Different trading tools are available to traders nowadays to get a better understanding of the Forex market. One tool that has been widely used by traders is an economic calendar. The economic calendar shows the economic news and events that move the market, as well as the time each data will be released.
What’s in an economic calendar?
Economic Events
Economic calendars display economic events. Few of the events covered include the world’s major central banks’ rate decision, nonfarm payrolls, FOMC minutes, and world leaders’ speeches. The rate decision of the the world’s major central banks is one of the most popular economic indicators among traders.
Release Time
If you know the time of the news release beforehand, you can plan your activities. Knowing what will happen, and when it will happen give you the upper hand.
Volatility
Most economic calendars have a color-coded system to help traders determine how critical the news is. News releases that will likely have a low impact on the market are marked yellow. A red volatility mark indicates that the news will likely move the market in a significant way. Additionally, an orange mark means market observers are in between.
When choosing an economic calendar, also consider the following:
- Mobile-friendly
- Customizable local time
- Automated refresh when data is released
- Related news and reports
- Historical graph
Bottomline
Every movement in the market, no matter how small or big it is, will impact your trading. An economic calendar helps you to project the possible direction of a currency pair you are interested in. Therefore, you are able to develop a sound trading plan. It is also important that you know what every news means in general, and specifically for your chosen trading instrument.
Also read: 5 Forex Websites You Should Follow
