Hello and Welcome to the ditto educational series that will provide you with the skills you need to become a forex trader!
Today we will be discussing The forex economic calendar and how it is useful for traders to learn about upcoming news events so that we may implement that knowledge as part of our fundamental analysis. We will explore the Dittotrade economic calendar in depth and look into how to read a forex economic calendar to plan ahead, manage risk, and execute strategic trades.
WHAT IS THE ECONOMIC CALENDAR?
The economic calendar is a fundamental resource that allows us to view important and upcoming economic information scheduled for release.
Major news releases such as the non farm payroll and changes to central bank interest rates are some good examples of what we may see. In the golden age of information it can be very advantageous to know about the release dates and times of potentially volatile market news. The events on the economic calendar are ranked from low, medium to high, depending on their probable degree of market impact as shown here.
HOW TO READ THE FOREX ECONOMIC CALENDAR
Lets now look at how to read the forex economic calendar. Learning how to properly navigate this fundamental information can save you time and is important to maximize your trading prior to and following the most important releases. If you make a habit of Checking the calendar every morning and or evening it will allow you to familiarize yourself with the upcoming events that matter most in terms of volatility and opportunity.
When you initially open the calendar it will show you every piece of economic news coming out for the major economies with no regard to importance, it will generally be displayed in a linear fashion in accordance with time. We generally do not need to know every piece of information so we can look at using the filters to customise the information displayed to benefit our needs.
CUSTOMISING YOUR FOREX ECONOMIC CALENDAR VIEW
Next we may use the Filter to eliminate events and currencies that are not important to us and show us the events that we are primarily focussed on.
As the EUR/USD has some of the highest liquidity in the market let’s now look at highlighting news surrounding this pair. We will want to focus on news coming out of the Eurozone and United States and select news releases that are of high importance, Our filtered results would look something like this. As you can see our chart only now shows the Eurozone and US news announcements that have a high probability to move the market should the news surprise traders and institutions.
when using the economic calendar for forex trading as we know the dates and times of news releases are displayed before us. you are informed on what most news announcements cover as well as the date of every central bank announcement. Some news releases that have varying levels of impact may be unknown to you as you have not encountered them before, if you click the information drop down button it will give you a detailed overview of the selected event in question as seen here.
The The benefits of using a economic calendar included improved risk management for one. Being able to strategise your trades based on utilising the economic calendar events means you can ready your accounts for potential volatility in price. When high impact news is released we may expect a period of market volatility if data is released well above, below or even in line with expectations.
You may want to close out trades prior to the news release or get a better position in the market after or during the release. Our Risk is the difference between our entry price and stop loss price, multiplied by the position size and you can learn more about this in our risk reward video.
The economic Calendar also offers us foresight. For example, if a Nonfarm Payroll report is set to be released, we know historically that this indicator has the potential to move FX markets substantially, so having awareness of the timings is crucial and means we can plan our forex trades accordingly.
We can also filter the economic Calendar to represent our needs in terms of what information we want to be displayed. Using this allows us to be more focussed and cut down on the background noise that to much information can create.
hopefully you have enjoyed our discussion today ladies and gentleman and now have a greater understanding of the usefulness of the economic calendar. please sit back and contemplate what you have learned today and remember Contemplation is the key to learning.