Trading stocks and shares is quite easy to learn and fairly simple to understand. However, in order to achieve good results traders should know well the current market conditions and follow closely the constantly changing market trends. There are many tools, which could help you stay on top of the markets and develop strategies, like various types of charts and graphs.
One of the most useful tools that gives great insight into the financial markets is the Economic Calendar. Used by both major investment firms and individual traders, the economic calendar is the most convenient way to stay updated about what is happening on the market.
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What is Economic Calendar?
The Economic Calendar is a schedule that shows the time when economic news is to be released, what stocks and shares will be affected by that news and how the news in question is typically interpreted. This way the Economic Calendar allows traders to determine the exact time an economic event will take place, how important it is and how it will influence asset price movements. By referring to the Economic Calendar traders can easily make an educated guess for the future market movements and act accordingly.
Stocks and shares are just like any other financial instrument, so in order to stay up to date, it is highly recommended to consult an Economic Calendar as a part of building your strategies. Economic calendars are available for free on many broker’s websites so traders have easy access to the data, which will help them improve their results.
How to Use the Economic Calendar?
Trading based on current economic news can result in success because when major events occur, the market movements are quite predictable. Reports on changes in monetary policy, GDP, inflation, important economic decisions and consumer patterns have a strong impact on the financial market. Therefore traders can take advantage of the readily available information and use the Economic Calendar. This tool provides a wide range of data, which is easy to interpret. Here is a list of the most important things traders should pay attention to when studying an Economic Calendar:
- Date of events: The first thing traders should check is the dates when certain economic news is to be released. The Economic Calendar provides not only dates for future releases, but information about past periods as well. This gives traders an excellent opportunity to see how different types of news affected the markets previously and help them identify future trends. You can select time periods of various durations and study the long-term or short term changes in price movements.
- Stocks: It is also of great importance to look at the stocks and shares that are going to be influenced by the news. This often concerns the geographic region form which the news is coming because that will have an impact on them from that region as well as on assets of companies, which have strong trade relations with companies and countries in the region in question.
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- Historical data: As Economic Calendars provide information not only about future releases, but also about news releases in the past, traders can check what market trends emerged following various kinds of news and press releases. Then you can make an educated guess how asset prices would be affected in similar market situations in the future.
Market Events Regarding Specific Companies
In addition to economic news that impacts the financial markets on a macro level, there are events, for example news about specific companies that influence a certain class of assets. Here we are talking about the time when a company’s earning reports are released or news conferences are scheduled. Such information is of great value for traders because it will inform their decisions on selecting an option’s expiration date among other things.
Overall the Economic Calendar is an essential tool that could be used to identify and predict market movements both on macro and micro level.