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Interpreting Market Calendars And Major Economic Events

Want to become a better trader? There's only so much you can do if you don't understand the roles market calendars and major economic events play in your success. Take a closer look.

A Common Scenario

This is an extremely common scenario for beginning traders, although veterans also deal with it. What happens is that they do their homework and study trading and the specific industry they'd like to invest in. They have their budget, so they won't lose anything they can't afford. Then there's all the work they did to ensure emotions don't get in the way of their success.

Finally, the big day comes. They sit down and execute trades just as they practiced. If they're forex traders or investors, this could unfold a number of different ways. In any case, their first trade doesn't work out. No big deal. Then their second trade falls through. They knew this could happen, but it's tough to take two in a row like that.

When the third hits, they start hurting. This kind of streak can only last so long before the trader quits and spends the rest of their life thinking some people just have "it" and some people don't.

The Importance of a Market Calendar

What went wrong? More often than not, the problem is that the trader didn't take a look at the market calendar. No matter what market you're trading in, everything is interconnected. As an example, a company's stock could drop significantly because a competitor just announced a new product. Sometimes a company that seemingly has nothing to do with another will impact it.

Interpreting the Market Calendar

It is essential that you look ahead at the market calendar so that you can interpret what economic events will do to stock prices. A big one is any announcement by the Fed. If interest rates are going up, expect a lot of stocks to fall. When they go down, the opposite.

You have to look at what companies in your industry or indirectly connected to it are doing. Subscribe to their newsletter or otherwise get on their PR rounds so you'll be the first to know when something is on the horizon.

Now that you have a better understanding of how important market calendars are, get started reading them. For best results, go back and look at how major events affected the markets you care about as this will help you look into the future.