Trading With the Economic Calendar
Trading With the Economic Calendar
Most of the forex traders use a simplified economic calendar, but this can be misleading. A market is a combination of a lot of different factors that need to be considered to properly analyze the trade flow. Because of the complexity of currency trading and the difference between exchange rates, the most accurate is the economic calendar which shows the currency pair at various points in time.
The European open is the official opening of the day where all the major forex exchanges begin trading. There are three currency pairs that can be traded at this time: EUR/USD, USD/EUR and GBP/USD. The opening or closing price of these currencies are shown in the bottom of the calendar. This currency market can help you know when to enter the market or exit it and give you an idea on what price to expect in the future.
The second official currency pair of the forex market is the US dollar/Canadian dollar. The currency exchange rate between the two countries is closely watched as both nations have very different economies. A strong CAD/USD will benefit the US economy, while a strong USD/CAD will only do damage to it.
The next chart of the day is shown at the middle of the date. The level where the market opened and closed is also plotted in the bottom part of the table and there are six currency pairs that can be traded at this time.
The three main trading periods for the day market opens, closes and opens again are shown in the top part of the chart. Daily charts are also shown when the market begins and closes on the day. The duration of the currency pairs and the market swing patterns are also shown in the upper part of the chart.
For any given trading session there is always a risk to a currency pair. The combination of these factors determine how high or low the prices will move during the trading session. Some factors to consider are the news of government moves, political developments and economic events.
The economic calendar is different from the time frame when you do your research about a certain currency pair. When you study the currency market, the currency movements over a long period of time will give you a better insight of how the pair is going to perform in the future.
Forex brokers usually use a simplified calendar and will show their currencies using the simple times that correspond to a high or low price range. When a broker publishes the daily market data, it is usually in three-hour intervals with full data as of the current trading session. The reasons for the different results of these calendars can vary.
Although the economic calendar is fairly accurate, it may not give you a true picture if you do not use other methods such as historical data and past trade values. The economic calendar will only tell you the values of the currency pairs when they were opened and closed, not when they were entered and exited in the market. Forex brokers might use a more traditional chart to show the opening and closing prices, but there are some inconsistencies with the historic data as well.
The economic calendar will only show the times of day where the price of the currency pair closed at a specific level and did not open at that same price. This means that historical charts are much more useful because they allow you to focus on other important indicators, such as daily trend analysis and volatility analysis.
You need to use the economic calendar when you want to know when to buy and sell currency pairs. It is not enough to know when the pair closed at a certain price. This could lead you to a wrong choice and might only get you in trouble if you are not careful.
So how can you improve your forex strategy by using the economic calendar to your advantage? First, you can learn when to buy and sell the currency pair at the same price. This method is used for trend-following and resistance analysis.