When trading in an unpredictable environment, any tool that can bring some form of order can seem like a “holy grail”. But since no one has tread in this realm to claim the grail for themselves, the rest of us remain with only tools that we can utilize to assist and guide our trading entries. The economic calendar, more than just your everyday schedule system, lists all of the information that are scheduled to be announced by every global economic power – think of it as the secretary to every trader.
There are many factors that play a role in the fluctuation of the market prices each day, and traders take aim to analyze all of these economic events in order to forecast where the future prices will be. Staying ahead of the game is crucial towards being profitable, and without any view of what is to come, trading would simply be another gambling recreation that has no winners. As we delve further into what the economic calendar is, we’ll also share an example of what it provides and how this information can take part in the trading choices made by investors of all kinds.
What is an Economic Calendar?
Instead of boring you with a plethora of words, a simple example should suffice. To help paint the picture of what an economic calendar is, let’s assume that it’s the first week of March and the United States Department of Labor is about to present the Non-farm Payroll. The number that will be released represents the total number of people that are on the payrolls of business that are non-agricultural. The after-effects that this news release are quite volatile and can cause a huge change in price action. The economic calendar would list these news event months prior to its occurrence, notifying the trader of what is to come. While worrying about how much risk you’d like to place in each trade, factoring all information that you’re given, and determining the trend, you may overlook an important event and forget about. This could lead to all of your trades expiring out of the money, with a shocked expression on the investors face as they didn’t see anything coming.
Other important economic events that can be found on the economic calendar include:
- Consumer Credit Report
- Consumer Confidence Index (CCI)
- Durable Goods
- Retail Sales
- Existing Home Sales
- Gross Domestic Products Annualized
- Jobless Claim Reports
- Non-Manufacturing Report
- Trade Balance Report
Why It’s Necessary
Forecasting is the main reason that trader’s perform all kinds of feat to achieve the highest probable trade entry. Knowledge is power, and in this market, the more that is understood and allows you to become a more profitable trader. Keeping the bigger picture in mind helps to see where the highest probable trades are to come. Having a general aspect of where to expect the price movement of an asset can help to make better decisions in your trading choices.