The Importance of a Forex Calendar

Last Updated July 9th 2019
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What is the importance of a forex calendar and how it determines market movements?

Experienced forex traders know that one of the most effective ways to make a profit and enjoy a consistent income is staying way ahead and being able to predict what impact important events and changes in the forex world may have on certain currencies.

They invest enough time and energy into examining and exploring future economic events that can affect the forex market.

Thanks to their daily hard work, such forex traders are able to make predictions on the movement of some currency pairs.

They keep up with crucial events in the economic realm and as smart economic players, they synchronize their own market movements.

Thanks to good practice and a lot of knowledge, by the time an announcement is made, the good forex traders will have already predicted the movement of a currency pair.

Of course, predictions are not always 100% accurate.

However, following the events and trading in a respective way is an opportunity for trading profitably with currency, as we’ve mentioned in previous articles there are no guarantees but it’s all about doing what you can to increase your chances of success.

One of the most effective yet very simple tool that provides forex traders with enough information to make predictions is the forex calendar.

Also known as an economic calendar, such a tool can be found for free on many websites including trading education, you can find it here.

This forex calendar assists traders in keeping track of important events, news, and statements in the economic world.

By using the forex calendar, traders have the opportunity to gain information about key economic and non-economic indicators and be aware of the possible direction of the forex market, current trends, and what can influence the movement of a particular currency.  

What is a forex calendar?

what is a forex calendar

A forex calendar is also known as an economic calendar.

In a nutshell, the forex calendar is the schedule of significant dates and important pre-scheduled events during the year that is expected to have an impact on the markets.

The impact of the forex calendar can be partly as in just effecting some currency pairs or as a whole, some events may be so big they impact the whole market.

Working as a good navigation and a guide, the forex calendar is a tool that forex traders and investors often use in their practice.

The forex calendar helps forex traders to plan trades and portfolio relocations. Furthermore, the forex calendar provides awareness of chart patterns, indications and indicators that may be instigated by these important events on the forex market.

The information provided by a forex calendar helps traders make better predictions of trends in the forex market.

Despite the fact that not all movements in the market can be predicted, or not all of them will be predicted with 100% accuracy, the calendar tool presents some good trading opportunities and helps traders develop and refine their strategies.

However, keep in mind that the forex market is very dynamic and anything is possible.

Every forex trader should have an awareness and regularly check the economic calendar in order to make smart movements with reasonable background knowledge in the forex realm.

See also: What are the Top 5 Tips to Learn Currency Trading?

A good understanding of how the forex calendar operates and what indicators it highlights can be gained thanks to a good educational training.

As an example, we at Trading Education provide knowledge of the mechanism of the forex calendar and how the tool can be used as a guide as a part of the world-class forex trading course here.

Using the economic calendar is one of the fundamentals of every forex strategy and plan. The forex trading course we offer you can get for absolutely free, if this is something you are interested in you can register here(link).

Furthermore, the forex calendar is a forex trading instrument you can get for absolutely free on some financial and market platforms and websites and Trading Education is included so find your forex calendar for free right here.

Keep in mind that the mechanism of the forex calendar can vary from one website or platform to another.

It all depends on the focus of the website and the events the website’s target and users are likely to be interested in. In this thread of thoughts, some websites are including only events in the U.S. in their economic calendars.

Other websites list events in other countries too with a set of qualifications, which can be individual for every website or platform, often including geographic location and market cap.

At Trading Education we aim to always provide comprehensive information and knowledge for the users of our website, this is why you can expect our forex calendar to include many countries and a lot of important information.

Different countries have a diverse impact on the global markets, The forex market included. Despite the fact that in past decade the foreign exchange reserves have been dominated by the U.S dollar that has a reserve-currency status, there are major economic events happening in other countries too, Brexit in the UK as an example, this is why statements coming from other countries that are not the U.S. can also have a considerable influence on the currency market.

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Events in the U.S. can also have an impact on currencies that don’t include the U.S. dollar.

Each forex calendar can also differ by the specific way chosen for grading the economic indicators.

For example, some websites and platforms prefer the structure based on rating indicators by the time aspect they affect, the impact they have on the economy, how much volatility they may cause in the market.

An online forex calendar is one of the most common ways to keep up with key economic and non-economic events. The online tool provides a lot of comfort by updating all the data and information in an automatic way so users have access to information 24/7.

In addition, not all economic calendars look the same but commonly you can expect that all of the information available is spread between a few columns including country, the name of the indicator and influence or the importance of it, current period value, forecast value, value regarding a previous period.

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What sort of information can you find in a forex calendar?

what information can you find in forex calendar

Examples of the events the forex calendar is providing information for include jobless claims, reports of new home starts, scheduled changes in the interest rate, regular reports from the Federal Reserve, predictions from specific markets, and plenty of other important, significant, and notable events.

In general, there are two main categories of events highlighted by the forex calendar and these are the predictions of future financial and economic events and the reports of recent financial and economic events.

Both categories provide valuable information that can significantly affect your forex trading strategy and have an impact on the results you get when trading with currency.

