News trading with forex factory using the economic calendar

The Forex Factory Calendar is by far the most user-friendly & accurate calendar khổng lồ keep track of Forex-related news events. By the end of this tutorial, you will know how lớn use the calendar as well as how khổng lồ read it in a way that is beneficial khổng lồ your trading.

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But before we get into the details, I want khổng lồ dispel a common misconception.

Many technical traders make the mistake of thinking that, because they take a technical approach to the market, they don’t have khổng lồ pay attention lớn news events.

Free PDF Guide:Want lớn learn how to use the Forex Factory news calendar in 5 simple steps? Click here to download the exclusive PDF guide.

While it isn’t necessary lớn study the news, it is advantageous to know when news is expected. This is especially true for heavy-hitting news that can adversely affect the market. Not only can this type of news affect an xuất hiện position, it can cause slippage và gaps that can wreakhavoc for pending orders.

Here’s how you can use a Forex news calendar khổng lồ start making more informed trading decisions.

Step 1: Getting Started With the Forex Factory Calendar

The very first thing you want to bởi is navigate to theForex Factory calendar.

Once there, you should be presented with a screen similar to the one below.

Don’t be intimidated by all of the activityon this page. It will all make sense by the end of the tutorial.

Next we will begin configuring the calendarso that you can get the most out of it.

Step 2: Configuring Your Time Zone

Now that you’re on the calendar tab, you will want khổng lồ set your time zone. To vì chưng this, simply click the time in the upper right hand corner.

After clicking the time stamp, you will be taken khổng lồ a page where you can set your time zone. This will synchronize the time for each news event with your local time.

Note: Setting the correct time zone is extremely important. If not set, itwill be difficult to lớn determinethe correct time for each news event.

At this point youalso have the option to turn Daylight Savings Time (DST) on or off. Lastly you can toggle the time format to lớn show either am/pm or 24 hour “military time”.

Once you are happy with the settings, click “Save Settings” so that you won’t be required to do this each time. As long as your browser’s cache is not cleared, your settings will remain the same each time you revisit this page.

After saving your settings, youshould now see the correct time displayed in the upper right hand corner of the screen. If not, repeat step 2 khổng lồ make sure your settings were saved properly.

Step 3: Setting the sự kiện Filter

At this point you should have the Forex Factory calendar in front of you with each news sự kiện synchronized with your local time.Next we aregoing khổng lồ set the event filter to lớn determine the type of news và currenciesto display.

This is convenient if you only want khổng lồ display certaintypesof news events or are only interested in specificcurrency pairs.

To set the filter, click the “Filter” icon in the upper right hand corner while on the calendar tab.

After clicking “Filter”, you will get a screen like the one below. This screen gives you the ability to filter events by expected impact, event type as well as currency.

Pro Tip: Hover your mouse over the colored boxes under “Expected Impact” lớn get an explanation of each one. In short, red equals high-impact, orange is medium-impact và yellow represents low-impact news.

I personally lượt thích to focus on the medium và high-impact news events. This gives me a complete picture of what to expect over the coming days without cluttering the calendar with news that will have little impact on the markets.

Once you have everything mix the way you want, click “Apply Filter” khổng lồ begin showing only the events and currencies you selected. You can change this any time by repeating this step.

Step 4: Selecting the DesiredTime Frame

You should now have your time zone set and your filter configured the way you want. Now it’s time lớn select the desired time frame.This is the span of time that will be shown on the calendar.

The navigation paneyou seebelow will allow you to lớn set any time frame you desire.

From this window, you can choose a single day, aweek or even the entire month. Also note that you can quickly selectpredetermined time frames in the bottomhalf of the navigation pane.

Pro Tip:Choosing to see the entire week is often the best approach when trading the higher time frames. This allows you to lớn preparefor the next few days rather than just the next 24 hours.

Step 5: Digging Deeper

In addition to lớn seeing the “surface content” such as the event name, expected impact and scheduled time, you can also expand each event to see additional information.

Be sure khổng lồ use this feature with caution. It can be far too easy to lớn get caught up in the nuances of each event. As price kích hoạt traders we need lớn bemore concerned aboutwhat’s happening on the chart và less concerned about the fundamental significance of news.

The image below illustrates how you can expand the details of a given news event.

Once the icon above is clicked, you will immediately see additional details of the event.

From the screen above, you can see additional detailssuch as the source, frequency & history of the event to name a few. To lớn close this window, simply click the “X” shown in the image above.

