Economic Calendar in Trading: why is important?
Published: April 29, 2021 by Andrew
The economic (or macroeconomic) calendar is a very practical tool to stay updated on news and events that can affect the Forex market and other financial markets.
By consulting it, it is possible to have a clear overview, at any time, on the events that can cause the price of an asset to go down or up. Knowing how to read the calendar, then, can make the difference between a winning strategy and one destined to fail.
In this guide to the economic calendar we will analyze:
- What is it
- How to read it
- How to use it to invest on the best platforms
If you decide to invest by relying on the platforms made available by the best brokers, in fact, you can count on total integration with the economic calendar, so as to always have it at hand. It doesn’t end here: on eToro, for example, you can copy the operations of traders who are experts in fundamental analysis, that is, those who are able to make the most of the indications contained in the macroeconomic agenda.
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Economic Calendar explained
The economic calendar is an agenda that reports every day all the information useful for planning investments on all national and international market indices.
The collection of news and macroeconomic data are reported in chronological order. It is possible to click on every single news item in the economic calendar to receive information. The news is enriched with a graph, containing the history of previously disclosed data.
The economic calendar is a very useful tool for those who make investments in the financial markets, including online. It has evolved into an effective and practical strategy to operate on the markets of various assets.
There are a huge number of traders who today use the economic calendar for their operations, especially to invest on platforms where this is available for free such as those of eToro and ForexTB (visit the official website here).
In the next paragraphs we will deepen the tools that these and other brokers make available to invest using the economic calendar and market movers.
Economic Calendar: how to read it
The functioning of the economic calendar is very simple and intuitive. It filters the data provided by the best certified sources, converting them into a layout that can be easily consulted by all traders.
The economic calendar is drawn up and planned well in advance. Thanks to it, therefore, it is possible to always keep under control the economic news, the most important moments and events of the trading day, to carry out a correct fundamental analysis.
To make the most of the economic calendar it is recommended to follow these steps:
- Set the Calendar time
Selecting the correct time is the basis for the proper functioning of the economic calendar. To set it, click on “current time” and select the time zone (so be careful to set the European one, for example, rather than the United States).
Hence the possibility of viewing the time of any economic event, in such a way as to be able to avoid errors and save time and money.
- Check the daily schedule
When using the economic calendar, the first thing to do is to research the schedule for a particular trading day. It is possible to scroll down to the date of interest and, by clicking on it, a list of economic and financial events will open.
- Interpretation of the economic calendar
The information contained in the economic calendar refers to various items, such as:
- Time: indicates the time when the news event will be disseminated.
- Cur: indicates the currency, in English currency and therefore abbreviated to cur. It also indicates which currency will likely be most affected by the news event.
- Imp: short for importance, it indicates the percentage of impact it will have on the market. It is also indicated with the image of a bull’s head. The greater the number of bull heads, the greater the impact it will have on the currency.
- Event: shows the name of the event that is scheduled.
- Actual: indicates the actual result of the event, once verified. Distinguished by the green or red color, respectively if the performance was better or worse than expected.
- Forecast: indicates the number of forecasts or the result that analysts had expected on average before the event. By comparing this last data with the previous one, one can understand how the market can react to the occurrence of the event.
- Previous: this section indicates the result of the last time a particular event occurred. By comparing the previous results with that which has just occurred, it will be possible to form an opinion on the performance of a country’s economy.
How to find out more about a macroeconomic event?
By clicking on the event of your interest, you can find the name of the event, an overview, all the details visible at the time of the click and the graphic form.
Economic Calendar: what to observe
What are the most important news on an economic calendar? From experience, there are some events that exert a greater influence on prices than others.
These are called market movers:
- GDP – (or GDP) gross domestic product measures the wealth generated by a nation; the data is released on a quarterly basis and its correlation with the currency is directly proportional.
- Interest rates – when central banks announce the news on rates, volatility increases significantly. However, the effect is not limited to that moment, because even in the immediate future, institutional discussions can lead to a certain frenzy on the markets.
