How to read and interpret a weekly economic calendar
In order to explain to you the importance of an economic calendar, let’s read a little scenario to measure the impact of not using this great tool.
You’ve got a successful trading session, but why are you losing?
You’ve done your homework.
Countless hours of seeking out the right guru (or piecing together your own system). Weeks of monitoring your guru’s daily trade picks (or paper-trading and back-testing your homemade system).
Countless hours of seeking out the right guru (or piecing together your own system). Weeks of monitoring your guru’s daily trade picks (or paper-trading and back-testing your homemade system).
You’ve done it by the book. No seat of the pants trading for you!
OK, now you’re confident. It’s time to put your money where your homework is. You’ve had your coffee and your first trade signal is before you.
Confidence high. Trade made. First loss. Not a problem. You understood before you started that successful traders both win and lose and “losing is part of the overall winning”. You’ve also heard more then once that “successful traders don’t win on every trade.”
Moving on, still confident. Next trade made. Another loss, but this one hurt your pride a little because you got stopped out early in the trade, and then the market rebounded and would have hit your profit target if you weren’t stopped out. You double check. Yep, you placed the stop where your trading system told you to place it. You kind of had a feeling that the early weakness in the market was just profit-taking from the previous day’s trading, but you’re trading a system and you must stick to it. Wounded, but resilient.
After a good night’s sleep and a few mouse clicks, your new daily trades are in front of you. Hey, this one looks good! It’s a little bit more risk than yesterday’s trades had, but look at that profit potential! With a smiling face, the trade is executed. With a nice start to the trade, you’re feeling good and you’ve moved your stop to breakeven, just like your system said.
Surprise piece of news – market reverses – blows through your stop – an “unexpected” loss. Is something wrong with the system? Has the overall market “personality” changed, affecting your system to the Core, rendering all your back-testing irrelevant? Your confidence turns to doubt.
You decide to “watch” the next trade… I mean, isn’t it wise to make sure the system gets back on track before you “throw good money after bad?” Isn’t that what a conservative trader does? Trade watched. It wins! In your head, you beat yourself up a little because you know that when you started your “live” trading, you made an agreement with yourself to take the first 10 trades “no matter what”… and here you wimpled-out and missed a big winner that would have gotten you even.
What’s happening?!!
What’s happening is that you are out of control. Your emotions are ruling your trading.
The above scenario plays out in every trader from time to time. New bee and veteran alike. The winning trader senses what is happening and nips it in the bud. The winning trader spend time EVERY DAY, working on “the discipline of trading”. Reads a chapter in his favorite psychological trading book, scans the “ten commandments of trading” that hangs on the wall over his/her desk, listens to his/her mental training software for futures traders… Something… Every Day… before trading begins.
Do not lose your hard earned money, as very often it’s extremely hard to recover it. Fact is that most of the times you just never get it back and instead of making money you will be struggling to recover the losses incurred.
1st Forex trading academy will provide you with a weekly economic calendar and the dose of ammunition to be a winner in the battlefield. The support, resistance levels with possible high and low targets, and to establish the direction of the Forex trading market is our job.
How to read and interpret a weekly economic calendar
The calendar lists the important economic events for the day, by the time at which they occur (or at midnight if they do not have a specific time).
Sections on the different panels below the main display give access to the financial events for each day and time of the current week, indicators and forecast. The calendar always opens on the current day and the displayed date is noted in the Title Bar for the calendar.
The currency displays all events for that week with additional information.
You use technical analysis to trade but the currency markets are driven by major fundamental announcements. Therefore, it is important to know exactly when these announcements will be made so you can take advantage of the big moves that follow or avoid losing through a sudden surprise reaction.
Sometimes consolidation takes place before a major fundamental announcement and you can benefit from a straddle trade. Economic calendars show in advance what time the economic data release will take place.
If traders are expecting an interest rate to rise and it does, there usually will not be much of a movement because the information will already have been discounted by the market. However, if the interest rate does not rise as expected, then the market may react violently.
are you interested in this part so check out more about it:
Major Indicators part 2
Books part 3
Major Indicators part4
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