Most Forex traders know that markets move based on economic news released in a timely manner. Traders need to consider all the essentials when looking at the market to predict how it’ll move. Technical and fundamental analyses need to be taken into account at any given time. Learning only one-half of the equation won’t do you any good as you’re most likely to commit errors.
Analyzing and interpreting economies are things that you, as a trader, should place in your arsenal in Forex trading. To help you make an educated guess about future movements in price, you should know the invaluable use of an economic calendar.
What is an Economic Calendar?
Simply put, an economic calendar is a tool used by many Forex traders around the globe to help create educated guesses as to how the market will move. In doing so, it’ll help individuals to either buy or sell currencies. If you’re new to trading or would want to look for a good economic calendar to help you in your life as a Forex trader, then you can start with the FXStreet Economic Event Calendar. With the use of this tool, you’ll know of any releases for economic news, along with the currencies affected by the event. It also holds different pertinent information such as standard interpretations of how the currency will move (based on the actual news), and the history of economic releases.
How to Look at the Economic Calendar?
Some beginner traders might get confused once they gaze their eyes upon an economic calendar. The first thing to do is to select a period to search for previous data released into the economy’s information network. Traders can then look at the past and existing trends to help them start hypothesizing on what to do in the next steps of Forex trading. Once the period is selected, see which currencies are influenced by the events. For example, if the news comes from the Eurozone, then it’s clear that the Euro is about to make a move. Now that we know which currencies are affected, it’s time to review the course of previous market movements, as well as the forecasted and current values of currencies.
What are the Indicators Used in an Economic Calendar?
There are many indicators found within the confines of an economic calendar. There are GDP reports that let traders adjust expectations and gauge the state of the economy, and there’s also the housing starts which is given more prominence in modern times as compared to before due to different financial crises and the housing bust. Also, investors should also look at the Industrial production, Producer Price Index, Purchasing Manager’s Index (PMI), and Consumer Confidence Index, just to name a few.
Who are traders?
Traders are people who work on the Forex market, trying to ascertain whether the price of a certain currency will increase or decrease and making a trade for the purchase or sale of that currency. As such, in buying a currency cheaper and selling it for more, traders earn money and increase their capital on the Forex market. Traders make their decisions based on the analysis of all factors that can affect prices, allowing them to work out precisely in which direction the prices are moving and plan their trades accordingly. Profit can be made by trading Forex on a fall in the price of a particular currency as well as a rise. Furthermore, traders can execute orders of any size on the Forex market anywhere in the world, from London to Timbuktu. Source: Alpari.com