There are two methods of foreign exchange analysis: technical analysis based on indicators and historical data to predict the direction of the trend, and fundamental analysis based on statistics, news, and events.
The economic calendar is one of the most effective tools for analyzing the market and is widely used by traders. It is a news summary that shows when the news was released and its impact on a specific currency. The economic calendar contains all important upcoming events from which traders can predict the possible movement of prices.
There are many factors that affect the foreign exchange market - economic reports, speeches, central bank meetings. They vary in importance and can be grouped into three categories: low, medium, and high. The more important the event, the greater the volatility expected after the release. This should be taken into account in forex trading.
Economic and political events heighten market volatility and prices can rise or fall sharply. Some traders choose to trade when the news is released, while others choose to avoid it. Traders who prefer to trade on the news create orders during the release of important macroeconomic statistics and profit from increased volatility and trends.
The economic calendar can be viewed in thematic and analytical resources, as well as on the websites of forex brokers.
How to Use the Economic Calendar
It is worth looking at the structure of the economic calendar in more detail. The economic calendar is displayed in a table consisting of columns and rows. Let's take a look at Forex's economic calendar and observe its structure:
Date - When the news is scheduled to be published.
Remaining Time - The time before the event. If there is a "done" flag, the event has ended.
Event - The name of the event. Click on an event if you want to see details.
Impact - The level of impact, showing how a particular piece of news will affect the currency. There are three levels - low, medium and high. Generally speaking, high means that after the announcement, a large increase or decrease is expected.
previous value - the previous value.
Expected Value - The expected value.
Actual Value - The current value. If displayed in green, the actual value is better than expected, red indicates that the actual value is worse than expected, and gray indicates that the expectation was correct.
Time Zone - Here you can select your time zone. It's important to take jet lag into account.
What news is worth paying attention to?
News with a mid-to-high sign can greatly affect price action. Such news can cause exchange rates to rise or fall sharply.
The following news have the most impact on the market:
changes in key interest rates;
Unemployment and employment changes;
inflation data;
national economic growth;
Index of business activity across sectors of the economy.
Traders can earn high profits by trading on news. Non-farm payrolls, for example, are a very important U.S. economic indicator, and the dollar reacts particularly strongly to them. It shows changes in the number of people employed in the nonfarm sector. The release of non-farm payrolls is considered a market-moving indicator. After the report is released, the reaction of the foreign exchange market is usually very strong.
Significant stats can lead to significant swings and heightened volatility. Therefore, it is very important to monitor the news in advance so that you know when it will be released and which trading instruments it will affect
Add
