When a currency trader determines tactics and strategy, he uses two types of analysis: technical and fundamental.
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I have always considered fundamental analysis the most important. It, in turn, is based on tracking and using economic news that can affect currency quotes.
With the advent of the economic news calendar, which began to appear on the sites of dealing centers, traders of the Forex market received a convenient tool. It helps to determine what number and when the news came out, and use their meaning as quickly as possible. In fact, an econic calendar is an interactive table containing data on the exact time of publication of significant macroeconomic news. It is updated in online mode, which allows the trader to always be aware of the latest developments.
As a rule, the economic calendar is made for a working week, that is, from Monday to Friday. The indicators of the next week are usually published on Fridays. Thanks to this schedule, a trader can think about how to trade next week, taking into account the information received. The calendar publishes news for different periods of time: month, year, quarter.
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Than this period is longer, the greater the importance of the news on the market. At first, only the previous indicators and macroeconomic forecasts for the future are reflected in the calendar. Then, when the news comes out officially, the actual value also appears. At this point, currency quotes change fastest. A high level of volatility of quotations can be observed during the speeches of the heads of the Central Banks or their meetings.
These events are always reflected in the economic calendar. I must say that not only economic news has an impact on the market. An important role is played by the psychological factor.
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The fact is that millions of traders from around the world use the economic calendar. Among them there are market makers - these are players who have large sums.
Of course, they are aware of how the market can react to this or that news. As a result, a huge number of orders will open in the same direction, although the news itself is not so significant. Almost all the indicators specified in the economic calendar, to one degree or another affect the market. For example, with the growth of GDP in the country will grow and currency quotations, and with the growth of inflation or the unemployment rate, the currency begins to depreciate.
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But some news may have a different impact on the market. Focus only on the red ones. These are the ones that will make prices travel. When trading, everything is about the interest rate. Namely, what the central bank will do next time it meets to set the monetary policy. These meetings have different names in different countries. Central banks meet regularly to set the monetary policy for the period ahead. Any economic news or piece of economic data in between these dates, allow for traders to have an educated guess about what the central bank will do next.
After the main central bank's meetings are identified, traders focus on the red events. These economic news show how an economy changed between two central banks meetings. The economic calendar gives the time when the news is released this is very important because trading algorithms are responsible for the huge spikes right at the top or bottom of the hour , the currency it refers, and the interpretation: why the news matters, why the traders care, and so on.
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Moreover, the previous data is known in advance, together with an estimation or a forecasted value for the current data. And then the interpretation is made between how the actual differs from the forecast. For all traders, no matter the financial product traded, interpreting news is the same.
If the general tendency is bullish, the chances are that the central bank will have a hawkish tone at the next meeting. Hence, this is bullish for the currency, economy, and so on. Binary options traders must understand that the market, in general, is highly dependent on this news. We live in a time when humans follow robots in trading, as algorithmic trading dictates price action.
As such, we must look at the same things as robots do, and interpret them on their own. Binary Options Broker Binary. How to Interpret the Economic Calendar A binary options trader uses the same information when buying a call or an option, like any other trader. Find the Central Banks Meetings The economic calendar comes with a color code.