Forex Factory Calendar can be described as the best convenient and accurate calendar that keeps the track of news related to Forex. After this guide, you’ll be able to utilize the calendar and how interpret it in a manner that can benefit your trading.
Before we dive into the specifics I’d like to dispel some common myths.
Many traders who are technical fall into the trap of believing that, since they use a more technological approach to market they don’t need to be aware of current events in the news.
While it’s not required to research the news but it’s beneficial to be aware of when it is likely to be newsworthy. This is particularly true when news is extremely damaging and could negatively impact the market. This kind of news impacts the open market, but it can also trigger gaps and slippage that could create havoc for orders that are pending.
Here’s how you can utilize the Forex information calendar and begin making better-informed trading decisions.
Step 1: Beginning with The Forex Factory Calendar
The first thing you should do is go on your Forex Factory calendar.
When you arrive, you’ll be presented with a display like this one.
Don’t be overwhelmed by all of the information that is on the page. The information will be clear at the conclusion of the lesson.
We will then begin to set up the calendar to ensure that you maximize its value of it.
Step 2: Setting Your Time Zone
Once you’re in your calendar, you’ll be required to establish the timezone you want to use. In order to do that, just click the time icon in the upper right corner.
When you click to view the date stamp you’ll be directed to a page where you can select the zone of your own time. This will allow you to synchronize the time of every news event to the local time in yours.
Important: Setting the correct time zone is crucial. If the time zone is not properly specified, it can be difficult to find the right time for each news item.
In this case, you have the option of turning Daylight Savings Time (DST) off or on. Additionally, you can change the format of time to show AM/PM or 24-hour “military timing”.
When you’re happy with your settings, select “Save Settings” to ensure that you will not have to repeat this every time. So long as your browser’s cache has not been cleared the settings will stay the same every time you visit this page.
When you save your configurations, you should have the correct date displayed in the upper right-hand edge of your screen. If not, go back to step 2 to ensure your settings were properly saved.
Step 3. Set the event filter
In this stage, you should already have your Forex Factory calendar in front of you with every news event being synchronized to Your local time. The next step is to configure the event filter to decide what kind of news or currencies to show.
This is a great option for those who only wish to display specific types of news or events, or are only interested in certain currencies.
To change the filter, simply click the “Filter” icon located in the upper right corner when you are clicking on the tab for the calendar.
When you click “Filter” After clicking “Filter,” you’ll see a similar screen to that below. This screen will give you the option of filtering events based on expected impact and event type and also by the currency.
Pro Tip: Swipe your cursor over boxes with colored colors beneath “Expected Impact” for a detailed explanation for each. In short, red is high-impact news, orange is medium-impact, and yellow is low-impact news.
I personally prefer to focus on high and medium-impact news events. This gives me a clear idea of what I can expect for the next week without overflowing my calendar with events that do not have a significant impact on markets.
When you’ve got everything set in the way you prefer Once you are satisfied, select “Apply Filter” to begin with only the events and currencies you have selected. You are able to change this at any time by repeating the process.
Step 4. Selecting the desired Time-Frame
It is now time to be able to have the timezone selected and your filter set you’d like it to be. It’s now time to choose the time period you’d like to see. This is the amount of time displayed in the calendar.
The navigation pane below will let you define any timeframe you like.
In this window, it is possible to select one day, a month, or even the whole month. Additionally, you can quickly choose predetermined time frames within the lower half of the pane for navigation.
Pro Tip: Making sure you look over the entire week is the most effective strategy for trading higher time frames. This lets you prepare for the coming days instead of just one day.
Step 5: Digging Deeper
In addition to more than just the “surface content” including the event’s name as well as the expected impact and time, you can look up each event for additional details.
Use this feature in a cautious manner. It’s extremely easy to become distracted by the details of every event. In our role as price action traders, we must be more focused on the events happening on the chart, and less focused on the fundamental importance of the news.
The picture below shows how you can extend the specifics of a particular news story.
If the above icon is clicked, you’ll immediately be able to see additional information regarding the event.
In the upper screen, you can view more details, including the cause, frequency, and background of the event to mention some. To close the window, simply click on the “X” as shown in the above image.
