Daily Economic Calendar
Weekly Economic Calendar
What is the Economic Calendar?
The economic calendar refers to the schedules dates of significant releases or events that may affect movement of individual security prices or markets as a whole. Investors and traders use the economic calendar to plan trades and portfolio reallocations, as well as to be alert to chart patterns and indicators that may be caused or affected by these events. The economic calendar for various countries is available for free on multiple financial and market websites.
Economic calendars are available for free from financial and economic websites. These calendars vary from site to site, however, and although it is referred to as “the economic calendar,” the actual calendar listings depend on the focus of the website and the events the users of the website are likely to be interested in. For example, the economic calendar on many websites lists only events in the United States as these events have a large market impact. There are other sites that allow the user to build their own economic calendar by using filters to display or hide events.
While these free calendars can be a useful starting point, most traders customize a calendar of their own based on the types of trades they prefer and the asset classes and regions they are comfortable with. Moreover, a customized economic calendar doesn’t need to be limited to government and central bank releases. A trader may, for example, create an economic calendar around the major releases from oil producing regions while also incorporating the U.S. Energy Information Administration weekly petroleum status report and the quarterly filing dates of the oil sector companies he follows. In this way, an economic calendar becomes a customizable trading tool like an indicator alert.
Risk Caused by High-Impact Data/News Releases
As a day trader, or even as a swing trader, the events marked red are the ones you need to be aware of. Volatility around the event is typical and expected, regardless of whether the data comes out above, below, or right in line with market expectations.
Traders know these events cause volatility, and they may decide to sit out while the markets swing by canceling their pending orders. Those canceled orders cause a drop in liquidity right before a market-moving event occurs. Since there are fewer orders to absorb market buy or sell orders (or stop-loss orders) that are triggered by the event, the price will often “whipsaw” quickly back and forth before choosing a more sustained direction.
Reducing Your Risk with the Economic Calendar
Check your economic calendar each morning before you start trading, and jot down the times of the major data releases.
Under normal market conditions, you should know what your risk is on every single trade. The risk on each trade—defined as the difference between your entry price and stop-loss price, multiplied by the position size—should be less than 2% of account equity, and ideally 1% or less.
Typically, your stop-loss order will get you out of the trade at the price you expect, so long as you are trading a stock (or other markets) with a tight bid/ask spread and significant liquidity (enough shares or contracts) at each price level to absorb your orders. However, when high-impact data is released, things can drastically change. You face a high chance of slippage (a worse-than-expected price on an order). What was supposed to be only a 1% risk trade could end up resulting in a 5% loss, for example.
You can’t know exactly what data will be revealed, or exactly how many orders will come into the market upon its release in a reduced-liquidity environment. Because of this unpredictability, professional day traders typically close out their forex, stock, or futures positions three-to-five minutes before the high-impact data’s release. They also avoid taking new trades until after the data has been released. Since that moment of increased risk is scheduled, it can be easily avoided, and it’s usually best to do so.
If you day trade options, you can hold your positions through a major data (or earnings) release. Many options strategies are designed for trading these types of specific events. Options are a bit different than other markets, though. Once you buy an option (paying the premium) your risk is capped—the premium you paid is the potential loss. When you buy an option or close out the trade, you may get slippage, but you can’t lose more than the premium you paid.
An Economic Calendar For Different Markets
Whether you trade forex, futures, or stocks, there is an economic calendar for you. Forex and options traders can use dailyfx.com/calendar. If you trade stock options, check the US earnings calendar. Earnings have a significant impact on price, just like economic data releases.