What is an economic calendar and how to use it?
Trading in the financial market should be deliberate and justified. It is reckless to open random transactions, hoping for big profits. Professional traders rarely rely on intuition and luck, their main tools are knowledge and awareness. To keep abreast of economic, geopolitical and other news, traders use the economic calendar.
The economic calendar – is one of the most important tools of any trader. It reflects the main macroeconomic indicators that directly or indirectly affect the quotes of trading instruments:
- stocks and securities;
- currency pairs;
- of raw materials;
- precious metals;
- stock indices.
The economic calendar summary displays a variety of events. The task of the trader to study them and make a correct forecast regarding the growth/fall of the price of an asset.
Important options in the economic calendar
Each trader must be able to handle the economic calendar, otherwise, he simply will not be able to trade in plus. It is not as difficult as it seems. The first thing to do is learn to prioritize events. Then there will be more chances to correctly build a trading strategy, to buy or sell at a good price. Particular attention should be paid to the following indicators:
- inflation Index;
- real estate sales;
- parameters of economic growth;
- unemployment rate;
- Central Bank interest rate;
- retail turnover;
- fluctuations in the value of securities.
It is imperative to monitor the level of economic growth. It affects the fundamental changes in the stock exchange and the world trading market. It includes three factors:
- consumer opportunities;
- budget expenditures.
These factors determine the speed and intensity of the growth of the state economy. This indicator is published once a month. Use it with extreme caution. So, if within two to three months the purchasing power decreases, then the volume of trade is likely to decrease. As a result, this will badly affect the value of the national currency.
Inflation is a consequence of excess demand over supply. It leads to higher prices for goods and services, which affects purchasing power. Also, inflation may be the result of rapid economic growth. If its value exceeds the pace of development by several times, then with high probability there will be chaos in the economy, and the national currency will fall.
The Central Bank lending rate of commercial banks also matters. If it increases, then purchasing power will decrease, which will affect the real estate market.
Unemployment, retail turnover and securities prices do not affect the financial market as much. Whether or not to take them into account depends on your chosen trading strategy.