Written by: PaxForex analytics dept - Friday, 08 September 2017 0 comments
For traders decision making is all important. Setting up an investment goal and choosing a particular financial instrument to trade on can only bring the expected return on investment if you know what moves the market and when it is the optimal time to enter or exit your trades. Traders in the foreign exchange market pay close attention to global events by using an economic calendar. By having the release schedule for each economic indicator, a trader can anticipate when major movements will happen.
The economic calendar provides useful information on upcoming macroeconomic events by means of pre-scheduled news announcements and government reports on economic indicators that influence the financial markets. This will help you not only follow a wide range of major economic events that continuously move the market but also make the right investment decisions. Because market reactions to global economic events are very quick, you will find it useful to know the time of such upcoming events and adapt your trading strategies accordingly.
The forex economic calendar is an event based calendar that traders use to keep current with upcoming financial information. An forex calendar contains information for future and past economic events of different countries and can clue the trader in on potential volatility expansions of certain
currency pairs. Each currency is representative of the economic, political, and social stability of a country. In this relationship, changes in the economic indicators of a country are likely to affect the value of the respective currency.
Each event is graded depending on which economic calendar website you use. Minor events likely to have minimal market impact are marked as "Low" (low impact), or don't have any special markings. Events that may have a market impact are marked as "Medium" and usually have a yellow dot or yellow star beside the event. Yellow indicates some caution is warranted at this time. Red stars/dots, or a "High" marking, indicates a significant news/data release which is highly likely to move the market in a significant way.
When a trader knows that the release of a particular report is imminent, the first decision should be whether this release will trigger volatility and whether it will be high. A trader’s response to an announcement relies very much on where he has positioned himself and where he has placed protective stops. Traders are able to profit when they have information in advance, because this enables them to project the possible direction of a currency pair they are interested in.