Economic calendar is something a trader can never do without. It can be likened to a roadmap on how to navigate the markets, when to watch when crucial economic events are to occur and numerous traders monitor calendars that platforms such as fxcm offer in order to be ready. When you hear of big reports or central bank announcements coming, you also have time to plan your trades even consider them as a warning of rough or fair weather.
The release of economic data is capable of moving markets in unforeseen directions. One day you may wake up in the morning and the U.S. Federal Reserve declares that they are increasing the interest rates and bam! The forex market is in chaos. These are very important moments that you may fail to notice without an economic calendar. When you have a platform such as FXCM, chances are that you will have a bunch of economic calendar literally at your fingertips. This feature can assist you to keep abreast of such high-impact events that touch on the global currencies.
What type of events do we have here? Well, the calendar records all the GDP releases, job reports and inflation data. It will be your ticket to what is going on in the financial world. Once an event with red indicate that it is a high-impact event, it is time to put your act together. These are the news which causes traders to cheer or keep cursing according to which side they are on.
One of the secrets of new traders: You have to keep the time in mind. It is even possible to be following an economic event and be caught on the crossfire by the eventual outcomes. An announcement of a reduction in the interest rate or unusual readings of the economy can be a freight train. Markets do not always respond in a manner that you anticipate them to and that is the excitement. The economic calendar is an excellent way to be prepared, but not to have the entire picture. It is like you know it is going to happen, not entirely knowing how much the wind is going to blow.
Market sentiment is one more thing to consider. Although there are many data in the calendar, traders are not necessarily rational. Sentiment or political occurrences can affect the markets. So you have a heads-up with the calendar, however, it is up to you to read between the lines.
Next we have the international factor. Economic calendar is not only about the activities of the one country but about all the activities of the globe. The Malaysian Ringgit could be affected by a large-scale news item in the EU, say. The calendar makes you aware not only of what is happening around locally but also what is happening around the world. When you are trading in more than one currency, you will be able to follow events in every part of the world.
Knowledge is one of the greatest tools as a trader. That knowledge is delivered straight to you by an economic calendar. However, it is not all about plugging in and hoping that everything will be fine. You will have to process the information and learn how various events influence various currencies. Simply because the U.S. broadcasts a positive job report would not automatically have the dollar jump it is not as apparent as it may appear.
Finally, the economic calendar will enable you to beat the game. Admittedly, we do not have a crystal ball, and unexpected things are always ready to happen, but being prepared is half the battle. Trade stocks, forex or commodities, whatever your trade is, sell better knowing what will happen to the economy. Some platforms such as FXCM have easy access to such calendars, and hence ensure you monitor them when you are trading.
This is a tool of trading that is equivalent to having an umbrella when the weather forecast is to rain–you may not necessarily need it, but when it rains you will know you were fortunate to have it.