The Easiest Way To Use Economic Calendar In Trading: The Economic calendar is a calendar used by the Investors to keep track of major financial events as well as Financial indicators. The economic calendar displays the news events and also data releases which are related to financial markets. It also shows all the financial information in forms of charts outlining days, months and years.
Investors as well as traders use the economic calendar to plan investments and for making suitable adjustments to investment portfolios. A live economic calendar can indicate the information about the vital economic indicators which can impact financial markets notably. Market-moving events are listed in chronological order daily on it, allowing investors time to research and anticipate their effects.
What To Examine In An Economic Calendar?
Skilful traders examine economic events daily to predict the movement of a particular financial instrument. They consistently stay way ahead of the disclosure of momentous events and get into action instantaneously. By the time a specific announcement occurs, they will have already estimated the impact of the event.
A practical way for traders to keep track of financial information is to have an economic calendar with them. The methodical analysis of critical economic and non-economic indicators becomes possible. This kind of anticipation can help in determining the direction in which a financial market is heading. It will assist in better determining whether the market is bullish or bearish.
There are various approaches to keeping an economic calendar. The most familiar is to have an online calendar platform available. The online calendar will automatically update data and immediately present all the financial information to its user.
When reading such a calendar, a beginner will most likely spot that all the available information is in columnist form. The calendar displays categories like country, name of the indicator, period value, forecast value and value of the previous period.
What Economic Indicators Appear on the Economic Calendar?
An economic indicator is a type of statistics that discloses information about economic activity in the country or the financial market. It allows investors to evaluate the economic performance of the country and to predict future performance as well. The significant economic indicators that are there on an economic calendar are as follows:
Consumer Price Index (CPI)
It is one of the important economic indicators used to estimate inflation. It is a number to measure the price changes in a basket of goods and services.
Producer Price Index (PPI)
It is a weighted index which estimates the price changes on the producer level, eliminating imports. By measuring PPI, one will become acquainted with high-interest rates, corporate profits, consumer spending, and movement in the financial market.
Gross Domestic Product (GDP)
It is like the indicator of the country’s economic fitness. GDP illustrates the total market value of all goods and services within time. It is one of the data-intensive indicators, including the PPI, which tells a lot about a country’s economic position.
Interest rate decisions
Interest rate decisions or monetary policies are attributes as a process by which central banks control the money supply. Every country has a monetary authority which makes decisions regarding the interest rates in the country to promote economic growth.
How To Use the Economic Calendar in Trading?
The financial market also requires technical as well as analytical skills to trade and invest. Investing in the financial markets involves a lot of analysis and interpretation of data. It becomes essential that investors understand how to interpret the conditions prevailing in the market.
An economic calendar can prove to be a perfect tool in helping investors and traders to make informed decisions. It can allow them to quickly anticipate the event that can cause significant changes in the market. It will also enable them to make changes in the portfolio accordingly.
Here are the steps to use the economic calendar in trading that are as follows:
Gain Access To Economic Calendar in Trading
One can also find an economic calendar online. Many stock market platforms also provide an economic calendar. Every investor must know why and how to interpret the economic calendar.
Set Day And Date
Once the calendar opens, you will notice arrangements for yesterday, today, and the whole week. If one needs to look at previous data for comparison, then they can select the period. You can choose data for the entire week. To get the data, all that is required is to select the right period, and it will display on the calendar.
Select Timezones For Data
One can also select desired timezone from the time zone setting. All financial events and data will get displayed accordingly.
Choose The Financial Instrument
Likewise, one can make a selection of financial instruments such as forex, commodity and so on. After selecting the financial instrument, it will appear on the calendar screen. Then investors can study news related to it, to find out the impact of news on that instrument.
How To Interpret Data Present On The Economic Calendar?
On the economic calendar, one can not only find news, but they can also see volatility related to the news. Volatility level means the likelihood of a specific event to impact the financial market. Generally, an economic calendar has also a three-level scale volatility indicator.
The Volatility levels can usually be marked by the three colors- red, yellow and orange.
- Red Color– It indicates that the market observers have predicted that a particular event will move the market.
- Yellow colour– It represents that the event will have a very mild impact on the volatility of the market.
- Orange Color– It signifies that the events might change in the future by comparing actual values with forecasted values.
Conclusion
For investors, an economic calendar is like a best friend. It is used by the traders to keep an eye on the market-moving event. They have a high probability of impacting a financial market. So, tracking them becomes important for Financial specialists.
The economic calendar is usually in the form of a chart showing days, weeks and months. The calendar lists market-moving events in chronological order, which also allows the investors to research them easily. Hence, by doing this, they can substantially reduce the risk of facing a financial crisis.
