Below is the week’s economic news for Australia,Canada, Japan, European Monetary union, New Zealand, Switzerland, United Kingdom and the United States.
On the left-hand side, you will see the scheduled time (GMT) of the data releases. Then we have the event, what the actual news is, this could be many different things from minutes meetings, housing stats, speeches, unemployment rate and more.
On the right-hand side, you can see the volatility (Vol.), this is shown in Bull Heads, one Bull Head shows low volatility, then we have two Bull Head’s and this shows medium volatility given the news release. Lastly, we have three Bull Head’s, this shows us that the data released is going to be of high volatility to the market.
An economic calendar is therefore used to tell us, whether a market has any upcoming fundamental releases for a specific currency and how volatile it is predicted to be.
The importance of knowing when there is high impact news is key to avoid traps.
Let’s talk briefly about the “Traps”, we’ll use the NFP (non-farm payrolls) as an example, often the day before or even during the intra-day trading session, the market can give false signals for you to enter a trade, it could be entry criteria price action, market structure, or a combination of the lot. It will entice you to want to place a trade and the next day goes completely out of your favor, trapping your capital in a losing trade that could easily have been avoided. There is a lot of volatility created on the days of high impact news and for the conservative methods that we use to trade, it just makes more financial sense to miss out on that day and wait for the next best opportunity.
This is why it is important to know what news will be released the next day and the time of the release to avoid any silly losses to your account.