**Choosing the Forex Factory Calendar Events to Watch**
Knowing how to set up the Forex Factory calendar is one thing; knowing how to use it properly is quite another.
The first thing to understand is that you only want to focus on the market-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 cause increased volatility.
Here are some high-impact events to watch for:
- Federal Open Market Committee (FOMC)
- Nonfarm Payrolls (NFP)
- Unemployment rates
- Final Gross Domestic Product (GDP)
- Monetary policy announcements
- Any central bank rate decisions
The above list is an excellent baseline for you. Trading around these news events will help keep you out of trouble, but the list isn’t so exhaustive that you can’t find time to safely trade.
**How to Trade Using the Forex Factory Calendar**
We want to use the Forex Factory calendar to anticipate market-moving news and thereby avoid or prepare for periods of high volatility.
As such, I want to run through a few basic rules when it comes to trading around the news. All of the scenarios below assume that the news event in question would hypothetically impact your trade.
**No open 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, and you get to objectively analyze the price action 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 event that could adversely affect that position?
This is a hard question to answer as it depends on a few factors.
- The trader – Every trader is different and, therefore, has different requirements regarding how risk-averse they are.
- The time frame – On average, a trade on the 1-hour chart will require less time between the entry and the pending news than a trade on the daily time frame.
- Distance to take profit – A trade with a 50 pip profit target will require less time than a trade with a 300 pip target, hypothetically speaking, of course.
As a general rule, I don’t like to place trades within 24 hours of high-impact news.
**Open position – small profit**
This scenario involves an open position that is in profit but could turn negative if the news event adversely affects the position.
We’ve all been there – that point of indecision before a major news event is about to 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.
Remember, 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 and get out. I can always get back in later if the market presents a favorable opportunity.
When in doubt, get out!
**Open position – large profit**
Of course, the last scenario we’re going to discuss is the second safest place to be after not having an open position. When a high-impact news event is around the corner and you have a position that is well into profit, you have more options.
It’s much easier to ride out a major news 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 initially targeted a profit of 300 pips and is now just 40 pips from that target. In this case, I would likely close the trade before the news event to book profits.
To risk giving back 260 pips for an additional 40 pips isn’t very appealing.
You can also take a partial profit before the news event, leaving the remaining position open if the market reaches your final target. This is certainly a viable option, and one I choose often.
**Frequently Asked Questions**
**How do I use the Forex Factory Calendar?**
See the step-by-step guide in this post for details.
**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 and usually ranks them from low to high impact.
**What is the best Forex news calendar?**
I prefer the Forex Factory news calendar. It’s incredibly easy to use and is one of the more accurate calendars out there. Plus, you can enter your timezone so events are displayed in your local time.
**Should I 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 study the price action that follows a news event than trying to guess.
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