The Forex Factory economic calendar is one of the most valuable tools available to forex traders. Tracking high impact news events and economic data releases can help you identify potential trading opportunities and avoid risky situations. This comprehensive guide will explain everything you need to know to effectively utilize the Forex Factory calendar in your trading strategy.
Introduction to the Forex Factory Calendar
The Forex Factory Calendar is a real-time calendar available online at www.forexfactory.com that provides traders with a detailed schedule of upcoming news announcements, economic data releases, central bank meetings, and other market-moving events. It covers economic events for dozens of countries worldwide.
Some key features of the Forex Factory Calendar include:
- Hundreds of important economic events from around the world displayed on an easy-to-read calendar.
- Color-coded event ratings indicating low, medium, and high impact.
- Filtering options to customize the calendar for specific currencies, impacts, and countries.
- Links to forecasts, historical data, and detailed event descriptions.
- Configurable email and browser alerts for upcoming events.
- Options for integration with MT4/MT5 trading platforms.
- Mobile-friendly responsive design.
The significance of the calendar is that many of these economic events and data releases directly influence the volatility and price movement of currency pairs traded on the forex market. By being aware of the timing of these events, traders can plan accordingly.
The Forex Factory calendar is free to use and suitable for all forex traders regardless of experience level. Learning to incorporate it effectively into a trading strategy can give traders an added edge in the market.
Why the Forex Factory Calendar Is Important for Traders
There are several key reasons why staying informed about events on the Forex Factory Calendar is crucial for forex traders:
- Predict volatility – During major economic news events, liquidity and volatility typically increase substantially for short periods of time. Being aware of these events allows you to predict volatility spikes.
- Understand price action – Fundamental news directly impacts currency rates. Economic data gives insight into whether prices are likely to rise or fall.
- Plan your trading – By timing your trading around news events appropriately, you can avoid risky periods and exploit potential opportunities.
- Context for analysis – Keeping up with economic trends provides greater context for technical and price analysis on the charts.
- Gain trading edge – With an economic calendar, you’ll have an informational trading edge over market participants who are unaware of upcoming events.
- Stay informed – The calendar condenses complex global economic news into an easy-to-use schedule for traders.
Without the context provided by a resource like the Forex Factory Calendar, it can be very difficult to anticipate and react appropriately to volatility caused by impactful economic events.
How to Read and Filter the Forex Factory Calendar
The Forex Factory Calendar can appear overwhelming at first, with so many events and data releases across different countries packed into one view. Let’s break down how to interpret the most important elements:
Color Coding
Each economic event is assigned a color indicating its expected impact on the market:
- Red – High Impact – These are major events that consistently produce above-average volatility and the biggest price movements.
- Orange – Medium Impact – These events are also significant and create heightened volatility but to a lesser extent than red events.
- Yellow – Low Impact – These events have the least effect on currency rates but are included for completeness.
Symbols
Special symbols are used to convey extra details about some events:
- Asterisk (*) – Event has official forecast data available
- Triangle (Δ) – Event’s specific release time is still tentative
Filtering
Using the filter options at the top of the calendar, you can customize the view to only show:
- Specific currencies
- High, medium or low impact events
- Events from particular countries or geographical regions
- Events for a certain time period (last day, week, month etc.)
Creating filters lets you focus only on the most relevant events for your trading.
Details and Links
Clicking on any event brings up detailed descriptions including historical data, forecasts, and linked source articles. Having these extra details only a click away makes understanding and analyzing events easier.
With the basics covered, you’re ready to harness the calendar for your trading!
How Economic News Impacts Forex Prices
Before using the economic calendar for trading, it’s crucial to understand how major news events actually influence currency rates and volatility.
At a high level, the forex market is primarily driven by the dynamics of supply and demand. Currency rates fluctuate based on macroeconomic factors that affect the relative value and demand for currencies. Some of the key fundamentals include:
- Interest rates – Central bank rates impact inflation and the appeal of holding currencies.
- Economic growth – GDP, jobs reports, production indicate growth and demand.
- Inflation – Rising consumer prices can lower real yields and purchasing power.
- Trade/Current Account – Export/import activity shows international demand for currencies.
- Government policy – Fiscal policy, regulations, and geopolitics influence markets.
- Sentiment – Investor risk appetite and expectations also drive currency demand.
