The Forex calendar is one of the most basic fundamental trading tools that every Forex trader needs, yet so many of them often forget about it or completely neglect it. This is a mistake regardless of whether someone is a scalper, day-trader, swing trader, position trader or whether he trades based only technicals.
There are many reasons why it’s important for any trader to regularly follow the Forex calendar, the most important of which we’ll discuss here.
Protect from highly volatile events
Obviously, the best way to stay out of the market during bad times is to avoid the highly volatile news events that occur regularly – usually on a monthly basis. This is especially the case for day-traders and scalpers since one big move caused by a news release can decide the fate of the day for them.
Some traders may want to stay in the market regardless of the volatile event, but knowing that a big event is going to occur in the future is still very important. Deciding to hold a trade into a volatile release and not being aware that one will take place at all are two different things.
Luckily, the solution is simple – check the Forex calendar .
Identify potential trading opportunities ahead of time
In the same way that we can see what could bring us trouble in trading, we can also see what opportunities may exist because of a certain news event. If the odds of a trade are favored on one side into a news event then it could be worth holding a position in that direction and potentially profiting nicely if the outcome is indeed as anticipated.
Again, if you are not aware of the calendar these opportunities will simply pass you by as will the pips and profits.
Get an overview of the big picture
We know that being able to see the big picture is very important in trading. A great way put together the different pieces of the big picture is to take note of the events on the calendar ahead of time.
It’s generally recommended to be aware of what is scheduled on the calendar at least 2 weeks in advance, and even better 3 – 4 weeks. This would cover half a month to a month of a timeline into the future. By knowing what’s ahead on the calendar in the next 2 – 3 or 4 weeks you have a nice “map” that can guide you in the desired direction.
Many times the market will hold off a move because there are important events scheduled on the calendar in 1 or 2 weeks (such as a central bank meeting, NFP, CPI inflation data etc.).
Looking ahead on the calendar is like turning on the long-range lights on the car to navigate through the dark. If you are trading without knowing what’s on the calendar it’s like driving through the night without your lights on – you can hit something.
So, hopefully, this article convinced you to regularly keep the calendar in check and position in the market accordingly. Ultimately, all professional and profitable traders are looking at the calendar – even those who trade purely on technicals.