- Unemployment – this data provides a clear indication of the state of health of a country. One of the most famous is the US non-farm payroll, which refers to all workers employed outside of seasonal agricultural workers. The indicator is very influential on the US market, as well as in Japan and Australia.
- CPI – the consumer price index is a fundamental indicator on inflation. A growing figure (within certain limits) corresponds to an economy that is strengthening.
Economic Calendar in Trading: which is the best strategy?
Macroeconomic data can be leveraged to make money with online trading. There are macroeconomic data that are more relevant than others, so only the most important ones should be used in investing in CFDs.
First you need to set the time frame of the graph in H1, since usually the influence of a given macro does not go beyond two hours. Once the graph is set, it waits for the time when the macro data will be released.
The next step is to consider two factors: the outcome of the data and the movement of the market. These two factors must always be observed, because it may happen that a negative data does not provoke the reaction that the market expected. It is necessary to check the market reaction before investing.
Once this reaction has taken place, you can proceed with the investment following the direction of the trend. You go long, up, when the market reaction is positive. If the reaction is negative, you go short, to the downside.
One of the many online CFD trading strategies concerns the economic calendar strategy.
This is closely related to fundamental analysis. This strategy only requires the simple use of market news in order to predict the future direction of price movement.
To use the economic calendar technique, you must first fill it in before trading on the markets begins. To do this, you must enter all the data regarding the events and possible forecasts concerning the underlying CFDs on which you have decided to invest.
How to apply the economic calendar strategy
The first thing that needs to be done to apply the strategy is to take note of:
- Specific data
- Display of expected numbers
- Monitoring of market reports, in order to test if the data is better, worse or close to what analysts expect
Price trends are important for all those traders who invest in CFDs as, thanks to leverage, profits can be made in no time. This data is reflected in the economic calendar and this is the secret of the economic calendar strategy.
It is important to obtain a reliable economic calendar and to choose among the news that have arisen during the week those that have the greatest volatility. Each piece of news identified, in turn, provides 4 fundamental data:
- Degree of volatility for the relevant currency
- Date and time of publication of the information
- Previous result
- Planned or expected results
The first thing to do is to open your broker’s platform. Immediately after, you have to open the page of the economic calendar just near the expiration time of the news and refresh the page continuously.
The news can take on 3 different aspects: positive, negative or neutral. With positive news you usually invest upwards, downwards for a negative one. If the news has a neutral aspect it is advisable not to trade.
However, there are some useful tips to follow if you want to employ the economic calendar strategy. These tips are even more important for those who are learning to invest. For example, if the news has a weight between the previous and what is expected, it is advisable not to carry out transactions.
If in the minutes before the publication of the data, you notice a transversal trend in prices, then you can expect that the published data conditions at least the first 5 minutes.
However, it is always necessary to act with the utmost caution. By taking advantage of the economic calendar strategy, you can risk investing a higher percentage of capital. It is good, however, to be careful not to invest more than 10% of the total capital for each single operation.
Best Platforms to invest with Economic Calendar
Most traders who invest in CFDs use the economic calendar strategy. CFDs, acronym for “Contract for Difference”, are a so-called derivative financial product. You invest on the difference between the opening price and the closing price of a specific underlying market or asset, speculating on the movement of prices.
There are many brokers on the market to trade CFDs with, but it is important to choose reliable ones. It is recommended to seek the right authorizations issued by major agencies and supervisory authorities. Those to keep an eye on are certainly CySEC, ESMA, CONSOB and FSA.
If the platform does not include at least one of these agencies, better stay away from them. The brokers that are proposed below are reliable and safe, used today by many experienced traders.
In 2007, three entrepreneurs decide to make trading accessible to anyone, anywhere and reduce dependence on traditional financial institutions. eToro was born and in September of the same year the visual FX trading platform was launched.
But it is in 2010 that eToro becomes the most important multinational social trading company. The broker, in fact, has managed to transform the knowledge and experiences of its users into practical trading tools.