Major news events, data releases, and policy announcements directly impact these underlying fundamentals. As the perception of the relative strength of a currency changes, its value will rise or fall accordingly.
For example, strong GDP indicates increasing economic activity, boosting the underlying value of that country’s currency. However, dovish central bank policy reduces interest rates, making a currency less appealing.
Understanding how news ties into fundamental drivers of forex price action is key for trading the news successfully.
Implementing the Economic Calendar in Your Trading Plan
With a grasp on why the calendar matters, let’s go over some strategies to integrate it into your trading effectively:
1. Identify Impactful Events for Selected Currency Pairs
Analyze which high and medium impact events are most relevant for the currencies and pairs you trade regularly. For example, forex traders focused on the major pairs (EUR/USD, GBP/USD etc.) will be most concerned with Eurozone and US news.
2. Set Alerts on MT4/MT5 Platforms
Make sure to enable visual and audio alerts for upcoming events on whatever trading platform you use, whether MT4, MT5, or proprietary broker platforms. This prevents you from missing news.
3. Plan Entry and Exit Points Around Events
Avoid entering new positions just prior to big news announcements where volatility often surges. Likewise, consider exiting positions temporarily to avoid being caught in volatile reactions during events.
4. Follow Up with Post-Event Analysis
Analyze how your trading pairs reacted after major economic events. Compare price action to your expectations based on the data. Review this feedback regularly to refine your strategies.
5. Keep Up With the News Outside Your Trading Hours
Don’t neglect events outside of when you actively trade, such as late night or early morning news. Being informed on all major developments provides key context.
6. Maintain a Trading Journal
Logging how events impacted your trading each day will help you continue improving your economic news trading approach. Identify what worked and what didn’t.
Making the most of the economic calendar takes some effort but can really pay off by boosting your market analysis skills.
Key Global Economic Events and Data Releases
Now let’s run through some of the most impactful economic data releases, events, and meetings from major economies around the world. These are the critical events to watch on the calendar:
United States Key Events
As the world’s largest economy, U.S. economic news events can create volatility across all currency markets globally.
- Interest Rate Decisions – The Federal Open Market Committee’s (FOMC) interest rate decisions and statements directly impact USD rates.
- Non-Farm Payrolls – The NFP monthly jobs report is a crucial labor market indicator. Strong job growth supports the USD.
- GDP – Quarterly GDP figures measure broad economic expansion or contraction. Accelerating growth lifts the USD.
- CPI Inflation – The inflation rate as measured by the Consumer Price Index influences Fed policy and real yields.
- Retails Sales – Monthly retail sales data shows strength of consumer spending, a key growth driver.
- ISM Manufacturing – This index of manufacturing activity signals industrial economic health. Readings above 50 indicate sector expansion.
- FOMC Member Speeches – Remarks by Fed members often impact rate hike expectations and USD.
Eurozone Key Events
As home to the EUR, the second most traded currency, Eurozone developments are critical for forex.
- ECB Interest Rate Decisions – Directly impacts short term EUR borrowing costs and rates.
- Flash GDP and CPI – Early estimates of Eurozone-wide GDP and inflation data which moves the EUR.
- ZEW Economic Sentiment – Reflects institutional investor outlook on the Eurozone economy as a whole.
- Ifo Business Climate – Sentiment index based on German business surveys indicates Eurozone growth.
- ECB President Speeches – Mario Draghi’s speeches could impact EUR depending on tone about monetary policy.
United Kingdom Key Events
Despite Brexit uncertainty, the British economy and GBP remain enormously influential on forex markets.
- BOE Interest Rate Decisions – Directly impact borrowing costs and demand for GBP. Hawkish BOE supports GBP.
- GDP – Overall gauge of U.K. economic growth or contraction. Rising GDP boosts GBP.
- CPI – Inflation rate helps determine BOE monetary policy. High inflation may boost GBP.
- PMI Data – Purchasing Manager Indexes for manufacturing, construction and services sectors. Shows sector strength.
- BOE Governor Speeches – Mark Carney’s speeches reflect views on monetary policy and often moves GBP.
- Brexit Updates – Major developments impacting Brexit may move the GBP dramatically.
Japan Key Events
As Asia’s largest economy, JPY fluctuates on Japan’s economic data even with negative rates.
- BOJ Interest Rate Decision – Central bank rate decisions affect JPY borrowing costs, demand, and forex rates.
- GDP – Overall gauge of economic growth. Accelerating growth and inflation may lift weak JPY.
