Stay Prepared for Market Volatility with the Forex Calendar
As a day trader, you need to be aware of the events marked in red on the economic calendar. These are the events that tend to cause significant volatility in the market. Even the days leading up to the actual announcements can be volatile, as the markets tend to weigh in predictions related to upcoming events, making traders move towards a certain side of the trade.
Many traders cancel pending orders, causing a drop in market liquidity. Due to fewer orders, prices may move to highs and lows, before moving in a particular direction.
An example of this is the release of the US Non-Farm Payroll (NFP) Report, on the first Friday of each month, by the US Bureau of Labour Statistics. The report provides data on the number of employees across various US industries, excluding agriculture, government and non-profit sectors, reflecting 80% of the US workforce.
A higher unemployment rate is generally not seen as a good sign, and causes the markets to decline, including the value of the US Dollar. At the same time, it affects many other parametres, such as consumer consumption figures, inflation and stock performance.
Traders anticipate the announcements and attempt to predict and plan trades accordingly. If the actual figures released are better than the predictions, it’s a signal that the markets might rise in response.