Why You should not trade to explore the economic calendar

The ability to analyze large information flows is an important and absolutely necessary feature for anyone who stepped on the difficult path of trading on the exchange. This is especially true for traders who have decided to rely in their analysis on fundamentals.

The endless stream of economic news and events, in the form of various statistical reports, publications of macroeconomic indicators and indices, in fact, is the root cause of price fluctuations for most financial instruments. Therefore, the ability to analyze the economic calendar and trading decisions based on it - an important and necessary skill in the Arsenal of a successful trader.

There are many approaches to use in trading in the Forex market information from the economic calendar. One of them is opening a position immediately before the publication of important macroeconomic indicator, for example, decisions on changes in interest rates, the level of employment in non-agricultural sectors of the U.S. economy, etc.

In this case, the "news" traders expect to hit the jackpot on a rapid unidirectional change of quotations of currency pairs. However, we should not forget about the serious risks of such trade is associated with a sharp widening of the spread as a result of failure of liquidity prior to the publication of important economic release.

The opening of the transaction with significant slippage (for a price much worse than that which was installed in order to open a position) can lead to devastating consequences for the trading account due to uncontrolled risks.

Therefore, a less risky tactic is to wait for the release of important news and open a position after it becomes clear the market reaction to the publication, and formed a trend momentum will start to gain strength.

Thus, regardless of which trading style he will choose for the trader in the Forex market he must be follow the release of important news for as little as possible to get a sharp price on emissions that could lead to loss of the Deposit.

Yuriy Kovalenko - Analyst at ActivTrades PLC

sections: Economics, Society