As a technical trader you may logically assume that you don’t need to know about scheduled economic news announcements. After all they impact the fundamental view of a currency at a moment in time, sparking the whole fundamental versus technical trader debate.
Some announcements can really rock the boat with price and you can almost foretell in your crystal ball which announcements they may be. Wow, there’s an advantage right there! Knowing something in advance. Well we don’t know which way the news release will go, good or bad, but we do know price is likely to react and move rapidly rocking your world.
Forex Tip: The US non-farm payrolls employment announcement, commonly referred to as NFP, occurs on the 1st Friday of the month. That’s the most volatile announcement of the month and has the largest immediate impact on price. If you choose to trade through NFP at all, trade with caution because of potential slippage and gaps in price.
A trader that doesn’t pay any attention to scheduled economic news announcements is like a person who walks on the road with the cars going past them from behind. The person who considers the announcements in advance is the person that walks on the road facing towards the oncoming cars, where they can see the danger approaching. The person not paying attention to the cars coming is far more likely to be flattened and worse, dead. That’s the statistics and it’s the same for trading blind. Don’t lose your trading account through ignorance.
In system development I suggest you consider economic news announcements and make a conscious informed decision about the risks associated with the particular announcement. Decide whether you’ll trade during its release and if so, how you will do so.
If you’re a technical trader, you may not take any action as a result of the scheduled news announcements and that’s ok. Make the choice from an informed and considered position. Consider the risk and decide whether and how you’ll take it.
“I’m always thinking about losing money as opposed to making money. Don’t focus on making money, focus on protecting what you have” – Paul Tudor Jones.
How To Set Up And Use The Forex Factory Calendar
Here I’ll show you how to use the Forex Factory Calendar. It’s a free resource used by many forex traders.
Step 1: Open the Forex Factory Website
Type into the web browser www.forexfactory.com. This will take you to the home page of the Forex Factory website.
Step 2: Select the Forex Factory Calendar
Select “Calendar” on the main toolbar near the top.
Step 3: Check the Current Time
Check the time displayed at the top left of the web page equals your actual local time.
Step 4: To Correct The Time
If the time is wrong, click on the time displayed next to “Login” at the top of the website. It takes you to the time settings section that looks like this:
On the time settings section:
- Select the location that is the same as you. For example, for me it should be “Auckland, New Zealand”.
- Select whether you’re in daylight savings or not.
- Press “Save Changes”.
- Click “Calendar” to return back to the calendar. It should now be displaying your correct time. Check it at the top left of the web page.
Step 5: Select The Display (Filter) Settings
Click on “Filter” in the top right hand side of the web page.
This brings up a menu where you can choose the settings for which announcements are displayed.
Red – high impact (expected to move price on their release. I pay attention to these announcements.)
Orange and Yellow – medium and low impact (not likely to significantly impact price.)
White – Displays non-economic events such as bank holidays (I like to display bank holidays.)
Forex Tip: Bank holidays are usually accompanied with lower liquidity and smaller moves on the currency pairs directly affected by a bank holiday.
Select which currencies you want to display.
All currencies are impacted by major global events. I recommend that you display all currencies. Any major economic news event can impact risk sentiment and whether risk is on or off in the world. We’re all globally connected.
Forex Note: CNY stands for China. It can have a significant impact on the AUD and to a lesser extent NZD. CNY has a significant impact on the AUD because it’s a major driver of demand for Australia’s natural mineral resources, which has a strong influence on Australia’s economy.
Keep all “Event Types” selected. You’ll want to know about all high impact announcements regardless of their type.
Click “Apply Filter”.
Step 6: Select The Period You Want To Display
On the top of the left hand sidebar is a “navigation” area where you can select the period of the announcements that you want to display.
I personally like to display the current week. I like to look ahead and plan my week. Having a weekly view gives me a good idea of what’s on the horizon for the week ahead. The choice is yours.
Step 7: Save The Website to Bookmarks
Bookmark the website so the settings are saved next time you visit the Forex Factory Calendar via the bookmark link.
Orientation Of The Forex Factory Calendar
Actual Results are Updated
On the right hand side there are columns for “Actual”, “Forecast” and “Previous”. The actual results and any update to the previous result are updated shortly after the release of the announcement. It’s shown in green if it’s regarded as good news and red for bad news.
You may experience delays if the website becomes overloaded around a particular news event that many traders are keenly interested in.
Looking for More Details
The “Details” column provides more information of the news event including a description and the results of the prior month announcement. Select the folder symbol to open the detail that looks like the image below.
Important Warning: Some GBP announcements are shown on the summary as occurring at :30 (half past) when infact they will be released to Thomson Reuters at :28, two minutes earlier. The price will be impacted at the earlier time. Here’s an example showing where to look:
Meaning of the Symbols
In the left sidebar there’s a “legend section” where the meaning of each of the symbols are shown.
Central Bank Rates
At the bottom of the left sidebar the government cash rates are shown for each of the currencies. This can be a handy resource for considering when you’ll likely pay or receive interest at the US roll over. You receive interest on the currency you’ve bought and pay interest on the currency you’ve sold, less a margin that the broker has added for their share.
A Final Word
Be aware of scheduled economic news announcements; make a conscious decision on how you’ll handle the risks and trade looking forward towards the oncoming traffic.
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About the Author: I’m Rachel Hunter, TraderRach, a Forex Trader who helps traders achieve the life they love with forex. Be strategic and design your trading business for sustainable success and have fun! That’s my mission. Join many traders’ gaining the edge with “10 Powerful Lessons for Forex Trading Success” plus other goodies. Years of precious learning specially packaged up for you. My background before trading is as a Chartered Accountant and Chief Financial Officer. I know what it takes to make a trading business rock on. It would give me great pleasure to make a difference to your success.