What Is an economic Calendar?
An economic Calendar shows us traders a list of events and data releases that affect a countries economy and shows the performance of the economy in key areas. It provides us with the time and date that these will take place, it also shows us the forecast is – this means the market is expecting this outcome.
Its important to look at an economic calendar as a trader because it shows us if there is any likely volatility to take place in these currency pairs whilst we are in the trade.
Here’s what it looks like – this is from www.forexfactory.com – this is the economic calendar mostly used
Red highlighted data shows that a high impact is expected on the currency meaning volatility is expected to happen in this pair, normally upon the release in most cases you will see a candle of 50 pips or more. So if you are planning a trade and there is high impact data then please be careful.
Orange labelled data shows a medium impact would happen on the economy, so your likely to see a spike up or down to 50 pips, if the data is released comes in well over or under the forecast then it could go further, but its unlikely.
Yellow labelled data means a low impact – so you shouldn’t really see that much change within the market happen.
This only gives you an indication and not all data releases labelled low impact are actually low impact. Such as JPY CPI data, normally has a yellow label next to it, but it has a larger impact then that, personally I would class it as orange.