How to Read an Economic Calendar
The economic calendar shows us what economic data releases are expected throughout the day. They’ll also show when there is central bank activity happening, including any speeches from policy makers. By following the calendar, we can anticipate when the markets become more volatile.
The calendar will be in chronological order and it’ll state what time the release is due to come out. Always make sure you double check the time zone at the top of the calendar, otherwise the release times will be incorrect.
Moving from right to left, the first column is the scheduled time of the release, this should be displayed based on the time zone you selected above.
Most releases are instant, however, you’ll notice there are also often events and speeches listed. This time represents the starting time, but keep in mind that some of these can last for hours, or in some cases the entire day.
In the next column we have the country the release relates to. If there’s a release that’s coming from the United States, then it’s likely to have the most impact on US assets, such as the US dollar.
In the third column, it shows the release name, and also usually includes the month, quarter or year the release is for, and whether it’s a preliminary release. It sometimes includes the institution the release is from, but that's not always the case.
Then we want to look at the impact, otherwise known as the volatility of the release. Normally this is rated low, medium or high. A low or medium release may move the relevant markets slightly, but they’re not usually too much of a problem.
High volatility releases can have a major impact on the market and we need to be careful if we’re looking to trade during these times. These sorts of releases are usually things like unemployment data, GDP, and central bank activity. You’ll also usually see PMI, the purchasing manager’s index, as quite high volatility too, although it’s not actually as impactful as the other things I mentioned.
Then we have some other columns such as the previous release, which shows us what the data was last time, the consensus forecast for the upcoming release, and then when the data is released we’ll see it in the actual column, showing us what the actual numbers came in as.
How you use the economic calendar will depend on your trading method. If you're trading based on technical analysis then it may serve more as a warning for when the markets will be more volatile. Whereas, if you’re relying on fundamental analysis, the data in the economic calendar may help you develop your view of the markets. I personally use a mix of both technicals and fundamentals.
If you want to be extra diligent, I’d recommend following at least two economic calendars. You’ll sometimes find that each calendar is missing certain things that others will have, particularly with policymaker speeches and bond market information. It usually won’t disrupt your trading too much, as they’ll both have the big releases covered, but even a small mistake can sometimes be costly and it doesn’t take too much time each day to check more than one.
It’s a good idea to spend time getting familiar with events in the calendar and recording what happens in the markets that you trade when those releases come out. That way, you’ll understand what impact they have and be better prepared for when they’re next released.