One of the most vital steps for a trader is to remain ahead of the curve when trading. It means always being aware of what is happening in the markets and using that information to make informed decisions. One way to stay on top of things is by keeping track of economic data releases.
There are several sources for economic data releases, but economic calendars are the most reliable. An economic calendar provides a schedule of upcoming events likely to impact the markets. It can include data releases from central banks, private companies, and government institutions.
One of the main benefits of using an economic calendar is that it can help you plan your trades. By knowing which events are coming up, you can anticipate how the markets might react and make informed decisions about your trading strategy.
However, never forget that not all economic data releases are created equal. Certain events are more important than others and can have a more significant impact on the markets. So how do you know which releases to focus on? Contact a Saxo broker today to find out more.
A few tips for evaluating data on economic calendars
1. Look at the date of the release.
Not all data releases are created equal. Certain events are more important than others and can have a more significant impact on the markets. So how do you know which releases to focus on?
One way to figure this out is by looking at their release date. Over time, you will learn which events are more likely to impact the markets. For example, if most of your trades are in commodities, an interest rate announcement will probably not affect your positions. You would be better off focusing on data releases that could affect commodity prices, such as inventory numbers or unemployment figures.
The same principle can be applied to cyclical stocks. Stocks for companies that rely on the economy tend to react more strongly to economic data than others.
2. Look at how market expectations compare with actual results.
You can also understand how vital a data release is by looking at the market’s expectations. It can be done by looking at analyst forecasts or reading market sentiment indicators.
If the market expects a particular data release to be positive, but the results are negative, it can lead to significant price swings. Conversely, if the market expects a data release to be negative, but it turns out to be positive, prices could move higher. It’s why it’s essential to always stay up-to-date with analyst forecasts.
3. Look at what happened in the past.
Another way to figure out how important a data release is is to look at what happened in the past. You can do it by looking at historical data or how the markets reacted to that particular data release in history. This information can help you understand how the markets might react this time around.
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4. Watch for central bank announcements.
One of the most important things you need to watch out for when evaluating economic data is central bank announcements. Central banks are responsible for setting monetary policy and influencing interest rates. So when they announce changes to their policies, it can have a significant impact on the markets.
For this reason, you’ll want to pay special attention to central bank announcements when evaluating economic data. Read the statement carefully and look for any clues about future policy changes.
5. Compare the features of different calendars.
Not all economic calendars are created equal. Some offer more features than others. Make sure you compare the characteristics of different calendars before deciding which one to use.
Some essential features to look for include:
- Frequency of updates
- Types of data included
- Notification options
- Layout and design
By using an economic calendar and following these tips, you can better understand which data releases are most important for your trading strategy. By being prepared for these events, you can make more informed decisions about your trades and maximize profits.