- PMI – Manufacturing index similar to ISM. Shows industrial/manufacturing sector health.
- Household Spending – Consumer spending data indicates strength of retail economy.
- Tankan Large Manufacturers Index – BOJ business outlook survey signals future industrial growth.
- BOJ Governor Speeches – Kuroda’s remarks on monetary stimulus move the JPY. Dovishness weakens it.
Australia Key Events
Australia’s commodity exports and high rates make it and the AUD a forex market fixture.
- RBA Interest Rate Decisions – Directly impact borrowing costs and demand for the interest rate sensitive AUD.
- CPI Inflation – Rising consumer prices may prompt the RBA to adopt hawkish policy, boosting AUD.
- Employment Data – Key labor market indicators including full time job change and the unemployment rate.
- GDP – Quarterly economic growth figures impact interest rate and AUD outlook.
- Trade Balance – Key export/import data for the commodity driven economy. Surpluses boost AUD.
- RBA Governor Speeches – Insight into monetary policy shifting AUD on rate outlook.
Canada Key Events
Despite proximity and trade with the U.S., Canada’s economy and CAD have unique drivers.
- BOC Interest Rate Decision – Directly impacts CAD rates and monetary policy expectations. Hawkishness boosts CAD.
- GDP – Measure of economic growth. Rising GDP inflates CAD value.
- CPI Inflation – Core inflation rate used by BOC in rate decisions. High inflation may lift CAD.
- Retail Sales – Key data on strength of Canada’s consumption/consumer economy.
- Employment Change – Monthly jobs data indicating labor market and economic health.
- BOC Governor Speeches – Poloz’s tone indicates rate policy outlook impacting CAD.
This covers some of the most essential events worldwide to follow. Tailor it to your specific traded pairs and strategies.
Trading Based on Economic News and Data
Once you know when impactful events are scheduled, the next key skill is actually trading around the news successfully. Here are some approaches:
Fading the News
This strategy involves fading the initial volatility spike on a data release by entering a position counter to the directional market reaction. The goal is to profit when rates revert back or resume the overall pre-news trend.
For example, strong positive data briefly lifts EUR/USD before profit taking sends it lower again. Traders would look to sell EUR/USD on the rise caused by the bullish data.
Trading the Trend
This approach means opening positions after data or news in the overall direction of the post-release price movement and trend. Traders aim to profit from events accelerating existing currency trends.
For instance, poor U.K. jobs data reinforces a bearish GBP trend, so traders would look to sell GBP/USD after the downside data reaction.
Range Trading
For major news events like interest rate decisions, volatility and pip movement often surge. Range traders take advantage by selling resistance and buying support through the volatile gyrations.
Positions Around Events
When major news is upcoming, traders watch for directional signals on lower timeframe charts to indicate possible post-news reactions. Positions are opened just before or after the release.
Scalping the News
For very active traders, big news events with guaranteed volatility provide short term scalping opportunities. By riding the small up/down oscillations, quick profits can accumulate.
The best approach depends on your personal trading style and strategy. Adjust your risk management accordingly for volatile news periods.
Best Practices for Trading News and Data
When incorporating economic events into your trading plan, keep these essential tips in mind:
- Check for consensus forecasts – Know what the market is already expecting for a data release when deciding how to trade it.
- Understand preceding trends – Put data into context of the pre-existing price action on daily or 4 hour charts.
- Manage risk carefully – Use stop losses and reduce position sizing for pending news periods.
- Remember revisions – Data like GDP and employment can be revised in following months, shifting sentiment.
- Watch for fakeouts – Volatility from data can produce brief price spikes that reverse, trapping traders.
- Stay patient – Wait for opportune signals confirming a durable post-news directional move.
- Mind the charts – React to the technical price reaction on your charts, not strictly the economic data figure.
- Consider correlations – Related currency pairs often move synchronically on big news.
Proper preparation and execution when trading around high impact economic news can prove very rewarding.
Adjusting Strategies for Different News Scenarios
Your approach should also adapt based on characteristics like these:
Surprise Event Outcomes
If data or an event result diverges drastically from market expectations, it will induce especially volatile, aggressive reactions as positions get re-priced. These surges create ample trading opportunities.
Uncertainty Around Events
Releases happening amidst broader economic uncertainty can spark greater volatility as markets lack clarity. For example, ECB rate decisions during periods of ambiguous growth.
