Warning: Any reliance you place on the Economic Calendar is strictly at your own risk as we make no representation or warranties of its completeness or accuracy
What is an Economic Event?
The preference of central banks and other major players is towards a calm and stable market, and in this way most instruments usually act. However, sometimes events can create major waves massively impacting the financial markets.
The Importance of an Economic Calendar
Why use an economic calendar
- Traders can track occurrences of market moving events and measure their effects
- Anticipating major market events and act on their performances
- Stay abreast of crucial market movements that can affect your open trades
- Follow key economic and non-economic indicators
- Events that influence the movements of a particular currency can be closely monitored
Fundamental analysis for Economic Calendar
Before an event from the calendar takes place, the trader will study the general state of the economy, review similar past events and more. Based on those factors and others, he will try to speculate the effects the event will have on various instruments. This is the basis of fundamental analysis – predicting the market trends based the current finance situation, past patterns and volumes etc.
Some traders, usually more experienced ones, will open positions before the financial event. If such a trader speculates that the announcement will bring to a rise of the instrument’s value, he will open a buying position prior to it, in order to sell it once it will go up and take profit. Other traders, however, will linger with their trades until after the announcement as part of their risk management.
This triggers attention by traders, anticipating the announcement and trying to predict and plan trades. Once announced, traders compare the report to their speculations before the release. If the rate is better than forecasted relevant markets will experience a rise. A higher unemployed number, however, will cause most markets to decline. The non-farm payroll can affect the many other fields such as costumer consumption rate, stocks and more. This is why it is considered an event with major financial influence.
It is important to bear in mind that any trends that occur after the event is also influenced by many other factors. There is no certainty the market will react the exact same way every time, since there are many other elements that affect it.
FCS TRADE’s Economic Calendar
It would be wise for all traders, regardless of the instrument, to follow up closely the Economic Calendar. As seen in the example given, any event might affect several instruments. Trading side by side the calendar will help you understand the market and stay on top of it. Accompanied by time and practice, the calendar can improve your fundamental analysis and predictions based on upcoming financial events.
It’s time to open an account and start trading based on upcoming economic events!
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You can use the economic calendar to plan trades and future orders, as well as to be alerted about upcoming market events – including national interest rates, inflation levels, trade balances, oil and natural gas stockpiles, monthly jobs reports and more.
The economic calendar can also be accessed via the platform’s main menu.
Economic events are defined as having economic significance to the value of shares, indices, commodities and other financial instruments, and encompass any internal or external occurrence that can affect their performance (primarily, supply and demand).
An economic event can either strengthen, weaken, or have a neutral effect on the instrument or instruments it correlates to.
Foreign currency exchange rates (also known as Forex), are influenced by an array of political and economic factors relating to the difference in value of a currency or economic region, such as the euro (EUR) in relation of another country’s or economic region’s currency, such as the United States dollar (USD).
The main factors affecting currency exchange rates are the terms of trade, political stability and overall economic performance between the two countries or regions. This also refers to their economic growth (for example GDP growth rate), economic health, interest rates, inflation rates and balance of payments (i.e. exports, imports, and government debt).
The United States Non-Farm Payrolls report (NFP) is an example of a major economic event that is related to Forex. The NFP typically affects the following currency exchange rates: EUR/USD, GBP/USD, and USD/JPY.
A company’s stock price typically rises or falls according to changes in its competitive position in the market. Various factors affect the competitive position of a company, including news releases issued by, or in relation to, the company’s financial performance, as well as corporate events (dividends, earnings reports, spin-offs, rights issue, etc).
FCS Trade’s Economic Calendar allows you to filter Corporate Events by Dividends and Earnings Releases within defined and customised time frames.
A quarterly earnings report for Facebook (FB) is an example of a corporate event that affects a stock’s price.
A stock index is a weighted average (or benchmark) of prices for a selected basket of companies listed on a stock market. The value of a stock index is determined according to factors such as place of listing, type of security, market capitalisation and the weightings of constituents. Popular stock market indices from across the world include: UK 100, US-TECH 100, Japan 225 and France 40.
One of the main factors affecting an index CFD is the percentage changes in the value of a stock which forms a significant constituent of that index, and/or the average percentage change of a group of shares in a particular industry, sector or category. Investors’ overall confidence and expected economic growth of a country’s stock market may also influence the price of its indices.
Germany Services PMI is an example of an economic event that can affect the price of the Germany 30 index, as well as other shares listed on the German stock exchange.