Thanks to eToro it is possible to do copy trading. With copy trading, users can copy other traders’ trades by setting their own budget. In this way, the investment is simpler, even for new entries in the investment world.
It is possible to select the trader to copy in the “Popular Investors” section or through the search tool. There are a variety of parameters to filter the search, such as earnings, risk score and location.
The risks of losses are always around the corner, which is why eToro also offers Copy Stop Loss. This tool allows you to set a threshold below which each investment is automatically blocked.
There are so many assets to invest in. eToro also caters to all types of investors, even beginners. That’s why with eToro it is possible to open a totally free and unlimited demo account to be able to practice in the world of financial markets.
Try Copy Trading yourself and invest with eToro. You can open an account with only 100 euros!
ForexTB was born in 2010 and is one of the best platforms for inexperienced traders who want to approach the trading world with caution. Until 2016, ForexTB was a leader in the binary options market, only to leave that sector in 2017 and specialize in CFDs and Forex.
One of the first positive aspects that catches the eye is certainly the user friendly interface. ForexTB is very concise, giving users the opportunity to explore the platform at their leisure.
Feeling the territory, you immediately arrive at the “Training” section, one of the pillars on which the platform relies. Once registered, in fact, you can download the ForexTB trading manual for free.
It is essential to have a thorough understanding of the world of online trading before starting with investments. Many traders offer excellent but expensive guides on the web. This is why ForexTB deserves a special mention.
Being able to take advantage of a totally free and well-made manual is an opportunity to be seized on the fly. According to leading analysts and industry experts, if this guide were marketed it would cost around $ 3,000.
Within the same area, an overview of global markets is also offered daily thanks to the economic calendar. In this way you can always stay up to date on the market and invest in the most efficient way.
Furthermore, ForexTB does not charge any type of fixed commission. It offers very tight spreads and, compared to other trading platforms, they do not increase with strong asset changes.Register on ForexTB and download the online trading guide now!
Trade.com is the gateway to the financial markets. The platform is in fact in first place among the most successful brokers currently on the market.
In its futuristic simplicity, Trade.com immediately transports users to the world of investing.
It uses two platforms, including WebTrader. Designed especially for less experienced users, the platform offers very simple navigation with access to over 2,100 assets with which to trade CFDs.
With the WebTrader platform it is possible to analyze asset charts in real time and make trades immediately. All while remaining constantly updated through the news that Trade.com offers.
Another feature present is Trading Cube, a tool that allows you to streamline the trading process, allowing you to view different instruments at the same time.
The other platform used is MetaTrader 4, intended for more experienced traders. In fact, it offers a wide range of technical analysis tools, as well as the ability to use Expert Advisors for online trading and advanced charts (useful for indicators such as Elliott’s Waves).
A section on trading strategies is available within the portal, in order to optimize your performance.
Very important resources can also be used for other avant-garde, such as the economic calendar. These features are useful for both novice and professional traders.
There are also several types of accounts offered. The minimum deposit available is just 100 euros, allowing even those with a small budget to start investing.Try Trade.com's WebTrader sign up for free, click here.
The economic calendar is used by both professional and novice traders. Information in the world of online trading is very important and allows you to take advantage of excellent investment opportunities. It is used a lot by traders, brokers, banks and intermediaries.
In summary, the economic calendar is useful as it indicates the most important appointments of the day and detects useful information on the data. It captures the most relevant and important economic news and events daily and provides useful news and information throughout the week.
In short, with the economic calendar it is possible to find out which currency or market is going to be directly affected and to know the analysts’ forecasts.
It is a free service and can be used in real time. The important thing is to choose a reliable one. In order not to risk, you can take advantage of the economic calendars made available by the brokers listed above, namely eToro, ForexTB and Trade.com.
For a Trader it is a tool of fundamental importance as it lists all the events and economic indicators in the financial world.
Certainly, since so-called “Market Maker” news that can influence the market are often on the list. Knowing these events in advance is a big plus.
The best brokers offer this service already integrated into the platform.
Above all, the announcement of rates by central banks and data on national GDP.