarkets publishes important news about different financial markets every day. They publish forex news, cryptocurrency news, regulator news, and crypto exchange news. They also have an analysis and opinion section.
The news section of AtoZMarkets has very rich and resourceful content. All types of traders, from beginners to experts, can use the resources for their trading needs.
In the forex news section, you will get the latest news of different currencies. You will also get the analysis of that news and its effect on currency pairs and the overall market. If you are a forex trader, you would love this section.
In the regulator news section, you will get all the latest news about different regulations released by various regulatory bodies.
The AtoZMarkets has different news sections for Cryptocurrency news and Crypto Exchange news as well. There you will get all the latest news of the cryptocurrency market. If you are a crypto lover, you would definitely like this.
What is a Forex Calendar?
We know that a calendar shows the date, days, weeks, and months of a year. But a forex calendar is the pre-scheduled dates and times for significant economic and political events of different currency pairs and their respective countries.
Those economic data and events have an impact on currency pairs. Some news affects specific currency pairs, but some big news impacts the overall market.
This calendar works as a valuable tool for forex traders, especially for fundamental analysts and news traders.
Even if you do not trade news or do not do fundamental analysis for your trading, you still need to stay updated about major economic events or data releases. For example, Interest Rate, NFP (Non-Farm Payroll), Monetary Policy, GDP Growth Rate are some news events. During and just after releasing significant events data, the market becomes too volatile. Some traders prefer to utilize the volatile movement by trading news, and some traders prefer to sit on the side bench.
According to it, the economic calendar aids forex traders to keep track of those critical news releases and make their trading plans.
Different forex trading and finance-related websites publish forex calendars on their websites. Some are free to access, but some give you access through a paid subscription. One of the most popular free calendars is the Forex Factory Calendar. It is probably the most widely used website for the forex economic calendar.
Their calendar is very well organized. The website releases data very fast. You can customize the calendar according to your needs. You can set time according to your local time zone. Their features allow you to filter information according to your necessity. They mark the news with color.
- The news marked with red is high-impact news.
- Marked with Brown expected to medium impact.
- Yellow-colored news has low to no effect.
How Does Forex Calendar Affect the Forex Market?
We know that it is the fundamental of a country’s economy that decides the trend of that currency. A single news event is an indicator of the economy. When important news is released, the market price moves. News experts try to understand how much specific information can affect the currency. They use their expertise in their favor to make money.
Some news like interest rate (if reduced or increased by a significant margin) can set the trend for a currency.
Forex traders can use the forex calendar to know about important news release dates and can take preparation beforehand.
There are a significant number of traders who do news trading. For them, the news calendar is essential. They make money from the volatility caused by the news events.
Major Economic events/News on Forex Calendar
Some news/data announcements have a considerable impact on the market. Those events make the market volatile. As a forex trader, you should have an update on that impactful news. Even if you are doing trade based on technical analysis, you also need to keep an eye on the forex calendar. Usually, good technical analysts stay away from trading during news release time. Once the market is calm after the effect of the news, they look for the trade set up.
The most impactful news is NFP (Nonfarm Payroll). It’s the report of the US jobs data released on the first Friday of every month.
The interest rate decision of any central bank is also a significant event. If the interest rate is unchanged, usually the market doesn’t affect much. On the other hand, if the interest rate is changed or there is a hint of changing the interest rate in the statement, it affects the market a lot.
Below are the major economic news or events you should know
- NFP (US Non-farm Payroll)
- Central Bank rate decisions (Minutes/Statement)
- CPI (Consumer Price Index)
- Employment Indicators
- GDP (Gross Domestic Product)
- Retail Sales
- OPEC Meetings
- Crude Oil Inventory
- New Home Sales
- PPI (Producer Price Index)
- Trade Balance
- Durable Goods Orders
- ISM Data
- Existing-Home Sales
No matter what type of trader you are, always stay alert during the above news events.
How to Read an Economic Calendar?
A forex calendar contains a lot of information. It’s important to know how to read it.
