The forces of demand and supply drive financial markets; in the forex market, the strength of one currency against the other drives the demand and supply based on exchange rates. The demand and supply for currencies are, in turn, affected by traders’ sentiments on the market direction, and traders look toward the macroeconomic and microeconomic data to understand the economic strength of a country. With over 900 indexes of the world’s biggest economies based on real-time data, an economic calendar needs to be organized into an actionable structure to give investors optimum results.
Metatrader 5 Economic Calendar
An economic calendar is a lineup of events and news that informs about the events that can move markets. Investors and traders use economic calendars to make trading decisions. Most brokers and forex data platforms provide complete or mini news calendars.
The MetaTrader 5 economic calendar is a built-in feature that presents real-time forex reports and news and schedules future events in one place. The tool is handy for fundamental traders but is also widely used by technical traders looking to hone their trading advantage.
The calendar has rows for the news release time, the currency impacted (country where the news is released), the previous, actual, and forecasted prices, and the event itself. This makes it easy for traders to navigate their preferred news and find the necessary information.
Why Add Economic Events and Market News to Your Trading Strategy?
A well-organized calendar is a valuable asset to forex traders for these reasons:
Trading Opportunities
Since news moves the market and creates volatility, having an economic calendar helps traders identify high-impact news with trading opportunities. Upward or downward volatility means more profits for traders than slow, ranging markets.
Risk Management
Trading is a skill; only skilled traders attempt to ‘trade the news.’ Traders who prefer slow markets often follow economic calendars to note the high volatility of days. This way, they can avoid uncertainty in the market. This is an important example, given that news events can reverse market trends quickly.
Enhanced Strategies
Although news trading is a strategy, it is often incorporated with others to enhance performance and potential profits. Traders, for instance, usually factor in news releases for swing trading.
How To Integrate Economic News Into Your MT5 Strategy
Keep Up
Mark your economic calendar religiously and ensure you’re abreast of the latest developments. The MT5 economic calendar is extensive; you can find more information and data from government agencies and central banks’ websites.
Categorize Each Event
Each event impacts markets to varying degrees; categorizing economic news makes it easier to streamline your strategy and pick entry points.
Trade the Correct Pairs
Although market news may have rippling effects, it primarily affects the country’s currency. The US CPI and NFP will impact the USD more than the CHF or YEN. Trading the right currency pair improves your potential.
Determine Market Sentiments
Market sentiment describes the investors’ confidence (or lack thereof) in a currency, especially following a news release. This is necessary because some events may not be strong enough to move markets alone, so investors consider other data before making trading decisions.
Apply Proper Risk Management
Risk management helps improve your trading outcomes while limiting the risks associated with news trading. Lot sizing, automated exits, and market orders are excellent risk management tools.
How to Set the Economic Calendar on MT5
The MT5 economic calendar is available on all platforms; traders can access the tool from the main menu. Here’s how to do it on mobile:
- Locate the “Economic Calendar” and tap to open it.
- Instill the Tradays FX Economic Calendar app.
- Navigate to the event that interests you and find the details.
There’s also a ‘News’ option on the main menu; this provides live news feeds for traders on the MT5 app. If you trade on the desktop version, the economic calendar and news feeds are on the menu bar. The calendar opens on the chart, and you can set the filters to show news according to “Priority,” “Currency,” and “Country.”
Economic Calendar and Expert Advisors
Integrating the MT5 economic calendar into an expert advisor (trading robot) for automated trading is also possible. These EAs are programmed to monitor the news and trade essential events based on pre-set instructions. For instance, investors could program an EA to take a sell trade on the EUR/USD pair if the European Central Bank revises its monetary policy. Integrating forex news and EAs may define how investors trade currencies in the future, as they enhance convenience and discipline.
Managing Trades After News Impacts the Market
Traders often enter positions after news hits the markets or exit their open positions before announcements. These are management strategies to ensure they don’t get taken out. Managing your trades after news impacts the market is a crucial skill that takes time to hone. For instance, you need to learn to ride the momentum of news and secure profits before reversals occur. Leverage the TP, SL, and other market orders to manage your trades effectively, and remember to always combine technical and fundamental analyses for the best outcomes.
