Forex calendar becomes a hot topic of argument between technical traders and fundamental traders. Technical traders believe that using a forex calendar is totally waste of time; while fundamental traders think that a proper use of forex calendar is the key to their success.
However, if you want to know the real-time market trend, learning to read the forex calendar may be essential and keep you in the market, no matter you are a technical trader or a fundamental trader. The below article will tell you what the forex calendar is and how to read one.
What is a forex calendar?
A forex calendar is a daily calendar that keeps all the important economic indicators and major events. Traders can find the specific time of the release of each indicator. For example, the major US economics are scheduled to release at 8:00am, 9:15am and 10:30 EST. In addition, the forex calendar also keeps track of the estimates from a survey of economists.
How to read a forex calendar?
1. Importance of the economic indicator marked on the forex calendar
The forex calendar always rates the level of importance for each release. Some forex calendar use colors with red being the most important, orange being next in importance, to yellow being not important at all. Other kind forex calendar may use a number system or other symbols such as the number of bulls that determines a rank of importance. Let’s just imagine a forex calendar for demonstration purpose here. The importance here in the forex calendar is a proxy for risk. The greater the importance, the greater the risk is, both before and after the release.
2. Forecast of the economic indicator on the forex calendar
The forecast is very important piece of information on the forex calendar too. The forecast is generally made by the survey of economists, a number that average traders have no reason to doubt in general. It’s not a courageous behavior to think the forecast will deviate from the actual number since it’s out of average traders’ knowledge base.
However, traders need to watch the forecast in the forex calendar closely when the actual is about to release. The larger the actual deviates from the forecast, the more likely the price movement will be dramatic.
3. The spread of the currency pairs will widen after the news release.
The other reason why traders need to focus on the forecast closely is that bid to ask spread may be widen after the news release. In fact, the larger the actual deviates from the forecast, the higher the possibility the spread will widen several pips. When that happens, slippage is mostly likely to occur.
In a word, for all traders in the forex market, it is important for them to keep track of a forex calendar, which will be helpful to their success in forex trading.