Before we get started I would like to remind you of the importance of making use of this additional information only sparingly or not at all. The main benefit of using calendars as a technical trader is the scheduled timing and the expected effects of news. Anything other than that and using a calendar for news could be something more distracting rather than an asset.
The process for creating this Forex Factory news calendar. We’ll now move to the second part of this tutorial, and talk about how you can use the information you’ve learned to benefit from trading Forex price movement.
Making the Right Headlines
How to create your Forex Factory calendar is one aspect, but knowing how to properly use it is another. The first thing you need to know is that you should only be focused on the most major market events.
This is a way of setting the filter to only include the high and medium-impact news events. In this way, it means that you won’t need to sort through the less-impact news to identify those events likely to increase volatility.
Pro Tips: Here is a list of the biggest news events to keep an eye on when you trade in the Forex market.
- Federal Open Market Committee (FOMC)
- NFP – Nonfarm Payrolls (NFP)
- Unemployment rates
- Gross Domestic Product Final (GDP)
- Monetary policy announcements
- Any rate announcement by central banks
Before proceeding, we’ll review the lessons you’ve learned so far.
You should now be able to set the time zone filter, time frame, and time zone in your calendar. It is important to be aware of the details about an event in the news and which ones are most likely to trigger more volatility.
The next step is to discuss how you can strategically place your trades around important events in the news to limit the risk.
Trade Around the News
The reason we make use of calendars like the Forex Factory calendar is to be aware of when news that affects markets is expected and thus be prepared for periods of extreme volatility.
In this regard, I’d like to go over some basic guidelines regarding trading in the news. Each of the scenarios given below presumes that the event of interest could potentially affect the trade. For instance trading USDJPY using NFPs or Nonfarm Payrolls (NFPs) in the tap.
There are no open positions in advance of an announcement event
It is the most secure spot to be in with the latest developments coming soon. There’s nothing to be concerned about and you can be able to objectively evaluate the price action that results as a result of the announcement.
What if the news doesn’t come in the air? What’s the length of time between the putting on of the new position and the planned news announcement that may negatively impact that position?
This is difficult to answer because it is dependent on a number of variables.
- The trader’s trading manner and risk tolerance come to mind. Every trader is unique and has different needs in terms of how risk-averse they are.
- The frame on average, trade on the chart for 4 hours requires less time between entry and the news that is pending as compared to a trade using the timeframe of the day. This is because, in a hypothetical sense being a trader, a transaction on the chart of 4 hours is more likely to make money prior to the news event taking place.
Distance to profit – In addition to the timeframe and distance from the entry point to the take profit is also a factor. A trade that has an objective of 50 pip profits will take less time than one with a target of 300 pip in the hypothetical sense of course.
As a rule of thumb, I prefer to have at least a 24-hour time frame in which there’s no scheduled (major) news prior to putting it on the market. When I say “major” I’m talking about one of the events described above. The meaning of “major” can vary according to the two points mentioned above.
Small profit from the open position
This is a scenario where there is an open position that is profitable but has the best chance of going negative when the news event is negative for the position.
There’s been many of us at that moment of indecision just before a major news story is set to occur.
Should you shut the trade and make some profit to remain sure? What happens is the consequences if the market changes in favor of your investment? If you decide to close the position now, you could miss the opportunity to earn profits.
My experience is that the majority of traders are worried about missing an opportunity more than they worry about losing capital.
This could not be further from the truth.
Your primary job as a trader is to preserve capital. The money-making process is always the last thing on your list. The way I go almost all the time is to cash in my tiny gain and walk away. It is possible to get back in if the market offers a good opportunity.
Always remember that if you are you’re in doubt, take your firearm.
Position open – huge profit
- The final scenario that we’ll be discussing is the second most secure position to be in if there’s no open position.
- If a news event is right around the corner, and you’ve got an investment that is into profit, there are many options. It’s easier to get through a major news event when you know your position is worth 200 pip within the profit.
- One factor that could influence your choice when making this decision is how far your investment is from the profit goal. Let’s suppose that the trade had originally set 300 pip profits and is now only 40 pips away from its goal. In this situation, I’d prefer to close the position prior to the news event in order to record gains. The risk of giving back more than 260 pips in exchange for 40 pips isn’t exactly the best option.
