What Is the Economic Calendar and What Is it For?

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There are 2 ways to analyze forex: technical analysis – forecasting the trend direction based on indicators and historical data and fundamental analysis which is based on statistical data, news, events.

Economic calendar is one of the most effective tools for analyzing the market, which is actively used by traders. It is a kind of news summary indicating the time of their release and the impact on particular currency. The calendar consists of all the significant upcoming events based on which the trader can foresee the possible behavior of the price.

Many factors affect the Forex market – economic reports, speeches, central banks meetings. They vary in degree of importance and are divided into three categories: low, medium and high. The more significant the event is, the more volatility can be expected after publication. This should be taken into account in forex trading.

Economic and political events increase market volatility, the price may rise or fall significantly. Some traders choose trading at the time of the news release, while others try to avoid it. Traders who prefer news trading open orders during the publication of important macroeconomic statistics and make profit from the increasing volatility and trend impulses.

The economic calendar is available on thematic and analytical resources and websites of forex brokers.

How to use economic calendar

It is worthwhile to get acquainted with the structure of the economic calendar in more detail. The calendar is presented in a table with columns and rows. Let’s look at the economic calendar and examine the structure:

1. Date – the time when the publication of the relevant news is planned.
2. Time left – the time before the event. If there is the “Done” mark, the event has already passed.
3. Event – the name of event. If you want to see the detailed information, left click on the event.
4. Impact – degree of influence, displays how the particular news affects the currency. There are three degrees – Low, Medium and High. As a rule, High means that after the announcement of that news, a sharp rise or fall is expected.
5. Previous – the previous value.
6. Consensus – the forecasted value.
7. Actual – the current value. If the line is highlighted with green, the result turned to be better than expected, red – worse than expected, and gray – the forecast was correct.
8. Timezone – here you can choose the time zone. It is important to consider the difference in time zones.

What news is worth paying attention to?

News marked with Medium and High can greatly affect the price movement. Such news can cause a sharp rise in the exchange rate or make it fall.

The following news influence the market the most:

• change in key interest rates;
• employment and unemployment changes;
• inflation data;
• economic growth of the country;
• indexes of business activity in various sectors of the economy.

Trading on the news, a trader can get a high profit. For example, Nonfarm Payrolls is very important US economic indicator, the dollar reacts to it particularly strongly. It displays the change in the number of people employed in the nonfarm sector. The publication of Nonfarm Payrolls is considered to be an indicator that makes the market move. After its publication, the response of the forex market is usually very powerful.

Important statistics cause significant impulses and increase volatility. So, it is very important to monitor the news in advance in order to know the time of publication and what trading instruments it will affect.