Undoubtedly, although pure technical analysts do not want to recognize it, the important economic news and announcements have a profound impact on the market. In some occasions it is only through such data that can be understood sudden rises and drops in the major currency pairs. For this reason it is always important to be aware of the major economic events worldwide, in order to take advantage of an opportunity or avoid a sudden market movement against us.
For this, we can make use of an economic calendar Forex, which are offered free by some of the leading Forex brokers. However, for this tool to be useful we must learn to read and interpret it properly, for which we include a small guide below:
Usually, when the news are released the market becomes more volatile, which may also occur hours before because of the expectations of investors. The strength of this volatility depends on what is known as the “surprise factor” that bring the news, especially in relation to forecasts. This factor can be defined as the level of the unexpected, where traders compare the expert forecast about any economic news with actual data recently released. The greater the difference between the actual data and the forecast the greater the impact on the market.
-Forecast: Virtually all economic calendars include a column with forecasts on various economic data. These forecasts are made by economic experts who try to predict what value will have an especific economic indicator when the news is given to know.
-Current value: This column displays the current value of the economic indicators and is updated until the news is released. At the precise moment when this happens, the current value is compared with the forecast and depending on the overall positivity or negativity of the economic news for a given currency, together with the “surprise factor”, it can cause the price up or down in seconds. For example, if the news indicates a contraction in the European economy, it is almost certainly that the price of the euro will fall against currencies like the dollar
The impact of economic news, which causes an increase in market volatility, is characterized by a period of 1-3 minutes of high volatility and a period of 5-10 minutes where the market experienced a corrective/adaptive volatility.
Forex Economic Calendar
The next tools are designed to present the most important news and economic events that affects the Forex Market and other financial markets in the daily movements. A lot of traders follow the economic news and make their decisions based in these data. This approach is calle fundamental analysis and is followed for thousands of traders in combination with the use of technical indicators. These economic calendars are updated daily, so the traders can keep up with the most important economic events that may affect their investments in the market.
Economic calendar presented by the broker Forexyard:
Economic calendar presented by the broker Deltastock:
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