If you see the above image taken from the forex factory calendar, we marked ten columns containing different information. Let’s see what’s there from 1 to 10.
1# Date Column
This column is for dates. Here you will find the dates when news will be released. You can customize it by weekly or any personalized dates.
2# Time Column
It’s the column for data/news/events time. Do not forget to customize time according to your local time zone. Otherwise, you have to adjust the time zone manually in your mind every time you visit the calendar.
3# Currency Column
It is the column for currency. It tells us which currency is to publish news/data. Suppose you want to trade the EURUSD pair, then in this column, you have to find out USD and EUR to see if there is any upcoming news for this pair.
4# Impact Column
Impact column tells the importance of any news according to its impact on currency pairs. Most impacted news is marked with red color. Medium impact news is Brown color while low impact news is marked with yellow color. With the help of this color code, you can easily find the most impactful news.
5# List of The News
In this column, we can find the name of all the news about to be released—for example, Non-Farm Employment Change, Unemployment Rate, Employment Change, etc.
6# Details of The News
In this column, you will see a folder icon for every news item. If you click on that folder icon, a detail page comes up. It shows you the past records; the next news publishes dates, and all the news sources. The details also have expert opinions on the impact of the news. See the below image. The details look like this.
7# Actual Data Column
Once the news is published, this column shows the actual figure of the report. If the data is more than the forecast number, it will be in green color. If the number is less than the forecasted number, it will be in red.
8# Forecast Column
Experts forecast data before the news release. Here we can see the forecast data. Once the data is published, we can see the difference between actual data vs. forecast data. If there is a huge gap between actual and forecast numbers, the market becomes volatile.
9# Previous Data Column
Here we can see previous actual data of the news. It helps you to compare between previous actual and current actual data.
10# Graph Column
When you click on the graph icon in the graph column, it will open up a graph. In the chart, you can see the actual vs. previous data in the graph from the past.
Importance of Forex News Calendar
Why is the news calendar important?
Let me tell you a story of my early days trading life. I didn’t have any idea about forex news when I started my forex trading journey. I was trading blindly. One day I was playing carrom board with my friends while I had open trade. While I was playing, I checked my trade on my smartphone. And guess what, there was a surprise for me. The price of EURUSD (I had buy-trade) fell sharply. And I lost a good amount of money. I was wondering why this happened. Later I came to know that US Non-Farm Payroll data was released at that time, and during news release time, the market becomes volatile.
High-Impact News Risk
High-impact news makes the forex market volatile. Many times the price gets a spike in both ways.
See the above H1 green candle of a currency pair during a major news release. If you are a short-term or day trader, this type of price movement can cause you to lose by hitting stop loss.
Also, during high-impact news time, a trader may get slippage. Slippage is when your order is executed way below or above the usually expected price due to high movement.
Risk Management With Forex Calendar
Every trader should check the forex calendar before starting his/her trade day. And note down the major data release time if there is any. It will help a trader to plan his/her trade.
If you are not a news trader, it is wise to sit out on the sideline bench during high-impact news release time.
By following the news calendar, one can avoid unpredictable volatility. As a result, the trader can reduce the risk or take proper preparation ahead of news releases.
If you review the economic calendar daily, you can be better prepared. For example, you have an open trade on EURUSD. And by seeing the forex calendar, you come to know that there is an NFP data release ahead. Now, you know that there will be a volatile market; you can exit from your trade before the news release. It can save you from unexpected loss.
Whether you are a novice or experienced trader, the forex economic calendar is a helpful tool for your trading. Without a forex calendar, you may fall into an expected volatile market and lose money.
But to use the fx economic calendar, you have to know how to read an economic calendar for practical use. Once you understand how to use it, you only need a few minutes a day to decipher the calendar.
Use the forex calendar in your favor. Know the high-impact news release time, pre-plan your trade. Remember, during high-impact news, you may face unexpected slippage. Manage your risk correctly to avoid unexpected loss.