Whether or not you decide to trade around news events, it is vital that you know when they are coming. Always be careful when trading around news events. When figures are released – especially if they are considered very important to the market – prices can become very volatile. Use the economic calendar to help you identify in advance which events in an upcoming day or week are most likely to affect theyou are trading. This may help you find new trading opportunities, flag up the need to protect or adjust existing trades, or simply alert you to times when you should stay out of the market altogether.
Step 1: Set the calendar time
To work best, the economic calendar should be set to your local time – the time in the place where you are based. This means that you can instantly see at what time during your own trading day an event will occur. This saves you wasting time – and possibly making expensive mistakes – trying to calculate time differences.
Step 2: Check the daily schedule
To find out what news events are scheduled for a particular trading day, scroll down to the date you are interested in. Click on that date and a list of news events will open beneath it. Note that the number of news events included will vary from day to day.
Step 3: Interpret the economic calendar
At the top of the calendar you will see a number of headings – Time, Cur, Imp, Event, Actual, Forecast and Previous – which give you information about what kinds of events you are dealing with.
- Time: This tells you what time the news event is scheduled to occur. This will be in your local time zone if you have already changed the settings, as previously discussed.
- Cur: This is short for ‘currency’ and tells you which will probably be affected by the news event as well as which country it will occur in or relate to. You will also see a country flag here.
- Imp: This is short for ‘importance’ and tells you how much impact the event is expected to have on the market. You will see one, two or three images of a bull. The more bulls, the more important the event is considered.
- Event: This shows you the name of the event that is scheduled. Make sure to check your economic calendar every day before you start trading. Also refer back to it throughout the trading day. This will help you avoid taking overly risky positions.
- Actual: This tells you the actual result of the event once it has occurred. If the event was the release of figures, it will appear as a number. It also uses colour-coding to tell you whether the figure was better (green) or worse (red) than the market expected.
- Forecast: This tells you what number or results analysts had on average predicted before the event. By comparing this figure with the ‘Actual’ result, you can form a view of how the market will react. If the ‘Actual’ result is worse than the ‘Forecast’ number, the currency involved will probably react negatively.
- Previous: This tells you the outcome the last time this particular event occurred. By comparing previous results with the latest result, you can form a view on whether a country’s economy or a specific industry is improving or worsening
Step 4: Find out more about an event
To gather even more information about a specific news event, click on it. You will then see an expanded view.
- The name of the event.
- Overview: this gives you a definition of the news event as well as what the actual number would probably mean for the currency or market in question.
- Details at a glance: this highlights the actual, forecast and previous numbers, as well as the importance of the event and the currency affected. It also gives you an external web link to the source of the report.