Low Liquidity Periods
Lighter liquidity and thinner markets during off hours amplify the reaction to economic news. Volatility increases when ranges expand in low volume conditions.
Closely Followed Events
Well-publicized events like monthly U.S. jobs reports or FOMC meetings provoke forceful reactions as huge numbers of traders act simultaneously.
Diverging Data Points
Conflicting or contradictory numbers from separate reports frustrate clear interpretations and produce choppy volatility.
Fine-tune your approach based on shifting market dynamics surrounding economic data events.
Common Forex Calendar Myths and Missteps
There are also some common mistakes traders make when incorporating economic data:
- Trading all releases equally – In reality, only a handful of high impact events per week matter. Don’t overtrade minor events.
- No game plan – Have a specific trading strategy tailored to different types of news events. Don’t just randomly react.
- No stop loss – Always use stops in volatile news conditions. Don’t leave yourself exposed without risk controls in place.
- Not checking forecasts – Know what baseline expectations are already priced in before a data release.
- Getting emotional – Don’t impose your own bias or panic. Trade based on your plan’s technical signals.
- Overtrading – Major news generates ample volatility for flexible traders. No need to trade small movements.
- Ignoring revisions – Don’t assume initial economic figures won’t be revised later. Update your analysis accordingly.
Avoiding these pitfalls will streamline your process for successfully trading economic news events.
Alternative Trading Strategies Without Economic Data
For traders who want to avoid directly trading around economic news events and data, alternatives do exist:
- Technical analysis – Analyze price action and chart patterns without regard to fundamentals.
- Quantitative/algorithmic – Program rules-based technical trading systems based purely on price dynamics.
- Order flow analysis – Focus on interpreting the market activity and transactions in the order book rather than news.
- Sentiment analysis – Gauge positioning and biases of other market participants using commitment of traders data and volatility indicators.
- Correlation trading – Exploit correlations between currency pairs and other asset classes rather than economic factors.
- Carry trading – Earn interest rate differentials between currency.
Useful Features of the Forex Factory Calendar
Beyond just displaying economic events, the Forex Factory Calendar interface provides several useful features for traders:
Email and Push Alerts
You can configure custom email and push notification alerts through Forex Factory to be informed of upcoming key events. This prevents you from missing the most important releases. Browser pop-up alerts are also available.
Pre-Set Filters
Pre-configured filters for highlighting major global economic regions like “United States”, “Eurozone”, and “United Kingdom” make isolating relevant events simple.
Impact Graph
A graphical timeline shows the number of low, medium and high impact events by day over the next 5 days. This visual representation makes it easy to identify busy news periods.
Copy and Export Events
Traders can download .ics calendar files or copy events to services like Google Calendar for viewing the Forex Factory schedule outside of the website.
Related Link Compilation
Relevant articles, charts, forecasts and historical data for economic releases are aggregated and linked to right on their calendar event pages.
Mobile Accessibility
The Forex Factory calendar site uses responsive design ideal for accessing on mobile browsers and while on-the-go. All functionality remains the same.
MT4/MT5 Integration
The calendar can be directly integrated with the popular MetaTrader trading platforms using addons like the Forex Factory calendar indicator for MT4/MT5.
These handy features enhance the calendar’s capabilities and convenience for forex traders.
Using the Forex Factory Event Page Details
Clicking into any economic event on the calendar opens an informational event page with additional details like:
- Historical data on past releases
- Forecasted consensus figures
- Impact analysis and trading considerations
- Related chart visualizations
- Relevant articles and links
Checking the event pages provides necessary context and preparations for trading the news. Make sure to routinely analyze this extra data.
For example, reading opinions and forecasts prepares you for how markets may initially react based on whether the data beats, matches, or misses expectations. Past volatility and impacts also give clues about how aggressively to trade the upcoming release.
Never trade economic news blindly. The comprehensive event pages allow you to make informed decisions.
Integrating the Calendar Into Your Existing Trading Plan
While the economic calendar should influence your trading, don’t completely overhaul your strategy or abandon technicals to become a pure fundamental trader.
Instead, integrate the calendar as an enhancement:
- Consult it for additional trade context and planning.
- Use it to time entries and exits around volatility spikes.
- Incorporate news reaction signals into technical analysis.
- Let it identify prime opportunities aligned with your trading style.
View fundamentals as an added edge that complements your existing technical process. The calendar provides critical context, but price action should remain the priority.
