What Is An Economic Calendar And Why Is It Used?

An economic calendar can help you pinpoint important market occurrences to strengthen your fundamental research. It can assist you in developing a more thorough trading strategy by enhancing your understanding of such events, teaching you how they may impact the price of a variety of assets. 

The economic calendar is a helpful tool for risk management, advanced planning, and viewing the information affecting numerous markets at once. Its advantages include

View a variety of data points

Users can examine various pieces of data simultaneously on the calendar. For instance, to trade a currency pair successfully, traders must keep up with events in the two countries involved in the pair in order to fully comprehend how they might affect the market.

Reduce Risks

You can account for probable price volatility in your decisions by scheduling trades around market-moving events in advance. If data is released above or below expectations, there will certainly be volatility as a key event approaches. You can improve your risk management choices for risk-reward ratios, stop placements, and hedging by keeping track of such fluctuations. 

Think Ahead

Events in the economic calendar are ranked in importance, with red denoting high importance, yellow denoting medium, and blue denoting low importance. Taking into account which events are most likely to influence markets, traders can prioritize the timing of their holdings accordingly.

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How the economic calendar works

The economic calendar informs traders of the significant international events that are likely to impact markets and have an impact on trading decisions. Users may quickly identify events that will have an impact on the UK, US, Australia, Japan, Germany, and France markets, such as central bank policy meetings, PMI releases, and more, to better plan and execute their plans.

How to Navigate the Economic Calendar

Financial and economic websites like FXStreet, Avatrade, DailyFX and Bloomberg Markets offer free versions of economic calendars. Although they are referred to as “the economic calendar,” these calendars differ from website to website and the actual calendar listings rely on the website’s focus and the events that its viewers are likely to find interesting. 

For instance, the economic calendar on many websites solely includes events in the United States because of their significant market influence. Other websites let users create their own economic calendars by displaying or hiding events using filters.

While these free calendars might be a helpful place to start, most traders create their own calendars based on their preferred trade types, preferred asset classes, and preferred areas. Furthermore, a personalized economic calendar need not only include announcements from the government and the central bank. The main releases from oil-producing regions may be the basis for a trader’s economic calendar, which may also include the U.S. Energy Information Administration’s weekly petroleum status report and the quarterly filing dates of the oil sector companies the trader monitors. An economic calendar then transforms into a programmable trading tool similar to an indication alert.

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Conclusion

An economic calendar is a very vital tool for any successful trader as it helps them plan their moves adequately. So dear traders make sure to look through an economic calendar the next time you want to make a major trading decision.

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