Using an economic calendar

Whether or not you decide to trade around news events, it is vital that you know when they are coming.

In this blog we will look at how you can use an economic calendar to help you identify in advance which events in an upcoming day or week are most likely to affect the markets you are trading.

This may help you find new trading opportunities, flag up the need to protect or adjust existing trades, or simply alert you to times when you should stay out of the market altogether.

How to use the economic calendar

Step 1: Set the calendar time

To work best, the economic calendar should be set to your local time – the time in the place where you are based. This means that you can instantly see at what time during your own trading day an event will occur. This saves you wasting time – and possibly making expensive mistakes – trying to calculate time differences.

To set the calendar time, click on the 'current time' link and select your time zone, as shown below:

Step 2: Check the daily schedule

To find out what news events are scheduled for a particular trading day, open the economic calendar and then scroll down to the date you are interested in.

Click on that date and a list of news events will open beneath it, as below:

Note that the number of news events included will vary from day to day.

Step 3: Interpret the economic calendar

At the top of the calendar you will see a number of headings – Time, Cur, Imp, Event, Actual, Forecast and Previous – which give you information about what kinds of events you are dealing with.

To find out what each of these headings refers to, look at the screenshot below and refer to the key underneath it:

Time: This tells you what time the news event is scheduled to occur. This will be in your local time zone if you have already changed the settings, as previously discussed. In the highlighted example, you can see that the news release was scheduled for 09:00.

Cur: This is short for 'currency' and tells you which currency will probably be affected by the news event as well as which country it will occur in or relate to. You will also see a country flag here. In the highlighted example, the Italian flag tells you that the news release will come from Italy and is likely to affect the euro.

Imp: This is short for 'importance' and tells you how much impact the event is expected to have on the market. You will see one, two or three images of a bull. The more bulls, the more important the event is considered. In the highlighted example, only one bull is visible, meaning this event is not expected to have much effect on the market.

Event: This shows you the name of the event that is scheduled. In the highlighted example, the month-on-month (MoM) Italian Industrial Production figures are due to be released.

Actual: This tells you the actual result of the event once it has occurred. If the event was the release of figures, it will appear as a number. It also uses colour-coding to tell you whether the figure was better (green) or worse (red) than the market expected. In the highlighted example, 0.2% means Italian industrial production grew 0.2% month-on-month. The number appears in red, meaning it was worse than expected.

Forecast: This tells you what number or results analysts had on average predicted before the event. By comparing this figure with the 'Actual' result, you can form a view of how the market will react. If the 'Actual' result is worse than the 'Forecast' number, the currency involved will probably react negatively. In this example, the 0.2% growth that was announced was worse than the forecast 0.3%.

Previous: This tells you the outcome the last time this particular event occurred. By comparing previous results with the latest result, you can form a view on whether a country's economy or a specific industry is improving or worsening. In the highlighted example, the previous number was -0.2%, indicating that Italy's industrial production is now improving.

Step 4: Find out more about an event

To gather even more information about a specific news event, click on it. You will then see an expanded view.

Look at the screenshot below and then read the key underneath to find out what each section of the expanded view will tell you:

The name of the event.

Overview: this gives you a definition of the news event as well as what the actual number would probably mean for the currency or market in question.

Details at a glance: this highlights the actual, forecast and previous numbers, as well as the importance of the event and the currency affected. It also gives you an external web link to the source of the report.

To see previous results for the news event in graph form, click on the 'Chart' tab (marked on the screenshot below as):

To see more detailed data for past news events, hover your mouse over the chart. In the example above, you can see that on October 10th 2012, the actual number came in at 1.7% and the forecast number was -0.4%.

To see the previous news events by date, click on the 'History' tab (next to the 'Chart' tab). This will show you the actual, forecast and previous numbers, as shown on the screenshot below: