Forex Factory is a trading forum where traders share and discuss their ideas. The forum has existed for a long time and has developed quite a bit. In addition to the calendar, you will find the latest news related to economic issues and much more.
How to use the forex factory calendar?
The forex factory calendar has become one of the most popular economic calendars when it comes to forex trading. The forexfactry.com calendar is free and is a valuable resource when it comes to tracking the forex markets.
Although there are many other economic calendars,
The popularity of the factory forex calendar is that it is easy to use and you can find a lot of useful information as well.
As a trader, while technical analysis can be the primary way to trade the markets, it is also important that traders follow the basics. This is because it is the fundamental events that form the basis for the price movement.
In other words, technical analysis is a method of predicting future prices based on past price history. Fundamental analysis, on the other hand, explains the factors behind price movements. True, sometimes the price action can be wrong.
For example, you might face times when some good economic releases end in a bearish price drop. It is nothing more than a combination of fundamentals and technical specifications. When looking at an economic calendar, the main thing to remember is that the price chart you see discards all the prevailing news.
When there is a surprise in the market, or in other words, when prices don't discount the news, you get strong market moves. Therefore, as a trader, it is always in your best interest to keep track of planned economic events.
Before we get into the details, there are a few things to understand first.
What is an Economic Event?
An economic event in the context of foreign exchange markets is a planned news release that will have an impact on the currency.
An economic event can be a news report, for example, measuring inflation or the unemployment rate. This is nothing more than fundamental economic data published by almost every country. The economic report mainly talks about the health of the economy.
There are basically two types of economic events.
- Scheduled economic events are events that follow a given calendar schedule. For example, a quarterly GDP report is released a few weeks after the end of the quarter. Likewise, the monthly unemployment report is released on the first Friday of the month for the previous month.
- Unplanned economic events are those that are not planned, but are formed depending on the development of the market. For example, a major crisis might prompt a central bank governor to make a statement. Or early elections, which play an important role in the foreign exchange markets, also qualify as unplanned economic events.
Between the above two types, unplanned economic events have a greater impact than planned high-impact economic events.
When the economy is doing well and is growing steadily and inflation is stable, the central bank can afford to raise interest rates. When interest rates are higher compared to another economy and therefore its currency, investors flock to a currency that offers higher interest rates.
Of course, it is not only interest rates that determine the performance of a currency. Other factors such as economic and political stability also play an important role.
It is important to understand that markets are always looking to the future. Hence, there is a high probability that the price will predict what the economic outlook will be.
Sometimes a currency can rise in price even when interest rates are low. This happens when the central bank engages in stimulus programs to boost its economy.
Economic events are the cornerstones of news trading. This is a strategy where traders only trade around news releases. New releases create a lot of volatility and you can make quite a lot of profit.
What is the Forex Economic Calendar?
Now that you know what an economic event is, you should pay attention to what a forex economic calendar is.
For those of you who have traded stocks, you should know that the stock markets also have a calendar known as the earnings calendar. The earnings calendar basically tells you when the company will report its earnings and so on.
Likewise, a forex economic calendar is a calendar of scheduled events that shows which economy will publish what type of data.
When you combine information from an economic event based on the forex economic calendar, you can get a better understanding of the markets.
As mentioned earlier that the markets look to the future, you will almost always find that the price action you see potentially reflects what will happen. Therefore, it is not surprising that sometimes before the release of high-impact news, such as monetary policy decisions, the currency may rise or fall.
This is because the markets are eagerly awaiting the release of the economy and have a preconfigured expectation. These expectations are not accidental, but simply reflect the position and prospects of the trader.