In the same way as the calendar you have at home, a forex calendar is a customized tool that offers information specifically about foreign exchange. If you are new to using this tool, you can think about why you have not missed a very important appointment the other day because you have your calendar reminding you what day it is. The same applies to forex or economic calendars.
They do not simply tell you what day it is in the different world markets. Economic calendars also provide you useful information about how the economy is going, how money is currently valued, and what specific events may drive this value up or down at any moment. Here are some of the benefits that traders can enjoy when using an economic calendar.
It prepares you to take action. A forex calendar is a medium of dissemination. Since the types of information you will get are specific to foreign exchange, you do not need to worry about looking for that specific thing you need to start trading.
Apart from that, the specificity of the information economic calendars offer varies from an hourly to a daily basis. This means that you have a fairly good idea about what is going on in the foreign exchange markets based on recent information.
It prepares you to not take action. A forex calendar does not only highlight the good news. The tool also is helpful in telling when something undesirable is about to happen. Although forecasting is mainly assumptive by nature, the direction of money usually indicates if a specific market is going down or not. This means that when indicators are everything but favorable, you are saved from placing a risky trade.
It prepares you to go to Plan B. Contingency plans are made possible through a forex calendar. This is beneficial especially when the information you get lets you know how a certain economy in a specific country is doing. If you have a few currency types to trade, you can focus on trading currency pairs that are not too risky.
Sometimes, all currencies seem to go down, but not all of them depreciate at the same amount. Relying heavily on your judgment on whether to take minimal risk or not, you can always resort to the currency pair that provides you the least chances of providing losses and minimal profit, if all indicators are not favorable.
You can see from the list provided above that a forex calendar serves as a tool in your decision to trade or not. However, you have to keep in mind that your knowledge in the various indicators and the forex trading strategy you have is still important in placing a trade.
Total reliance on forex calendars do not help determine your success as a trader. Know that even expert traders still continue to develop additional skills to make them better. In this regard, learning about the other factors that drive volatility in the foreign exchange market is still recommended.