There are two different ways to analyze currency pairs; one way is a technical analysis and the other one is a fundamental analysis. Today we will take a look at the fundamental analysis and one of the most important factors forex traders need to keep track of are economic news which gravely impact currency pairs. Even traders who execute trades based on technical analysis need to be aware of economic news as they will impact price action and therefore the technical charts.
Economic news are released every trading day, but not every country will release news every day which means that each economic report can create a trading opportunity for forex traders. Economic news often act as a catalyst for a breakout or breakdown in accordance with technical patterns and therefore should never be ignored by forex traders. In addition to acting as a catalyst it can also provide better entry as well as exit opportunities to either existing trades or pending orders.
There are economic calendars out there which can be accessed free of charge and should be the first stop for forex traders. All major economic reports can be found there and forex traders should take note of all events. This is best done over the weekend before trading begins in order to account for those events. Once the trading weeks begins forex traders often do not have the same focus. Most forex traders trade part-time which means they have to cater to a full-time job and only have time to focus on trading during certain hours.
This makes proper planning even more important in order not to forget key events which could disrupt any analysis conducted. Economic news may be the number one reason forex traders fail. Either they are being ignored, forgotten or in the worst case new traders try to trade the news without proper understanding. This is the reason why forex traders should take some time over the weekend to study next week’s economic calendar in order to be aware of which reports are released when.
Forex traders are also advised to create their own calendar and create alarms in order to be reminded prior to the release of each important economic report. This will help traders keep track and never forget an important economic event. Plenty of events are recurring events and once forex traders start creating their own forex calendar they will also start to memorize events and over time economic news will no longer become an obstacle, but something to look forward to as they do create trading opportunities.