How to Read and Use Forex Factory Calendar
Forex Factory which is located at the URL www.forexfactory.com is a site that provides a variety of multipurpose resources for forex traders, including the most popular of which are trader forums and forex calendars. The trader forum is relatively easy to use because it has the same format as online discussion forums in general. However, novice traders are often confused about how to read and use the Forex Factory calendar, because it is not equipped with easy-to-understand user manuals in Indonesian.
In this article, we will review how to read and use the Forex Factory calendar in a complete and easy-to-understand way. This knowledge is not only important for those of you who want to trade using news (News-Trading), but also for users of technical and fundamental analysis who use different trading techniques.
Setting Forex Factory Calendar Time Setting
Before reading and using it, the trader must first set the time settings on the Forex Factory Calendar. Why? Because the original time setting is not necessarily following the standards generally applicable in Indonesia, so we can be confused when matching it with our schedule. In fact, a calendar will lose its function if it shows a different time from where we are.
To see if the time setting is correct or not, pay attention to the time indicated in the upper right corner of the Forex Factory home page, or the upper left side of the calendar area. Compare with the time indication displayed by your PC/Laptop. If the numbers listed on Forex Factory match the hours shown by your PC/Laptop, it means that you don’t need to adjust them anymore.
However, if it doesn’t match, then you have to click on the time hint in the top right corner. On the next page that opens, you can choose the option to adjust the Forex Factory clock to the clock on your PC/Laptop or to adjust it to West Indonesia Time (GMT+7). Alternatively, to save these settings indefinitely (no need to reset when opening Forex Factory again), you need to register to become a member of Forex Factory and log in to your member account.
How to Read Forex Factory Calendar in a Simple Way
After adjusting the time settings on the Forex Factory calendar, the next step is to read the displayed schedule. Notice that the calendar is divided into 10 columns, as shown in the following figure:
Sort from left to right, each has the following functions:
- Date: Indicates the date of an event (such as a speech by a central bank official), or the date of the release of economic data.
- Time: Shows the estimated hours of the occurrence of an event or the release of data. It should be noted that not all events can be timed accurately, so the hours shown may be tentative.
- Currency: Indicates the currency symbol of the country from which the event or data originates. For example, if data comes from the United States, the USD symbol will appear.
- Impact: Indicates the estimated impact of an event or data to be released. Four colors will be displayed by the Forex Factory calendar (three of them are shown in the image above. There are color codes Yellow (low impact, or often almost no effect), Orange (medium impact, or around 25-60 pips), and Red (high impact, around 50-100 pips or more) In addition, there is also a white color code which is usually used to indicate a holiday in a country.
- Event: The top side of this column is usually not given any title. However, we can see a series of event names or data names that will occur. For example, RBA Assist Gov Kent Speaks (RBA Kent Assistant Governor Speech), Business NZ Manufacturing Index (New Zealand Manufacturing Business Index), and so on.
- Details: This section contains more information about the related event. For example, which institution publishes it, what is the content of the data, its effect, the frequency of reporting, its relevance for traders? There is also a chronology of previous data, links to view the overall chart, as well as related news (if the data has been published. By monitoring this section, traders can get a broader picture of the events taking place.
- Actual: This section shows the economic data that has been released. If the data has not been released, then this column will be empty. If the number is better than the forecast, it will appear in green ink. If it is the same as forecast, the color is black. Meanwhile, if the number is lower than the forecast, it will appear in red ink.
- Forecast: This section shows the approximate figures (estimates) of related data, based on mathematical projection calculations.
- Previous: This section shows the figures obtained by the data in the reporting of the previous period.
- Graph: As the name implies, this section can display a graph that displays a chronology of data over time. By looking at the chart, the trader can judge whether the achievement of the related data is the highest or lowest in a certain period. For example, the data is not only higher than the previous period, but also the highest in the last year. In such a situation, the effect of data on price changes in the forex market can be higher than usual.
- How To Use Factory Forex Calendar For Trading
Can you read the Forex Factory calendar? If yes, the next step is to use it in forex trading. For that, you actually only need to pay attention to two columns, namely the Impact and Actual columns. Conditions:
- If Impact is red, it means the event will have a high impact. If you don’t want to face high volatility and increased market risk, then don’t trade when an event is about to occur. On the other hand, if you actually want to trade using the news (News-Trading), then prepare a chart of the related currency pair that appears in the Currency column for trading.
- When News-Trading, pay attention to the color of the actual numbers. If the color is black, cancel the trade because the price movement will not be significant. If the color is red, it means that it is likely to have a bearish impact on the related currency. Conversely, if the color is green, it means that it is likely to have a bullish impact on the related currency.
Let’s take the example of the Retail Sales data release on the GBP currency earlier.
This data clearly has a big impact, because Impact is in red. On the same line, the Actual numbers are also visible in green. This means that the released data will be bullish for the GBP (Pound sterling) currency.
After witnessing this, you can immediately open a Buy position on the GBP/USD currency pair, or open a Sell position on the EUR/GBP currency pair. Thus, you can benefit from the faster strengthening of the GBP due to the momentum.
However, you should be careful when using this strategy. Because, not always the green Actual number will have a bullish impact, and not always the red Actual number will have a bearish impact. If at about the same time there are other data from the rival currency that is better, then the related currency pair may fail to advance in the expected direction. Moreover, not all events that affect the forex market will appear on the Forex Factory calendar. In the event of an unexpected situation such as war, coup d’etat, or armed conflict, the currency may plummet or skyrocket by itself; although there is no schedule anything on this calendar.