Forex is one of the business instruments that requires in-depth analysis in order to be able to predict market fluctuations. This is because the movement of the Forex market is strongly influenced by external factors that occur in all parts of the world.
In order to be able to support the activities for this analysis, traders are advised to use a tool, namely the Economic Calendar. Both beginners and experienced traders really have to use the economic calendar.
What is the Forex Trading Economic Calendar?
The Forex trading Economic Calendar is a useful tool for Forex traders to keep track of important events that have the potential to move the market. So in this tool some international news related to Forex will be collected.
Basically, this economic calendar tool is integrated with many credible news sites. So, every time there is an event that has the potential to move the Forex market, this tool will automatically provide updates automatically.
So the view of the economic calendar will appear as an online chronology of global economic events and a list of important Forex news. Each news item is ranked by color and looks very much like a priority scale.
There are two types of categories that exist in the economic category, the first is lagging indicators which are useful for analyzing or measuring something that is already happening in the market, for example such as inflation.
While the second indicator is the Leading Indicator, which is a data used to predict events that will occur in the future. An example is consumer confidence which affects retail sales.
All news affecting fundamental factors (GDP growth, retail sales, consumer price index) are published regularly and seriously influence the price movement of a country’s official currency.
It can be said that the Forex economic calendar is a reference for every trader, regardless of their experience and level of professionalism. In addition to calculating important events, the economic calendar can also contain predictions from experts.
Many Forex traders use the economic calendar to make early detection of events that can later create turmoil in the Forex market. This turmoil is very obligatory to be anticipated early on.
Is Forex Trading Possible Without an Economic Calendar?
This question often arises, especially for beginners who have just entered the world of forex trading. Trading without an economic calendar is like driving but with your eyes closed.
Indeed, out there you will find many confident traders who jump into the forex market without relying on the economic calendar. But that was too risky and almost like taking a big gamble.
Without an economic calendar, it is impossible for a trader to spot signals of changes in the Forex market. This influences the process of making the right decisions about when to enter and exit a trade.
Even the most experienced traders will regularly check the calendar several times a day and take note of any updates. Each of these notes will be useful as a provision to determine the next step.
The Benefits of Using an Economic Trading Calendar
How does the economic calendar specifically affect forex market movements? and what benefits do traders get when using these tools? The following is a list of advantages of using an economic calendar:
1. Can Do Risk Management
Being able to plan mitigations for your portfolio based on economic calendar events means you can prepare for possible price fluctuations. This technique is known as risk management.
When an event listed in the calendar occurs, there will most likely be a period of volatility that makes the Forex market volatile. With the economic calendar all trading risks can occur.
2. Real Time Updates
The economic calendar has a display in the form of a chronology of events that occurred in the international world. All events or events are sorted based on the time the activity occurred.
If you search for relevant economic news manually, it will certainly take a lot of time and effort. Therefore it would be better to use an economic calendar that has been arranged based on time and priority.
3. There is a Priority Scale
Not all economic news covered by the economic calendar have a significant impact on Forex market movements. Therefore there is a priority scale to mark how big the effect of the news is on the market.
There are at least 3 categories available on the economic calendar, these categories include:
Important: This is the first tier scale in the economic calendar because it does have a big impact on the Forex market. An example of this indicator is a country’s monetary policy or unemployment data.
Medium: The second tier indicator of an economic calendar. Its contents revolve around inflation predictions that occur in a country.
Low: The last tier of news on the economic calendar, usually contains regional central bank forecasts for future inflation.
4. Learn About Economic Indicators
The function of this economic calendar number 4 is for a beginner to learn how the forex market works. Especially if the beginner uses a demo account, he can experiment with a suitable strategy.
If you jump right into the forex market, experimenting with strategies can be a big risk. If the implementation is wrong then there will be losses that must be borne.
Well, you can also give signs about what factors can affect economic indicators and what don’t affect them at all.
So far, both experienced and novice traders have always relied on the economic calendar to make predictions about market movements. Therefore the existence of this tool is very important for your forex trading portfolio.