Before we move on, I want lớn reiterate how important it is khổng lồ use these additional detailssparingly, if at all. The real advantage khổng lồ using a calendar as a technical trader lies in the scheduled time & expected impact of the news. Anything more than that và using a news calendar can become more of a distraction than an asset.

That concludes the process of setting up the Forex Factory news calendar. Now let’s get into the second half of this tutorial & discuss how lớn use what you’ve just learnedto your advantage when trading Forex price action.

Choosing the Important Headlines

Knowing how khổng lồ set up the Forex Factory calendar is one thing, knowing how to use it properlyis quite another. The first thing to understand is that you only want lớn focus on themarket-moving events.

This means setting the filter to include only the medium and high-impact news events. By doing this,you don’t have to sift through the low-impact news to find the events that are likely to lớn cause increased volatility.

Pro Tip:Below is a list of some of the major news events you shouldkeep an eye on as you trade the Forex market.

Federal open Market Committee (FOMC)Nonfarm Payrolls (NFP)Unemployment ratesFinal Gross Domestic sản phẩm (GDP)Monetary policy announcementsAny rate decision announcement fromcentral banks

Before moving on, let’s recap what you have learnedthus far.

By now you should have the time zone, filter & time frame set for your calendar. You should know how to view additional details of a news event as well as which events are most likely lớn cause an increase in volatility.

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Next we will get intohow to strategically position your trades around major news events so as to lớn minimize your risk.

Trading Around the News

The reason we want lớn use the Forex Factory calendar is to know when market-moving news is expected & thereby avoid or prepare for periods of high volatility.

As such, I want khổng lồ run through a few basic rules when it comes lớn trading around the news. All of the scenariosbelow assume that the news event in question would hypothetically impact your trade. For example, trading USDJPY with Nonfarm Payrolls (NFPs) on tap.

No xuất hiện positions ahead of a news event

This is obviously the safest place to be with major news around the corner. You have nothing at risk và you get lớn objectively analyze the price kích hoạt that forms as a result of the news.

But what if the news isn’t just around the corner? How much time is needed between putting on a new position and a scheduled news sự kiện that could adversely affect that position?

This is a hard question to answeras it depends on a few factors.

The trader –Trading style & risk tolerancecome lớn mind. Every trader is different and therefore has different requirements when it comes khổng lồ how risk averse they are.The time frame – On average, a trade on the 4 hour chart will require less time between the entry and the pending news than a trade on the daily time frame. This is because, hypothetically speaking, a trade on the 4 hour chart has a greater chance of running lớn profit before the news sự kiện occurs.Distance totake profit – Aside from the time frame, the distance from the entry lớn the take profit also plays a role. A trade with a 50 pip profit targetwill require less time than a trade with a 300 pip target, hypothetically speaking of course.

As a general rule, I lượt thích to see at leasta 24 hour window in which there is no scheduled (major) news before putting on a trade. By “major” I’m referring khổng lồ one of the events listed above. This of course can change depending on the last two factors listed above.

Open position – small profit

This scenario involves an xuất hiện position that is in profit, but stands a good chance of turning negative if the news event in question adversely affects the position.

We’ve all been there – that point of indecision before a major news sự kiện is about khổng lồ hit.

Should you close the trade and book a small profit to be safe? But then what if the market moves in favor of your position? If you close it now you risk missing out on potential profits.

In my experience, most traders fear a missed opportunity more than they fear losing capital.

This couldn’t be more wrong.

Your number one job as a trader is capital preservation. Making money always comes second. The path I choose 95% of the time in this situation is to take my small profit & get out. I can always get back in later if the market presents a favorable opportunity.

Just remember – when in doubt, get out.

Open position – largeprofit

The last scenariowe’re going to lớn discuss is the second safest place lớn be behind having no xuất hiện position, of course.

When a high impact news sự kiện is around the corner và you have a position that is well into profit, you have more options. It’s much easier to lớn ride out a majornews event if you know your position is 200 pips in the money.

One thing that can influence your decision here is how far away your trade is from its profit target. Let’s assume this position was originally aiming for a 300 pip profit targetand is now just 40 pips from the target. In this case I would be more likely lớn close the trade before the news sự kiện to book profits. Khổng lồ risk giving back 260 pips for an additional 40 pips isn’t the greatest of propositions.

