Is a Forex Calendar Important in a Trader’s Life?
In the Forex market, there are 3 types of people. Those who use technical analysis, fundamental analysis or Price Action traders like us. One of the questions I get asked a lot of time is whether or not I use a Forex calendar in my trading decisions.
While I do not disregard the role of a Forex Calendar in a professional trader’s routine, I do not think that events that happen in the Forex market are in any way influential in how we Price Action traders trade.
For starters, a Forex Calendar or Economic Calendar is basically a clear schedule of known economic events that will happen at various dates of the year.
An economic Calendar is something that is freely available on the internet. Most professional Forex and CFDs brokers will have it integrated on their platforms.
A Forex Calendar will show the following things:
- The time and date of an economic news release as well as instruments that will be affected.
- Interpretation of how the economic news release will affect the trading instruments/currencies in question
- History of that economic release meaning that if you are a news trader, you can go up to 2 years back in time to track what has been happening in a particular market.
This data can be used to identify possible tops as well as bottoms in a trend. It can also be used to identify a build or slowing of momentum in a market.
With a Forex Calendar, a variety of economic indicators are used. These include Industrial production, Producer price index (indicator for overall demand in the industry and pricing capabilities of companies), Consumer Credit Report, Employment reports, Jobless Claims, Factory Orders, Retail Data, Trade Balance and many more.
Does a Forex Calendar really Matter?
To fundamental analysis traders who depend on every news piece to make their trading decisions, it does matter.
For those who use technical analysis, it somehow matters. However, to Price Action Traders like us, a Forex Calendar may not influence our trading decision at all, why?
Because price action is basically the response of the market in relation to the data found in the Forex Calendar. Price Action shows us what traders think and what they are likely to do next.
When I first embarked on this journey to become a professional trader, I used a lot of technical analysis to trade the market. But my results were not really good at the end of the day. I lost money. Later on, I came to figure out some of the reasons why I was losing money.
- I was focusing too much on technical analysis thus over-analyzing the market
- I was crowding the charts in front of me with too many indicators which basically impeded by judgement and decision making, thus causing confusion rather than giving me insights on where the market would go next
- Finally, indicators that are found in every charting solution out there are based on historic data, and are not a very accurate way of forecasting what the market will do next. I bet that you cannot show me any successful Forex trader in the world who is also a technical analysis trader.
So, those points answer very clearly why we Price Action traders don’t rely on a Forex Calendar. All information that we need is right there in the market.
If a market forms a pin bar at a key support or resistance zone, we definitely take note of that information and interpret it to mean that the market is likely to change direction.
How about a pin Bar on a trend? It definitely means a trend continuation. Based on price action trading and risk management, we can efficiently trade the market even without looking at the Forex Calendar.
We only trade what we see based on how we interpret that information. In fact, price action trading even tells us what the market will do next based on how the market is behaving at the time. That is why it is better to become a Price Action Trader rather than a news release trader or a technical analysis trader.
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