Make Good Use Of The Financial Calendar For Investing
As we mentioned in the last lesson, “If you intended to do a good job, you must first sharpen your tools.”. When investors are preparing for investment, other than browsing the international news, and able to clearly remember the exact time of the upcoming financial events of the day or the week, that would provide Investors to have more available time to evaluate the possible outcome and the correlation between the product you choose to trade on. These slides will talk about how to make good use of the common economic calendar to prepare for investment in advance.
Pre-Investment Preparation – On the Basis of Importance and Commodity Items
The day starts from the morning, and a week starts by Monday. Generally, when browsing the economic calendar on the anecdotal finance website, it is recommended to start from Monday, and then filter by importance and the preferred product(s) related data, to save your time going through the whole occurrences. Then, according to your own habits of product(s), look for the relevant financial events and the release time of data. If it is an economic performance indicator, check further on the differences between the previous value and the expected value(Forecast), as shown in the figure. (Source from: Investing.com for demonstration).
Further Review on Forecast of Indicators on Preferred Product(s)
(Take Gold As an Example)
As can be seen from the figure below, the highly correlated data with Gold is the Non-Farm Payrolls(Oct) by 20:30 from United States. This was due to the employment data holds a deep impact on the prospects of the US economy, it is not only correlated to the performance of the US stock market, but also played a huge role to the $USD and the USD-measured products like Gold. Looking at this table, the previous value was 312,000, the expected value is 450,000, and the announced value resulted with 531,000. Before the publication is disclosed, the market expected value is higher than the previous value, which is a relatively optimistic forecast. Therefore, market investors would usually project a Bullish Outlook on $USD and a Bearish Trend on Gold.
Draw Up an Investment Plan
Then formulate an investment plan applicable to the above example. Generally, three operation modes are adopted.
1. Place an “Instant Execution” order at the present price, that is, the transaction is made directly according to the quotation of the software provided by brokers.
2. A “Limit” pending order, Investors who look Long on XAUUSD and wishes to Bargain-Hunt at lower price could place a “Buy-Limit” order for Bull trend, the software will automatically execute the order when the quotation met the market price during/after pullback. On the contrary, if Investors forecast the near future would be Bearish outlook, whom can place a “Sell Limit” order. Again, the software will automatically execute the transaction when the quotation of the product has met the nomination during/after the rebound.
3. A “Stop” pending order. For Bull trend in domination, Investors could consider to place a “Buy Stop” order, the software will automatically execute the order when the breakthrough to the price nominated do occurred, and vice versa for “Sell Stop” order.
Simply organize the above three methods of operations:
The “Instant Execution Order” is to place an order according to the current quotation on the software. The “Limit Pending Order” is applicable for Investors who wishes to operate High-Throw or Bargain-Hunt, and lastly, the “Stop Pending Order” is applicable to the operation to break through the threshold.
Executing Your Investment Plan
Taking the above example, if an investor checks the calendar and comes to the conclusion that the Bear is dominating the trend on Gold, they can adopt the “Sell-Limit Order” method (the concept of shorting on rallies), or the method of “Sell-Stop Order” (the concept of continue shorting below a certain price), and then properly set the Take-Profit/Stop-Loss goal. Then you have completed the investment process of observing the economic calendar.
The economic indicators and events from the economic calendar are usually marked with dates and times in advance, not only to remind investors to pay attention to market changes, but also to reveal the potential path economic development from medium to long-term, and to observe the context of various indicators to deduce possible economic trends in the future. This constructed ability to conduct the fundamental analysis for the investors when judging the market trend of related products, coupled with real-time updated news, it can support investors to grasp on the most present financial affairs. If investors develop the investment habit of collecting and organize information released, you could enhance your analysis skill in time.
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