- Other options are to make a profit, and leave the rest of the position open, or to maintain the position for the duration of the occasion. I’m not a fan of profiting from a portion of a position which is why I typically take a complete loss. One thing is for sure you’ll have many more options when you are in a position that has made significant gains.
- It’s time to put the pieces together. You should now be able to set up the Forex Factory calendar as well as how to handle the news events. Let’s conclude this course by talking about how price action plays an important role in all this.
- I’ve previously written about how you can use the news to gauge the market’s sentiment. This time, I’d like to talk about looking at the news through the price-action strategies you can see in the chart.
- What’s a pin bar actually? What about one that is inside? You’re probably aware of how they look But have you thought about the reasons they appear?
- These two strategies share one thing in common They are both results of news. This could be news recently announced, or a gradual stream of news that results in market sentiment changing or staying the same.
- In reality, all Forex trade strategies can be described as a result of news in one way.
- The pin bar and the inside bar are the true fundamentals of how news can influence the market.
Pro Tip: Use the more granular time frames (4 Hours and Daily) so that you can get a more accurate sense of the impact of a significant news announcement. This can help get rid of any “whipsaw” effect which is typical in smaller time frames.
Pin Bar Candlestick pattern
Some of the most impressive pin bars appear behind the major news event. One of my favorite designs is that of the NFP pin bars. This is due to the fact that NFPs release at 8:30 am ET and the 4-hour candle that I have on the New York close chart closes at 9 am Eastern Standard Time, which gives the market 30 minutes to adjust.
The timing of such as could result in the price of US Dollar pairs rising or falling swiftly, creating a four-hour pin bar. However, this may not always be the case, however, in the event that it happens that an NFP pin bar appears at a crucial point, it’s usually worth a look.
Inside Bar candle stick pattern
The inside bar is described as being the opposite of the pin bar. The pin bar symbolizes the possibility of a volatile push in any direction The inside bar is the consolidation of a move that has been made.
The pin bar is formed when news releases are made The inside bar usually develops the following day following the release of a news item. This is the reason why the inside bar configuration is frequently called a kind of break-out strategy.
Pro Tip: Although the pin bar could be traded on the daily or four-hour timeframe however the inside bar should be traded on the daily timeframe.
Before we conclude this section, I’d like to highlight that the information behind these kinds of movements isn’t always obvious. The market can fluctuate due to an unplanned occasion or an incident that’s already occurred however the market only gets to know the implications. No matter when or how the news is reported these two strategies will give you a quick and simple way to analyze the news through your charts.
We’ve covered a lot of topics in this video. Everything from setting up your Forex Factory calendar to how to use it in making trades on price actions. So, I’d like to outline some of the most important things to consider in using the News Calendar.
First and foremost is that the news calendar shouldn’t be used to aid you in entering the market. Also, trying to trade news events because of the volatility it creates can be a surefire way to destroy the trading account.
The calendar could, however, it is a fantastic method to track future events. Knowing when these events will be scheduled will aid you in deciding the time of your entry. It’s also beneficial if you have an open position because it allows you to make profits prior to an increase in volatility.
As a trader using price action has a distinct advantage over market participants with a different strategy than price actions. You are able to see the news through your charts by employing strategies like the pin bar and the inside bar. Make sure you stick on the daily as well as the 4-hour time frames, with only the inside bar which is only to be traded in the daily timeframe.
Frequently Answered Questions
What is a Forex calendar?
It is the Forex news calendar can be an essential tool for anyone who is serious about trading. It displays the news events scheduled throughout the week and sorts them into low impact to high impact.
What is the most effective Forex information calendar?
I like my preference for the Forex Factory news calendar. It’s very simple to use and one of the most accurate calendars on the market. You can also enter your time zone to ensure that the events will be displayed according to the local time zone of your location.
Do you need to trade Forex news?
My opinion is that the answer is no! The news market is a gamble. I’ve found it more beneficial to learn about the price movement that occurs following the news event rather than to make a guess.
It’s Your Turn…
Do you want to begin with this calendar? Forex Factory news calendar?
If yes, then you’ll download the free PDF guide I’ve just made.
It explains how to make use of the calendar in five easy steps. It explains which news events generate the highest high levels of volatility.
Follow the link and then enter your email address to gain instant access to the PDF guide.