Based on the value of foreign currency traded, Forex trading is one of the largest…
Foreign exchange trading is more often than not based on assumptions determined by a volume of data. It is possible to predict the future by the use of historical forex information, however, care should be taken when this is done. The volatility of this financial market makes it difficult to predict the future. You should consider using a foreign exchange calendar to provide you with an edge when you predict trends.
One of the economic events that is currently affecting forex rates is the rate of unemployment. News releases on this and other economic factors that affect financial markets are constantly being made available. Some of the other events that you should be aware of for effective trading are non-farm payrolls, interest rates and consumer price indices.
Be Aware When Trading
Your trading method is an important factor, but it is also important that you keep up to date with current events and future events that will have an effect on your trading options. If you are not aware of the latest economic trends, you may be unaware of adjustments that may be necessary to improve your strategy. The use of technical analysis methods is highly dependent upon the current trends and global events.
Although you may be making consistent profits with your current strategy, if you ignore potential risky events, you could be putting your money at risk. The use of a calendar will allow you the opportunity to access readily available information which you can prepare for. This will help you avoid any sudden changes that could potentially turn the tide against you.
The calendar is used to keep up to date about major announcements released by different countries across the globe. If you are aware that an announcement is pending, it is best not to trade. The best method is to abstain from trading for at least two or three hours before you expect an economic data release for your trading currency pairs. For example, if you are trading GBP/USD and you are aware of an impending event such as interest rate announcements, you should refrain from trading before it is released. This will aid you in avoiding the major slides that often take place when the announcement is finally released.
Currencies generally experience a huge swing just before these major announcements. Once the market settles down, the trend will be reversed. You do not want to get caught up in these fake signals as it might cause panic. It is advisable to check the signals once the market has had time to settle which should be about half an hour after the event.
When you use a foreign exchange calendar, you will be able to mark the events that you feel are relevant to your trading pattern. You will have the opportunity to highlight the main announcements linked to your trading pairs. Many of the websites where you are able to access the calendar have tutorials on how to effectively use the calendar. They also indicate when you should make your trades and explain how the economic announcements may affect your trades.