How to Read the Economic Calendar?

How to Read the Economic Calendar?

Information from the economic calendar

if we know what to expect of this or that statistical data, news, or statements (what kind of influence on the market crowd), the only question remaining is: where do we get the information from? The information is provided by economic calendars. The economic calendar is some sort of a schedule of news, statistics, and events, topical for the international market. Even those who work by the tech analysis, keep an eye on the calendar because at the publication of important news, surges in volatility may take place, and many traders prefer to remain out of the market at such times.

  • the origin of the news (flags of countries are used);
  • the text of certain news: for example, a speech of the head of a Central bank, the decision on some interest rate, or some economic statistics;
  • previous statistical data;
  • the importance of the publication.
Economic Calendar
Economic Calendar

How to work with the economic calendar?

To work efficiently, you need to check the calendar not for the current day only but also for the upcoming days. Traders prefer to prepare for certain events in advance. Such an event might be a meeting of a Central bank where a decision on the interest rate will be made. The market may react emotionally even if the interest rate remains without changes. However, in certain cases, the market plays on the news beforehand, on expectations, hence, at the publication, there will be no special volatility. Anyway, such events are worth paying attention to.

Nonfarm Payrolls, and how to use them

One of the most important pieces of macrostatistics that can influence a currency pair in the short and medium run is the Nonfarm Payrolls. They demonstrate the number of new workplaces in all sectors of the economy apart from the agricultural sector.

EUR/USD — NonFarm Payrolls
EUR/USD — NonFarm Payrolls

An example of working by the NFP

Here is an example of entering a long position by one of the strategies based on the NFP:

  • Enter after a 5-minute candlestick with a large body and small shadows form right after the publication of the NFP;
  • The Profit/Loss rate must be 1:1 at least;
  • The aim is the nearest important local high;
  • Bring the SL to the entry level and close a half of the volume of the open trade at the moment when the price reaches the target level.

Summary

The analysis of information is a complicated process that requires not only considering final digits but also studying the whole report in all the sectors of the economy. Only after that, a trader may make good guesses of the reaction of market players.

RoboForex is a brokerage company, which provides traders, who work on financial markets, with access to its proprietary trading platforms.