An economic calendar is frequently used by traders to track market-moving occurrences, including central economic policy decisions and economic indicators. Market-moving occurrences, which are most typically released or announced in some form in an economic report, carry a high level of risk for traders who trade on futures exchanges. Economic reports are prepared by economists, government officials and other professionals for the sole purpose of analyzing and advising the public as to the state of the national economy. The information contained in such reports is taken into consideration by many of the market participants, including traders, short sellers, central banks and other financial institutions. As such, accurate analysis and information from economic reports are important for market traders.
The process of obtaining and interpreting an economic calendar can be made much easier using an electronic trading platform. Such a trading platform would allow the trader to see which currency pairs he should focus on trading at any given time and in what quantity. By analyzing the various economic indicators, the trader can determine which currency pair would be the best investment at a particular point in time.
Furthermore, electronic trading platforms can help traders determine their entry and exit points as well as giving them the chance to manage risks more effectively. Economic reports are released regularly, usually every 6 months or so, and each release has a range of economic data that is being analyzed and discussed. Because traders can quickly download and examine such reports, they have the ability to make informed decisions about what currency pairs to trade in based on the information contained within such reports. Electronic trading platforms make it very easy for traders to obtain and use economic calendar information and can serve as excellent reference guides as well.
In addition, obtaining and analyzing the economic calendar can help traders determine the time left before certain indicators reach their peak. Certain time periods may represent higher or lower values of certain indicators. When this is the case, traders can determine when it is likely that an indicator will hit its highest or lowest value and make appropriate moves accordingly. At the same time, by determining the time left until such indicators reach their maximum threshold, traders can determine the amount of time they need to spend on their trades. This can help them avoid situations where they overreact to changing economic conditions and consequently incur large losses.
The timing of an upcoming scheduled announcement by a central bank is also another important factor that can affect foreign exchange trading. When such an announcement is made, it is usually made at a specific time, which is known only to a very small number of people. For example, if the Central Bank of the United States makes a statement on a specific date, it will be issued to only a few bankers or other people who are directly involved with the decision-making process. On the other hand, if such an announcement is made in the middle of the trading day, there will be a wide range of people who will hear the news and react to it in different ways.
The impact of an upcoming scheduled announcement by the Central Bank is not restricted to the decision making of the banks; it can also affect foreign currency traders. In particular, traders who are taking long positions may find themselves cut off from trading opportunities when the bank’s decision comes out. Similarly, short traders may see their trading volume reduce as prices of currencies go up following the release of the economic calendar. For traders who trade in numerous currencies, a reduction in trading volume can lead to profitability being reduced.
Economic calendars can also include a special item that is usually not included in the daily newspaper. Among the most commonly included economic items are consumer price index (CPI), wholesale price index (WPI), producer price index (PPI), employment rate, inflation rate, national debt, and Gross Domestic Product (GDP). These items allow traders to become better informed about the state of the economy. For example, the Consumer Price Index (CPI) is calculated based on the cost of items received by a typical consumer. WPI reflects the situation of the cost of living that is influenced by factors such as gasoline, food, and utility costs.
Most economic calendars focus on the major indicators that have broad implications on the balance of trade. Some of these indicators may be released every month, while others come out annually. The frequency of release of these indicators can be determined by the size and number of traders in the financial markets and by the importance of the economies of the countries included in the economic calendar. For instance, if there are few traders, the release of the indicators often takes more time. Conversely, if there are large numbers of traders, the indicators are released more frequently to give them time to react to the changes that will likely occur. Determining which of the economic calendars to use is often dependent on the type of trader and the other information that are important to the trader.