Finding the optimal balance leads to substantial trading success. Don’t neglect either technicals or fundamentals.
Forex Factory Calendar vs. Alternative Calendars
Aside from Forex Factory, traders can find economic calendars on most major forex broker websites, platforms like Bloomberg or Thomson Reuters Eikon, as well as specialized sites like DailyFX, BabyPips, and Investing.com.
However, the Forex Factory Calendar has some advantages over most alternatives:
- Completely web-based making it more accessible. Don’t need to download proprietary software.
- Offers numerous pre-configured filters to easily isolate relevant events.
- User-friendly and intuitive interactive interface design. Easy to learn for beginners.
- Helpful accompanying event details pages with charts, analysis, forecasts, historical data etc.
- Integrates with MT4/MT5 using addons like the Forex Factory calendar indicator.
- Covers all major economic news globally including more obscure releases. Very comprehensive.
- Free to use with no paywalls restricting access.
While many economic calendars share basic functionality, Forex Factory stands out for its breadth of coverage, customization options, interconnectedness, and simplicity of use.
Ensuring You Don’t Miss Key Events
With hundreds of important economic events each week, making sure you catch major ones for your currency pairs is essential. Here are some tips:
- Check the calendar daily and set alerts for the week ahead.
- Enable email and browser notifications so releases get pushed to you.
- Follow key economic/central bank accounts on social media for announcements.
- Pre-schedule when you’ll review the calendar, such as Sunday evenings.
- Consult the calendar first thing each morning before starting to trade.
- Code the calendar into custom MT4 indicators or Expert Advisors to automate alerts.
- Maintain an organized spreadsheet or journal of impactful events.
Catching every major data release or event is unrealistic. Just ensure you capture the 2-3 most important ones for your pairs and strategy each trading session.
How to Use the Forex Factory Calendar on Mobile Devices
The Forex Factory Calendar functions fluidly on all mobile browsers and devices without any special mobile trading apps required.
Navigating the calendar itself remains simple using standard touch gestures. Key tips for mobile:
- Add a web app icon to your home screen for one tap access.
- Enable push notifications in your device settings to get alerts.
- Pre-set specific filters you can quickly toggle between.
- Use landscape mode for a larger calendar view and text size.
- Test different mobile browsers (Safari, Chrome, Samsung etc.) for performance.
- Ensure your device time zone matches the calendar.
Mobile optimization makes staying updated with the economic calendar on-the-go easy. You’ll never miss a major event.
Common Questions About the Forex Factory Calendar
Should beginners start trading the news immediately?
Beginners should gain experience with technical trading first. Trading news requires understanding fundamentals. Start following the calendar to learn, and add news trading later once skilled.
How many news events should I trade each week?
1-5 of the highest impact events for your currency pairs is ideal. Overtrading causes fatigue. Be selective.
When is the optimal time to enter trades around news releases?
5-10 minutes before/after events typically sees the most volatile reactions offering the best trade entries.
Is trading news helpful for scalpers?
Yes, volatility from news creates perfect short term trading opportunities on smaller time frames like 1 minute or 5 minutes.
Should I avoid placing trades an hour before big news events?
Often best to exit existing trades an hour pre-news. Volatility and spreads begin increasing during this lead up period.
Can you profit trading news with binary options?
Certainly, binary options are well suited for speculative news trading. Expiry times can be aligned with events.
Be sure to learn the nuances of trading economic data over time by actively using the calendar. Pay attention to how prices react to better capitalize next time.
Conclusion
Mastering the Forex Factory Calendar is a key stepping stone to success as a forex trader. Tracking high impact economic events provides invaluable context for day to day price action and volatility. This ultimately allows you to boost analysis, spot trading opportunities, and avoid risky situations.
Some key takeaways:
- Use the calendar to identify events that may cause volatility for your currency pairs.
- Understand how news impacts fundamental drivers of forex prices like growth, policy, inflation etc.
- Have a trading gameplan tailored to different types of economic news events.
- Check the event details pages to review forecasts, historical data and analyses.
- Enable notifications so you act rapidly around news events.
- Find the right balance between technical and fundamental analysis.
While challenging at first, with the right approach, the economic calendar becomes an indispensable trading tool that pays major dividends. Keep persevering.
“If you don't find a way to make money while you sleep, you will work until you die.”
- Warren Buffett
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