Economic Calendar And Forex Trading: Los Angeles Insights – Home > Free Courses > Forex Fundamental and Technical Analysis > How to Read a Forex Economic Calendar?
Most forex traders use a financial calendar to stay abreast of upcoming financial information and news events to help them with their fundamental analysis. Fortunately, knowing how to read the forex economic calendar is not rocket science, but it is a knowledge and skill that you need to have in forex trading.
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So, in this course, we will quickly show you how to read a forex economic calendar and how to integrate it into your trading strategy.
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A forex economic calendar shows scheduled economic data releases and news events related to various economies around the world. It is used by traders and investors to make future monetary policy decisions and assess the economic growth of various countries and sectors around the world.
Since FX currency pairs are heavily influenced by monetary policy announcements and major economic events, these events inevitably have a major impact on the forex market. Moreover, since central banks like the Federal Reserve Bank and the European Central Bank are more involved in financial markets these days, it is very important to know the next central bank meeting or the next speech of a leading central banker.
Basically, most forex brokers and trading firms offer a financial calendar for retail investor accounts that covers all financial and economic events. Furthermore, if you use MetaTrader4, you can get a financial calendar plugin directly on the trading platform
As we mentioned earlier, knowing how to read a forex economic calendar is often easy. Events or economic indicators are listed in the economic news calendar, and you can see all economic reports that were published earlier that day and upcoming news events that may affect the price of the currency pair. Forex market
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Furthermore, you can go back through different days and weeks to view previous data releases (as shown in the figure below).
Note that most Forex economic calendars also provide a brief description of events and their impact on the market. Also, on most calendars, actual data will be marked in red or green depending on the results If the actual data is in green, it means the result is better than expected, and if the actual data is in red, it means the result is worse than expected. In short, most traders look at the actual vs. predicted price to determine their next trade
Thus, if you see a data release that is better than expected, you are likely to see the respective currency increase in value relative to other currencies. However, while this concept is valid and true in theory, you have to remember that it is not written in stone, and currency pair prices can change in either direction before taking a direction.
What’s more, as we mentioned in the previous lesson, in many cases you have to monitor the correction of economic data. This is because the data is often revised and usually the revised figure is published in the following month These corrections have a significant impact on price movements in the forex market and in some cases are more important than published news events.
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Remember, however, that this information is not included in the economic calendar and you will need to find other sources (forex and financial news sites or the official site of the organization that publishes the data) to find out the exact revised numbers.
When you are looking at economic events, you are likely to see a time scale next to the economic event. This can be quarterly data (Q1, Q2, etc.), monthly data MoM (month over month), or annual data YoY (year over year). How to Customize a Forex Economic Calendar?
Okay, so you look at the financial calendar every day and you see a lot of irrelevant economic events that really bother you. I mean, some calendars include all countries and you just want to get economic data for the currency pairs you want to focus on. Fortunately, many of these calendars enable you to customize your forex calendar to the markets and economies that apply to you.
To customize your calendar and see the most important events for your forex trading, you need to find the filter button. Then, you can set the Forex Economic Calendar so that it shows you the news and events coming out of the countries and zones you want to focus on.
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As you can see in the image below, the settings have been changed and the financial calendar will now only show you financial events from 7 selected countries.
Another useful feature used by many Forex traders is to remove low impact events from the calendar. To set up this feature, you need to click on a tab or a button in the Financial Calendar menu (seen in the image below).
Generally, forex traders try to predict the next monetary policy decisions by various central banks and thus need to follow the economic growth of different countries. For that matter, some of the most important news events published in the financial calendar include interest rate decision, Gross Domestic Product (GDP), Consumer Price Index (CPI), Consumer Confidence Index (CCI), Unemployment Rate, NFP, Trade Balance, Central. Bank meeting etc
On how to trade economic events – There are two basic methods when trading forex currency pairs during and after the release of economic news. The first is to trade in the direction of economic releases, which means that if actual data differs from market expectations and prior estimates, you take a position based on those numbers.
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For example, if non-farm payrolls come out better than expected, you will immediately enter a position to buy the US dollar against other currencies.
The second strategy is to wait several minutes (usually 15-30 minutes), analyze the data and enter a position when the price of the currency pair takes a direction. This way, you can ‘miss’ spikes and market volatility after a news release, yet, you can maintain a more effective risk management system.
No matter what your trading strategy is and what currency pairs you want to focus on in your forex trading, it will be useful for you to keep an eye on upcoming financial events.
Whether you’re going to use fundamental or technical analysis as your trading strategy, or both – having a financial calendar web page open is an essential tool for a forex trader. And knowing how to read and analyze economic news events in a financial calendar is the first step in evaluating the strength or weakness of a particular economy and its currency value.
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For those who plan to trade the news and focus on fundamental analysis, an economic calendar will certainly help them find triggers to enter trades in the forex market. So… open a financial calendar page and start using it And, if needed, we’re here to help you with any questions you may have. The Delifox Economic Calendar has been the world’s leading reliable free news and research source since 2002.
A trader can use it for analysis on commodity, currency and index trading In this tutorial, you will learn how to read the calendar that is easy and suitable for your trading.
Delifox.com Economic Calendar is the place for traders to keep track and stay on top of the latest market news releases and announcements.
From the start, market day traders and highly experienced market dynamics examine market dynamics to stay ahead of important announcements, while looking for excellent trading opportunities. Forex calendars are also used by many traders to make wise trading decisions and avoid sudden economic situations.
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In this tutorial, you will learn how to use Delifox Financial Calendar, Dividend Calendar and Central Bank Calendar.
After navigating, click the “Calendar and Charts” button at the top and click “Financial Calendar”. This should show you a screen similar to the image below;
Now that you are on the Calendar tab, you just need to click on the button as shown in this image
Note: Your correct time zone setup is very important in determining the correct time for each news event, so make sure your configuration is correct.
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To set the filter, click the filter icon at the top right of the screen as in the image below.
As seen in Filters, there is an important tab where you can change which events you want to focus on
Once everything is set, just click the “close icon” to start showing the events and coins you selected. You can change what you want to see by repeating this step
Now that your time zone is set with a configured filter, it’s time to select your desired time frame. This is the time interval that will be displayed on the calendar
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From that part of the screen, you can navigate through the time frames at any time
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