There is a tool in the world of forex that should never be lacking among those daily used by traders for market operations: this is the daily and / or weekly calendar of macroeconomic and financial events.
The economic calendar is especially important in the world of forex as currencies are sensitive to changes in monetary policies, inflation, GDP, trade deficit, etc… more than any other financial asset.
But what is the information that a good economic calendar must contain to be a useful tool for a daily trading?
First of all, it should provide with great precision date and time of any macroeconomic data or event (such as meetings of central banks, G20, ECOFIN, etc…) with the relative economic affected area.
Even better it would be to have a list of dates where to find all the times and places of the press conferences or the planned interventions of the members of the major central banks.
Another element that should not be missing is a signal of sensitivity, such as a colored flag, at some economic data, to highlight what the relevant data for the currency market are. It is obvious that for a country with high inflation, the CPI is much more important respect to a country that has instead strong trade balance problems.
This signal of sensitivity will allow the trader to restrict the events on which to focus his attention.
Even the time is quite important because since the trader can not physically operate 24 hours a day, however, he will be able to know at what time it is more appropriate to work on stop loss, trailing stop, etc… For example, if a European investor has placed a long order on EurJpy and knows that the monetary policy meeting of the Bank of Japan will be held during the night, then he will be able to consider the expected (and in some cases even higher) volatility.
Therefore, this factor allows traders to define the calendar not as a technical analysis tool, but as an element capable of providing traders indications of potential volatility in the market, advising them accordingly whether to operate or not.
Aside from the data listed above, day and time, concerned economic area, sensitivity signal, the numbers of the previous releases as well as the numbers expected by the market should always be considered.
Looking at a forex calendar, we could get a very interesting daily trading support that might allow us to evaluate the reactions of the market basing on data that have been released; usually, the market reacts negatively to worst data respect to expectations, and positively vice versa.
Even a simple forex calendar can then be an element of fundamental knowledge for the trader who wants to earn on the forex market; the research of forex calendar, could be a long and laborious process, but when the trader finds a model that meets his expectations, then he will automatically get every day an exceptional and punctual trading companion, reliable and complete.