Your other options are lớn take a partial profit and leave the remaining position on or keep the entire position mở cửa throughout the event. I’m not a huge fan hâm mộ of taking partial profits so I usuallyopt to go all or nothing. But one thing is certain, you have a lot more options with a position that has run into considerable profit.

Now it’s time lớn bring it all together. By now you should know how to lớn configure your Forex Factory calendar as well as how to lớn manage news events. Let’s finish up this tutorial by discussing how price kích hoạt plays a role in all of this.

I have written before about how to lớn use the news to lớn gauge market sentiment. However this time I want lớn talk about actually reading the news through the price kích hoạt strategies that form on your chart.

What is a pin sạc bar, really? How about an inside bar? You probably knowwhat they look like, but have you ever thought about why they form?

These two strategieshave a common thread – they are both the byproduct of news. Whether it be something that was just announced or a more gradual flow of news that causes market sentiment khổng lồ either fluctuate or remain constant.

In fact, all Forex trading strategies are a byproduct of news in one way or another.

However, the sạc bar and inside bar really embody the essence of how news can influence a market.

Here’s why…

Pro Tip:Stick to the higher time frames (4 hour và daily) in order lớn get a better feel for the impact of a major news event. This will help to lớn eliminate the “whipsaw” effect that is common on the lower time frames.

Pin Bar

Some of the best pin bars size on the back of a major news event. In fact one of my favorite setups is the NFP sạc bar. This is because NFPs are released at 8:30 am EST andthe 4 hour candle on my new york close chart closes at 9am EST, giving the market thirty minutes khổng lồ react.

The timing of a news event like this can often cause the price for US Dollar pairs lớn rise or fall quickly, thus forming a 4 hour sạc bar. Of course it isn’t always the case, but when an NFP sạc pin bar forms at a key level, it’s often worth taking.

Inside Bar

The inside bar can be thought of as the opposite to the sạc bar. While the sạc pin bar represents a volatile push in either direction, the inside bar represents consolidation after a large move.

So whereas the sạc bar forms as news is released, the inside bar often forms the day after a news release.This is why the inside bar thiết đặt is often referred khổng lồ as a type of breakout strategy.

Pro Tip:While the sạc pin bar can be traded on the daily or 4 hour time frame, the inside bar is best traded only on the daily time frame.

Before we kết thúc this section, I would like to point out that the news which causes these types of moves isn’t always immediately apparent. The markets can move because ofan unscheduled event or perhaps an sự kiện that has already passed và the market is just now realizing the impact. Regardless of how or when the news occurs, the two strategies above give you a quick & easy way to read the news via your charts.

We have covered a lot of material in this tutorial. Everything from how to configure the Forex Factory calendar lớn how khổng lồ use it when trading price action. As such I would like to summarize some of the more important points to lớn keep in mind when using the news calendar.

First & foremost, the news calendar should never be used as a tool to lớn help you enter the market. In other words, attempting khổng lồ trade a news event for the volatility it causes is a surefire way to blow up a trading account.

The calendar can, however, be a great way to lớn keep track of upcoming events. Knowing when these events are scheduledcan help you make decisions aboutthe timing of your entries. It’s also helpful if you have an open position as it gives you the opportunity to book profits before a potential increase in volatility.

As a price kích hoạt trader, you have a distinct advantage over other market participants using something other than price action. You have the ability to lớn read the news through your charts using strategies such as the pin sạc bar và inside bar. Just remember to stick lớn the daily and 4 hour time frames with the exception of the inside bar, which should only be traded on the daily time frame.

What is a Forex calendar?

The Forex news calendar is a vital tool for any serious trader. It shows the scheduled news events for the week và usually ranks them from low khổng lồ high impact.

What is the best Forex news calendar?

I prefer the Forex Factory news calendar. It’s incredibly easy lớn use và is one of the more accurate calendars out there. Plus, you can enter your timezone so events are displayed in your local time.

Should you trade Forex news?

In my opinion, the answer is a resounding no! Trading the news is gambling. I’ve found it far more useful to lớn study the price kích hoạt that follows a news event than trying khổng lồ guess.

Are you ready khổng lồ start using the Forex Factory news calendar?

If so, you definitely want to tải về thefreePDF guide that I just created.

It breaks down how to lớn use the calendar in 5 simple steps & explains which news events produce the most volatility.

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Click the links below và enter your thư điện tử to get instant access to lớn the PDF guide.