Using of the Economic Calendar to Increase Profitability
Modern trader is not just a market fighter, first of all he is a serious analyst with diverse interests. And there is nothing more important than information for the analyst. Professional traders are interested in almost everything about the world economy: from the prices for retail goods and presidential elections, to the hostilities and natural disasters. You need to see, hear, read and realize on time everything, that can affect the financial market.
The economic calendar
The economic calendar of the Forex market allows you to collect together all the important global financial news practically at the time of publication. Wherein, calendar not only keeps the real history, but also ranks them in order of importance and power of influence on the market – everything you need for analysis and successful Forex trading. The history of the economic data and forecasts of analysts are stored there as well. Usually online calendar is published before the opening of the trading week, and the output of the main regular data planned in advance for a period of several months and is constantly adjusted in accordance with the current situation.
Using the economic calendar for trading takes place the following way. Each announced economic event has at least three meanings: the event, the consensus (forecast) and the previous meaning. Exactly the deviation of the event, firstly – from the analytical prediction, secondly, from previous data that can be adjusted relative to the release of the previous period is valued.
If the forecast by the fact of publication is justified, i.e., coincides with the calculated (predicted) values, the market reaction will often be mild or be absent at all. If actual data differs from the forecast, the market gives a sharp speculative shot, and the greater the difference, the stronger this reaction is. Global news: international events, statements and press conferences of the key figures of the financial market, the statistics of the leading countries provide an effective response practically on all the trading instruments.
When the news come out better than expected (for a country's currency output), it is usually recommended to open a buy order, if worse than forecast – sell one. If the values match (rare, but it happens!) – keep calm and neutral trading.
If the trader knows the time of the news beforehand, he can plan his activities, in particular, the moments of entering the market or closing the position. The principle of "buy the rumor, sell the news" in practice means that the market starts to respond to the information in advance, and at the time of publication may go in the opposite direction, forming a speculative market "spike". Everything happens within a few minutes for small deposits and such situation is extremely dangerous. Economic calendar warns in advance, when the news will be released, that allows to close the already opened positions in time or, conversely, to try to squeeze a profit from a quick movement, if the trader is ready to a greater risk.
Every financial resource offers economic calendar, which can be with different design, and sometimes functional content, but there are some signs, which characterize precisely quality calendar:
...the economic calendar will be helpful fellow guide for you on your road to profits...
First of all, the Forex economic calendar must be complete, relevant and constantly updated, that is, to have direct access to news sources.
The interface must be understandable, visual and functional, without advertising tricks and other irritating elements.
Software implementation calendar must support a logical system of various filters for information with the ability to save the settings in personal profile of each user.
Finally, to summarize the above: always seek to understand what news mean for the market in general and specifically for your trading instrument, analyze historical data, consider the psychology of the market behavior of the crowd at the time of the news release and then the economic calendar will be helpful fellow guide for you on your road to profits.