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Posted on May 03, 2018 at 04:58 PM
In the Forex market, there are 2 types of people; those who use technical analysis and those who use fundamental analysis to trade. Come to think of it, is it really important to study the Forex calendar before placing trades? This article explains our standpoint on the importance of Forex calendar in the life of a trader.
One of the questions often asked a lot of time is whether or not to use a Forex calendar to make trading decisions.
While not exaggerating the role of a Forex Calendar in a professional trader’s routine, events that happen in the world of economics and politics greatly influence the Forex market which in some ways affect how traders trade daily.
For starters, a Forex Calendar or Economic Calendar is basically a clear schedule of known economic events that will happen at various dates of the year.
An economic Calendar is something that is freely available on the internet. Most professional Forex and CFDs brokers have it integrated on their platforms like we do.
A Forex Calendar will show the following things:
This data can be used to identify possible tops as well as bottoms in a trend. It can also be used to identify a build or slowing of momentum in a market.
With a Forex Calendar, a variety of economic indicators are used.
These include Industrial production, Producer price index (indicator for overall demand in the industry and pricing capabilities of companies), Consumer Credit Report, Employment reports, Jobless Claims, Factory Orders, Retail Data, Trade Balance and many more.
Well, to fundamental analysis traders who depend on every news piece to make their trading decisions, it does really matter.
For those who use technical analysis, it somehow matters because it influences our trading decision in the form of price action. Why?
Because price action is basically the response of the market in relation to the data found in the Forex Calendar. Price Action shows us what traders think and what they are likely to do next.
As most traders embark on their journey to become professional traders, they use a lot of technical analysis to trade the market. But their results are not really as good at the end of the day. Later on, they have come to figure out some of the reasons why they were losing money.
So, those points answer very clearly why technical traders should always have a Forex Calendar handy even though most information that we need is right there in the market, since we only trade what we see based on how we interpret market information.
A Forex Calendar tells us what the market will do next based on a particular news release at the time. This vital information can make you a more effective technical analysis trader.
What do you think? Would you rather stick to technical analysis only or trade with fundamental analysis only?
I would really like to know! Feel free to share your opinion with me in the comment section below! I'm waiting to read and respond to them.