Forex Trading Money Making | Economic calendar basics | Fundamental Analysis #1

Welcome back, traders and true believers of Forex Trading.

Welcome to the McDuck trading family.

In our last post, we talked about how you can trade Forex like a boss and make money with signals if you missed it make sure to check it!

Back when we discussed the importance of doing the research before entering the trade, we mentioned two most popular types of analysis in Forex trading. Today we are going to go more in-depth regarding the fundamental analysis, and how you can use the Economic calendar to further increase your knowledge regarding the assets you are interested in trading.

But Mr Scrooge, what is the Economic calendar?

The economic calendar refers to the scheduled dates of major releases or activities that can influence the movement of individual security prices or the entire markets. Investors and traders use the economic calendar to schedule transactions and portfolio reallocations, as well as to be alert to chart trends and indicators that may be triggered or influenced by these events.

Great, where do I find it?

There are many websites that you can use, such as this one (Investing.com), or this one (Fxstreet.com), and this one (Forexfactory.com).

For the purpose of this post, we are going to be using the Forexfactory.com one, however, you may choose to use whichever you like the most.

Why is Economic calendar important?

Economic calendars typically concentrate on planned economic report releases for a given country.

Types of activities listed on an economic calendar include weekly jobless claims, new home start reports, expected interest rate or exchange rate signalling adjustments, daily announcements from the Federal Reserve or other central banks, market-specific economic sentiment polls and hundreds of other event types.

The majority of the reported events fall into one of two categories: predictions of potential political or economic events, or reports of recent economic or financial events.

Traders and investors are dependent on the economic calendar to provide them with knowledge and opportunities to trade. Traders often time moving into or out of positions to sync up with an announcement of some event or with the high amount of trading that often precedes a scheduled notice.

It can be particularly beneficial for a trader who wants to take a short position following the economic calendar. If the trader makes a good assumption regarding the significance of the announcement, he will open the position immediately before the announcement is scheduled and then close it within hours of the announcement.

Awesome, how do I use it?

First of all, go over to the Economic calendar on the Forex Factory website. Now, check out the navigation panel segment to the left of the screen. You'll notice a few useful items inside it like:

• Today

• Tomorrow

• This Week

• This Month
  

• Up Next

• Next Week Next Month
  

• Last Week

• Last Month

• Yesterday

Clicking on those links will give you the news updates, or the news schedule for the desired time frame.

You can see information about currency pairs in the currency column which will be influenced by the publication of specific forex information. Let us say, for example, that the UK has decided to announce interest rates. That means that it will affect both GBP and the currency pairs that are connected to it.

The influence column addresses the potential effect of forex news on a given currency and its pairs. Here are the four common colours:

• Red means there will be a strong impact due to highly anticipated forex reports.

• Brown suggests there'll be a medium effect depending on the future forex reports.

• Yellow means that the coming forex news will have very little impact.

• Grey's used to point out bank holidays. And thus the currency most certainly would have a small volume of trading that day

The Detail column shows an icon of a yellow folder. You'll get a section displayed by selecting that icon that contains more information about a particular event. You may use this function to gain more information on topics such as:

• What the forex case tells us

• How it could affect currency

• Source of the news

• When related news comes up

• The history of both the actuals and forecasts

The actual column displays current statistics that have recently been published or updated.

You should note the column of forecast after the actual column. That column shows what people predicted before the news got out. You will see whether those assumptions were accurate or wrong, and that's determined by the "actual" figure details seen in the column itself.

Understanding both the forecast and the actual columns is crucial. Most traders examine and analyze the differences between those two columns.

For example, let 's assume analysts forecast that Australia's Reserve Bank would lower the interest rate from two-and-a-half percent to two percent within the month because that prediction has been made, traders will make trading decisions or change their AUD-involving strategies when the actual figure is published.

The next post in the Fundamental Analysis series will cover more information and techniques for Economic calendar.

That is everything for today, feel free to check out the video below on this topic, stay safe and I will see you soon with more tips and tricks, trading signals and guidelines for Forex trading! Very soon we are going to be reviewing a renowned trading signals provider called Tools Trades, so make sure you don't miss that one.

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