Of course, the events noted by the forex calendar have a partial impact on how profitable forex trading is for you. This is why the events from both groups are used as a helpful guide for many forex traders in navigating through the forex market.

Indicators are a vital part of the forex calendar. Generally, there are two types of indicators considering the time aspect they are affecting.

The first type is the leading indicators. As the name suggests, these indicators usually change prior to major and larger economic adjustments.

Leading indicators are normally used for predicting feature trends. The second type of lagging indicators reflects the performance of the economy in the past.

These indicators will change after an economic tendency and pattern have already been formed.

Based on the volatility they may cause and the impact they have, indicators can also be arranged in three groups. The group with the most relevance is the nation’s Gross Domestic Product.

Other indicators of a higher influence in this group are the Purchasing Manager’s Index, Initial Jobless Claims, Unemployment rate, Consumer Confidence Index, Home Sales, Durable Goods Orders, etc.

The second group providing important data includes indicators such as Housing starts, the Beige Book report, Business Inventories, Factory Orders, Average Hourly Earnings, Federal Budget Balance, etc.

Two more important indicators that reflect the average price levels for producers and consumers and are the most preferred measures of a country’s inflation are the Producer Price Index and the Consumer Price Index.

The expected volatility is reflected on most forex calendars in three colours where yellow stands for a lower impact, orange stands for medium impact, and red stands for high impact.

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How does the information in a forex calendar affect the market?

how does the information in forex calendar affect the market

A forex calendar provides a lot of important information that can be interpreted by an experienced forex trader.

The forex market is further driven by many economic and political factors that strongly impact the value and strength of the currency of every country. Such factors are usually reflected by a forex calendar that provides information for both major and minor changes.

When a forex trader knows and understands the factors and indicators that affect the economic outlook for a country, he or she has the advantage of keeping up with the competitive and fast-moving world of forex.

All of these economic and non-economic factors determine not only the trader’s decision but also have an ultimate impact on the value of a currency at any given point. Of course, one of the most important factors determining the value of a currency is the health of a nation’s economy.

However, the overall economic health is shaped by a number of events and information that can change at a fast pace. The way the forex calendar provides information for economic factors and determines the decisions and movements forex traders make can have an impact on the market.

For example, a forex calendar and the forex trader’s movements it determines can have an impact on the International Trade. The trade levels between nations represent the relative demand of goods from a nation.

A nation will typically see appreciation in its currency if there is a high demand in the nation’s goods and services. In order to purchase goods from a country, buyers must convert their currency into the country’s currency to make the purchase.

The increased demand for the currency will put upward pressure on its value. In contrast, countries with a large trade deficit are net importers of international goods and services.

As a result, more of the country’s currency will be sold to purchase the currency of other countries and pay for international goods resulting in a possible negative impact on the importer country’s currency.

International Trade, Capital Markets, Political Impact, Economic Releases have all a major impact on a nation’s economy followed by the economic outlook for a country and resulting in affecting the forex marker too.

Economic reports are often the backbone of forex traders’ movements and decisions and a forex calendar provides all the information available for economic reports in the form of leading and lagging indicators.

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Why do forex traders use a forex calendar?

why do forex traders use economic calendar

Despite the fact that the forex calendar is a helpful guide for forex traders, not all of them are using the tool.

The forex calendar will not provide you with all the clear answers to the dilemmas you may stumble upon when foreign exchange trading.

However, the tool designates the important events and indications what can affect the forex market to an extent or as a whole.

The job of the forex trader is understanding the signals and based on the information provided by the forex calendar, forex traders can make better forecasts and predictions of movement.

While not all market movements can be predicted, the better predictions help a lot in managing and controlling the risk and making a better profit from forex trading, taking advantage of better trading opportunities.

Many traders, familiar with the forex calendar, often times move into or out of position, synchronizing their movements to the information of events provided by the economic calendar tool, the announcements of some events, the current trend affecting the industry of the specific security, the heavy trading volume.

In addition, the forex calendar is often a highly appreciated tool by forex traders who take short positions.

A trader who manages to correctly predict the nature of an announcement can proceed by opening a position immediately before the scheduled announcement.

Within hours the position can be closed, instead of waiting longer, which makes the position short.

There are three main figures a forex trader can figure out thanks to data provided by the forex calendar.

The three figures of the current period, preceding period, and the analysts’ estimates for the specific data help traders be aware and predict if the new data exceeds or disappoints the expectations so they make their next market move.

An imminent report helps the forex trader decide whether its release will trigger volatility and how high it will be.

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In conclusion

If you want to become a successful forex trader and make a sustainable profit from trading, a forex calendar is definitely one of the tools you will be recommended to follow daily.

It is true that once you start understanding the tool’s mechanism and read the “signals” quickly, you will spend only a couple of minutes a day using the economic calendar, depending on the currency pairs you are interested in.

However, these couple of minutes a day will be of a high significance and importance because they will provide you with the important economic, political, and overall stability and security information you can interpret in order to make predictions.

The better you are at making predictions, the more often you are ahead, the more opportunities you will have for making a profit from forex trading.

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