We live in the digital age and information travels fast. It is therefore very important for forex traders to make sure that they stay up-to-date with global developments as they will have an instant impact on their trading accounts. While this may sound simple, it is no easy task. Since the forex market is open 24 hours per day and five days per week, it is impossible for any trader to remain alert for what may happen. Professional traders and firms employ scores of analysts and strategically place them around the globe to make sure no event takes place without being able to act.
There are geopolitical events which may occur and they are beyond anyone control. When they materialize, forex traders need to react fast. Today we will discuss a very important topic which can be controlled, planned for and taken advantage of and one which every trader, novice as well expert, should master. While geopolitical events are random, economic news are not. Every country publishes them and they are well communicated in advance. All those reports are repetitive each month which makes them easy to remember.
Nobody needs to memorize all the economic reports which are released throughout every trading day. Economic forex calendars are available for free and good forex brokers also make this information available to all traders. The information is usually presented in the order it will be released and forex traders can adjust the calendar to their time zone. This will give a good overview of what economic reports will be released at what time and it is easy for every trader to account for the announcements and prepare their trading accounts.
While there are plenty of reports released each trading day from around the globe, it is wise to memorize the release of the most important reports for the week. A good practice is to take a look at the following week’s release schedule over the weekend and plan ahead. This will take away unnecessary trading stress during the week and allow a forex trader to be fully prepared for what lies ahead. Being prepared is key to improve trading results and takes away the risk of making useless mistakes.
Many traders tend to ignore fundamentals as they have based their trading strategies purely on technical indicators and price action. This is a big mistake as economic releases have a direct impact on price action and can change the preceding trend. It is therefore important to know when a report is due for release and how it may impact any given currency pair. Not all economic reports move the markets and some have a bigger impact than others. This is often marked in an economic forex calendar. Most use three different levels of importance: low, medium and high. They can also be highlighted by different colors such as yellow, orange and red.
Volatility usually spikes when economic reports are released as forex traders make adjustments based on the announced figures. Economists publish expectations and market participants price them in. In the event that the released figures match expectations or are very close to them, volatility remains muted as traders expected those figures. Volatility spikes if the published figures come in well below or above economists expectations which can also be found in the economic forex calendar.
Usually the biggest market moving reports include employment reports, GDP reports, inflation reports, consumer spending and confidence data as well as speeches by key central bank figures. Even if forex traders base their strategies on a technical analysis, the importance of economic releases should not be ignored. Fundamental factors will impact a technical trade set-up and forex traders can better the outcome of a trade if this is taken into consideration. PaxForex offers all traders an excellent forex calendar which details all economic news releases for each trading day.