The difficulty in trading lies in the inability to determine the direction in which the market will turn. You can be sure though, the volatility will go up after the news announcement.
There is, however, a group of traders who are specializing in trading in highly volatile markets. They use this aspect to their advantage and they can raise your balance before the situation on the market calms down.
Regardless of which group you belong to, you need to be well informed and ready for the report release. There is a great feature available on the Olymp Trade platform that will prepare you for the changes. It is called the Economic Calendar.
I would like to present the calendar to you. When you gather some knowledge about it and try trading with its help, you will be able to decide whether to trade after an important report is published or not. The currency exchange will be the market I will use to describe the economic calendar. The reason for that is the fact that data in the calendar are usually connected to the single country economy what impacts a particular currency.
Contents
Key Takeaways🔑
| →The Economic Calendar at Olymp Trade helps traders prepare for market volatility. |
| →Understanding the impact of news releases on market volatility can enhance trading strategies. |
| →Choose your trading times wisely based on market conditions and news announcements. |
How to find the economic calendar on the Olymp Trade platform
Once you are logged in to your Olymp Trade trading account, you will see the hamburger menu in the top left corner. Click on it and you will find the “Analytics” section there.
A few words about the filters
First, you have the possibility to choose the countries. If you are trading the EURUSD currency pair you should check the United States and European markets. Note, that important data concerning USD practically has an impact on all the markets.
Second, you can select the time to display on the calendar. You have two choices here. You can either see the time of the announcement or the time that is left until the announcement.
Third, category. Here you can choose specific market sectors that will be affected by the report announcement. I would suggest selecting all the categories. I usually do just this.
Finally, importance. There are three levels of news importance. If the importance is low, you will most likely not see a big difference in the volatility of the market. The best way is to select only the highest impact the news might have on the markets.
The last thing to do in the filters section is to click on the “Apply” button.
A few more words about the importance of the released news
On the Olymp Trade platform, the importance of the news item announcement is represented by the heads of the bull.
- One bull’s head signifies the low importance of the news. It rather won’t result in the high volatility of the market.
- Two bulls’ heads stand for the medium importance of the announcement. It can be expected that the news will cause some temporary volatility.
- Three bulls’ heads refer to the high importance. Such a news item release would have a big impact on the market. It will create high volatility for a longer period of time.
There is also the fourth type. Unexpected news. You won’t see them until they happen. And they will cause extremely high volatility. This might be, for example, a terrorist attack. It would definitely influence the economy of the given country.
The way the news has an impact on the markets
There are two ways the important news item announcement may affect the market. It can either make it grow or fall. I would like to use an example here. It comes from October 4th. I will use the EURUSD currency pair with 1-minute interval candles to demonstrate how the news release influenced the market.
The economic calendar on Friday, October 4th, 2019.
You can read from the picture below that at 13:30 there was some news released regarding Nonfarm Payrolls in the United States.
Now, let’s take a look at what was happening on the market on that day.
In the morning, the EURUSD market was ranging. The movements of the price were rather insignificant. The market was moving within a certain range. But after the news announcement, the price falls suddenly. Then rises a bit and falls again. After an hour or so, the market is again stabilized. Here data were rather close to forecast. If they differ much then you can observe huge market movements.
Pros and Cons of Trading with the Economic Calendar at Olymp Trade👍👎
Pros:
- 💹 Better preparedness for market volatility
- 🌐 Access to global economic data
- 📈 Improved trading strategies based on news releases
- 🔍 Easy filtering for relevant data
Cons:
- 📊 Requires a deep understanding of market analysis
- ⏱️ Limited time to capitalize on market fluctuations after news releases
- 💥 High volatility can result in potential losses
| Economic Indicators | Impact on Currency |
|---|---|
| Gross Domestic Product (GDP) | Affects currency strength |
| Nonfarm Payrolls | Influences interest rates |
| Consumer Price Index (CPI) | Signals inflation levels |
| Unemployment Rate | Affects currency value |
| Interest Rate Decisions | Influences currency strength |
Before or after the news item release. When to trade?
You should start the market analysis long before the news is published. The trend development can be visible a few hours before the announcement. But the best time to enter the market is after the important news is published. This way you will have the biggest chance to make a profit on the price movements.
Bear in mind that these extreme price swings will not be long-term. When you’d rather trade on the quieter markets, you should wait for the news release effect to wear off. In our example, it would mean to wait around 1 hour for the market stabilization.
The way, the news release has an impact on the market should not be one of your concerns. When the time comes, you will see the price fluctuations on the chart and you will conclude. What you ought to focus on is to be ready for the change in the market brought on by some data release.
Is it a good idea to trade during the news release?
I am sure some of you keep asking this question. Is it worth trading on the markets where there is some news announcement? Or is it better to avoid such markets? There is no one right answer. It will depend on your trading preferences.
You may want to stay out of the markets where the news will soon be published if the certainty and low risk are your things. But if you feel confident in volatile markets, then go ahead and choose the markets where the news is about to release.
To trade on the markets where the news item is published is a fast way to make huge profits. Remember though, it is not for everyone. You cannot predict the direction the market will go after the release and there is a possibility, you will end up with a huge loss instead of a win.
Do you have any experience in trading in the markets after some news announcement? Or maybe you wish to share your thoughts on this subject? Feel free to use the comments section below.
Best wishes!
Frequently Asked Questions❓
- Q: How can the Economic Calendar at Olymp Trade help me with my trading?
A: The Economic Calendar provides information on global economic events and their potential impact on the markets, allowing you to make more informed trading decisions. - Q: Do I need to be an expert in market analysis to use the Economic Calendar effectively?
A: While a deep understanding of market analysis is helpful, the Economic Calendar is designed to be user-friendly and accessible for traders of all experience levels. - Q: Can I customize the Economic Calendar to display only the data relevant to my trading?
A: Yes, you can use filters to select specific countries, market sectors, timeframes, and levels of importance. - Q: How can I determine the best time to trade based on the Economic Calendar?
A: Analyze the market trends before news releases and consider entering the market after high-impact news has been published to capitalize on price movements. - Q: What should I do if I prefer trading in less volatile markets?
A: If you prefer trading in quieter markets, wait for the effect of the news release to wear off, which can be around 1 hour or more, depending on the event.