In Forex, macroeconomic factors are always at play. From the interest rate decisions of a governing central bank to the geopolitical turmoil’s brewing between two countries, supply and demand of a certain currency will fluctuate in accordance with these catalysts.
As a trader, it is paramount to know what these economic events are and, more importantly, when they are released.
Economic Calendar Explained
In a nutshell, an economic calendar aggregates all the economic events in foreign exchange.
The list of events varies per week but include the following: interest rate decision, employment and unemployment numbers, GDP, imports and exports.
Majority of economic calendars are found online and are free to use, for example, on T1Markets.
Tools and Features
An economic calendar’s features will vary depending on the source. Usually, however, you’ll find economic events categorized neatly on the order of when the news report or announcement will be released.
Aside from time, other filters exist, such as what currency the news event is for and the previous results if it’s a periodic event.
The impact of the event is also graded into three color-coded categories, namely Low, Medium, and High.
The Importance of Economic Calendars
Forex trading is often a highly volatile and risky business. Without real-time access to an economic calendar, a trader will be left at the mercy of the markets. With an economic calendar, you can determine when a high-impact news event is set to unfold and react accordingly. This allows you to avoid news events that have the potential to create large swings in either direction.