An Economic Calendar Might Be an Investor's Daily Best Friend

Defining an Economic Calendar

In economy and finance, the news events and data releases are public and scheduled. Some examples are GDP growth rates, non-farm payroll numbers, and decisions on interest rates.

Where can one access these? An economic calendar keeps track of all of these. These releases are essential to know, especially for professional day traders, since they affect the movement of prices or even markets.

Traders and investors can take advantage of economic calendars to plan their trades, reallocate their portfolios, and be aware of chart patterns that can be affected. Economic calendars are free on most websites in numerous countries.

Economic data release grades

The data releases have a grade basis. They may be low, medium, or high grade. Usually, financial data is released every week and daily during a busy season.

• Low grades are minor events that tend to have a small impact with no unique markings.
• Medium grades are events that have an impact. Their markings can either be a yellow dot or a yellow star beside the indicated event.
• High grades are events that can have a significant impact on the market. Their markings are red dots or red stars.

Risks of high-grade economic data

High-grade releases and events with red markings cause a massive impact on the market. It may be useful or worse, so traders go on the safe side and cancel their pending orders before the event even begins.

Then, there will be a drop in Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term. Canceled orders mean a back and forth in the prices before a constant direction forms.

Economic calendar indicators

Listed below are economic calendar indicators that can help a trader in decision making.

• The Personal Income and Outlays Report. This monthly report is information about consumer behavior and consumption in dollar measurement. It influences the economy’s future direction and customer price index.
• The Producer Price Index. It is a price index with a wholesale or producer level measurement excluding imported goods. This report is an inflation indicator, and its encouragement causes a positive effect on the market.
• The Productivity report. It measures an organization’s output level per labor unit through gross domestic product and labor figures.
• The Purchasing Manager Index. It indicates all issued monthly report headlines.

Tips on how to avoid risks through an economic calendar

The economic calendar helps traders in their daily decision making. A wise trader will check and list down high-grade events with red markings expected to cause Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad Read this Term in the market. It might only take a minute, but this minute can massively benefit a trader.

A wise trader knows how to evaluate risks. It should not go beyond 2%, and the most ideal is only 1% or even less. A risk is entry price minus stop loss and then multiplied by the position size.

A high-grade economic release can cause slippage to a trader. Slippage is when you expected an order price, and it comes out worse. For example, the 1% risk trade went downhill to a 5% loss.

Market behavior will always be unpredictable. It’s a given fact, so traders usually try to avoid high-risk events by closing out stocks and avoiding making new trades before a data release.