Economic calendar: what is it? And how do traders use it?
The economic calendar is probably one of the most valuable allies of Forex traders, as it allows you to determine the best indicators for many currencies. Let's find out together how this economic calendar works and how to use it to make investments based on accurate analysis and exchange rates.
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Economic calendar : What is it?
The economic calendar is a kind of agenda in which all important economic events are mentioned, as well as some political events that may affect the exchange rates.
Of course, thanks to this economic calendar, we know in advance the dates of upcoming important events, which allows us to predict the effect of the announcement and, consequently, predict the acceleration or reversal of the trend.
Therefore, it is strongly recommended to closely monitor this schedule to identify the best opportunities in the future.
Among the events that you can find in the stock market calendar are :
Earnings Announcements: These results are followed by the vast majority of investors and, therefore, have a great influence on trends in assets. General meetings: They can initiate major changes in the company's policy and increase or decrease the share price. Launch dates for new products or services: This is often an opportunity to take a position on the stock market. Finally, other events, less general but no less important, can be moved to the stock market agenda.
How to interpret the economic calendar ?
Almost all budget calendars that you will find on the Internet are presented in the form of a table. The data there is ordered by date and in chronological order. It usually consists of several columns, including :
Expected event name Event time Event importance level (only for certain calendars) Event value Previous value consensus (or expected value)
Some economic calendars go so far as to tell you which assets are affected by the announcement.
The interpretation of the economic calendar has all its significance here. To do this, first of all, you have to take into account the difference between the cost of the event and its previous cost, helping you reach a consensus. It is the difference between the consensus and the real value that will determine the direction of the asset's development.
The indicators of the economic calendar cannot be missed :
Of course, not all the data contained in the economic calendar will interest you. Thus, you should be able to determine, if the calendar you are using does not mention this, which asset will be affected by the news, and the level of this impact.
When trading CFDs, the following indicators will be taken into account first of all :
Interest rates: They are set by major central banks after monetary policy meetings and have a very strong effect on currency pairs. But most often these rates remain unchanged. GDP: It is also a mandatory indicator in the sense that it usually reflects all the wealth produced by one country or group of countries annually. A sharp change in this figure usually leads to significant movements. Consumer price index: Also called "CPI", it allows you to estimate the level of inflation in a country or geographical area based on wages, the number of able-bodied population and unemployment. Retail sales: It allows, like the consumer price index, to assess the level of a country's purchasing power and, consequently, its inflation. It is mainly used to predict future movements of other indicators. Employment and unemployment data: these are highly valued by investors, these statistics, as a rule, reflect well the level of growth of the country and, therefore, can serve as a sign of a possible change in the monetary policy of the country.
Of course, depending on which currency pair you are following, other indicators may matter. For example, it is known that some currencies are affected by changes and inventories.
On the other hand, it is important never to use indicators taken only from the economic calendar, but to link this information with fundamental analysis data.
Other fundamental data that are not in the economic calendar :
Although the economic calendar is a very interesting source of information for investing in financial markets and informing about events that most affect the exchange rate of assets, it is possible to find fundamental information outside of this chart.
In addition, if you, in particular, trade stocks on the stock exchange, it is interesting and even reasonable to get acquainted with some specific data related to the economic publications of the company issuing securities. Among other things, data on profit and loss, profit or income is required.
You can also subscribe to information streams about assets that you are used to tracking, and which will allow you to receive the latest news from the markets on a daily basis.
Also keep in mind that on trading platforms, Market News is published over time and is available to user traders for free.
Is it possible to use the economic calendar independently to develop a strategy ?
Although the economic calendar is an indispensable tool for implementing an investment strategy, it is not enough to make a safe profit in the markets. Indeed, the economic calendar should preferably be used in parallel with technical analysis.
Indeed, although major events and data strongly affect the asset rate, it should not be forgotten that investors also base their strategies on graphical and technical data. In addition, it would be a mistake not to take this data into account.
Thus, a comprehensive and effective analysis is a combination of technical and fundamental analysis thanks to an economic calendar and other tools, customizable charts or technical indicators.
Where and how to consult a good economic schedule ?
Generally speaking, the economic calendar will help you get acquainted with important events on the Forex agenda or in other financial markets. No matter where you view this calendar, you will have access to almost the same information and events with the exact dates and times of publication of economic news, as well as other useful information, such as the importance of this publication for the market and, therefore, its value depending on the cost. what you trade.
These economic charts are offered by financial reporting websites as well as all online Forex and CFD brokers. But be careful ! Not all economic calendars offer the same benefits.
Indeed, depending on which broker you choose, you will have access to budget calendars that include more or less convenient functions. Among the most interesting features can be noted, for example, the expectation of the market and analysts of certain data. Thanks to this expectation, you can use the actual data after publication as confirmation or refutation of market sentiment and, therefore, trade based on this.
In addition, with regard to the specific functions of certain economic calendars, some brokers also suggest that you display only the data that may interest you, based on the assets you are trading. This way, you view only important publications, eliminating distractions, which saves you a lot of time.
Thus, we better understand the importance of choosing the right broker for the quality of the information provided by him, especially for the quality and adjustment of his economic schedule. Do not lose sight of this point, because you will quickly realize that you very often need this economic calendar during your trading sessions.
Is it really possible to rely on the data published in the economic calendar?
As we have already seen above, the economic calendar itself does not allow you to determine the future trend of an asset, even if the information you find in it will be very useful for you. But is it really possible to trust the data published there ?
First of all, let's remember that the main usefulness of the economic calendar is that it allows you to anticipate the market reaction using the dates of future publications and, when this feature is offered, analyst expectations. However, it is logical that it is known that the vast majority of investors view the information in this economic calendar, and also use it to take their positions. Thus, it is also necessary to take into account the expected reaction of these investors, which, of course, will affect the value of assets.
Indeed, in order to use the economic calendar correctly, it should be understood that the impact of a large issue on the price of an asset most often occurs before its release date, given that almost all investors expect such a reaction. However, when publication does occur, more or less strong course adjustments are most often observed in accordance with previous expectations.
Thus, there are two ways to trade based on the data published in the economic calendar. Thus, you can trade in a trend, taking a position in the direction of market expectations, but paying attention to the official publication in order to make a profit at the right time in case of a strong correction, and you can also wait for this actual publication to trade on the upcoming trend correction, depending on whether the published data meets market expectations..
As you can see, reading, interpreting and using the economic calendar as part of a trading strategy is much more difficult than it seems, and requires a good understanding of market dynamics and investor psychology.
On the other hand, it is also important to know how to integrate the publication effect into your trading strategy. Indeed, and as you will probably soon realize, markets do not always track the economic results published in the economic calendar. Therefore, after each consultation with different indicators, a good analysis is needed.
That's why we strongly recommend that you practice this type of fundamental analysis using, for example, a free demo account that you will find with most of the most serious brokers. This type of training will allow you to quickly understand which data most strongly affects the price of the assets you trade, and which strategies will allow you to reduce the risk level of your positions, find the best entry or exit point to the market and structure your positions. bidding.
Frequently asked questions.
The economic calendar is interesting because it contains a lot of information about events that can affect the market: the name of the event, the date and time of the event, the level of importance of the event offered by certain calendars, the cost of the event, the previous value of the event and the consensus corresponding to the expected value.
Many traders implement a trading strategy based on economic announcements in the economic calendar. To do this, they focus on a major economic announcement, which often means volatility in the market. In addition, then it is necessary to find out whether the consensus has been integrated by the market, and see if the advertising effect will change or accelerate the trend at the time of the event. Of course, this method of trading requires high concentration and availability at a convenient time.
The economic calendar is an indispensable tool if you want to conduct a good fundamental analysis of the market, but you still need to find a high-quality one containing the correct information. Most often, you will find extremely high-quality budget calendars on the platforms or websites of online brokers and brokers who offer them to their users in order to help them develop good strategies with a full set of elements.