In the world of foreign currencies, one must be able to study the trend and average true range, study the resistance and support levels and of course the trading volume and more. A trader must be able to do the studies mentioned above but the most important and often overlooked is the study of daily forex economic calendar. The main goal of this area of study is to be able to understand which fiscal releases are scheduled and the possible impact such releases would have upon the proposed or actual trades.
In order to help this study, it is important to understand that this it is much of what is contained in these releases that would actually moves the forex market – employment/unemployment data, interest rate changes, GDP, retail price index, inflation, balance of payments and more.
Also, the trader must be able to understand that as each piece of fundamental information is being released, the market participants would react to such new information. As a result, the market prices become very unpredictable.
In most cases, traders tend to commit a mistake by trying to understand the information to be released. They tend to look too closely at the information itself.
There is an example of effective strategy and it is what we call as market sentiment. This will gauge how the market participants would react to the new information. A good forex economic calendar is not just about giving time and nature of the release but also the appropriate previous figures and its corresponding indications that the market would expect the next time.
The kind of forex economic calendar previously mentioned has a facility to allow the study of specific commentary for each of the releases which could be very helpful in trying to assess how strongly the market could be affected by such release. There are economic releases that could make an impact to just one currency pair while others will affect many pairs. Also, it is important for a trader to understand the inter-relationship, or the lack of it, between the different currency pairs.
If your trading is short term then that means the daily economic releases would be affected by your trading more than the case if you were going to be in a position trading however, even for people who are into position trading would remain aware of what is due to impact the market.
Now, to conclude, whatever your routine in your daily trading, ensure that it would include depth of study of a reliable forex economic calendar.