Have you checked the lists of High Impact and Tradable Fundamental Analysis on the FORUM?
Please, if you’ve not, then quickly check, copy and save somewhere on your PC to know which
Economic Indicators drives the FX market.
You need to understand that there are some elements and details on the ForexFactory website. We have:
Date: Shows the date that the report(s) will be released
Time: Shows the time after you have set and saved as a member on that site. It is very important that
you register as a member on www.forexfactory.com and make sure you sign in before checking any
report. Otherwise, you might not get the correct timing.
Currency: This shows the Country/Currency that is releasing the report(s)
Impact: Signifies the effect of the economic indicator in 4 categories (colors) – Red – High Impact,
Orange – Medium Impact, Yellow – Low Impact, & White – Non Economic or Holiday.
Detail: This is very important for all traders to view before forecasting. It defines the Indicator and the
usual effect.
Actual: Displays the figure of the report/indicator when it is released at the stipulated time. But the
Actual will not display any figure before the release time.
Forecast: This displays the expected figure of the report as researched by financial market
experts/analysts.
Previous: Displays the previous/last Actual figure that was released.
Chart: Newly incorporated for more enhancements on this site. Good to check indicator performance.
Study the diagram below
Now, after you have studied the above diagram, you are getting closer to forecasting the FX market.
How to Forecast Tradable Indicator
1. Logon to www.forexfactory.com
2. Locate the tradable indicator ahead of the release time
3. Click on the Detail and you will see more info about the indicator, previous reports, what
you should be expecting etc.
4. Your focus should be on “Usual Effect” Actual > Forecast = Good for currency; This
simply means if the Actual figure is higher than the Forecast, then the currency of the economy that
we are expecting the report from will be stronger. E.g. the diagram above shows the report
(Retail Sales m/m) from Great Britain at 9.30am. The forecast was 0.1%, and the Usual Effect states
that if Actual > Forecast = Good for currency;
In this case, your next focus will be to check the History, check the past 3 month’s history and note the
Deviation. By definition, Deviation is a change or difference from what is usual, accepted, expected or
planned. Check the average deviation from the History to determine what deviation you would use for
your forecast.
Therefore, what is expected is the forecast. And if the Actual comes out to be higher or lower than the
forecast, that will tell you what to do in the forex market; either buy or sell. As for the Retail Sales m/m
that was released on the 17th of June 2010. The forecast was 0.1% while the Actual came out to be
0.6%. This shows that we should expect stronger GBP. And if you want to trade, you should be trading
(buying) any of these pairs; GBPUSD, GBPJPY, GBPCHF. Preferably GBPUSD.
5. Immediately it is 5 minutes to the release of any indicator, just go to
www.forexfactory.com or refresh the page if you have it opened. Or visit www.marketwatch.com to
watch out for the breaking news.
6. Once the ACTUAL is released and you are clear with the deviation. That is the difference
between the Actual and Forecast. Then, you can now follow the trend or direction of the market as
speculated by the Fundamental indicator.
Note: If you are trading FA, it is advisable to maintain risk and money management. You should
minimize your risk exposure in the market. Do not trade higher lot size than your account capacity. You
should be looking at exposing between 5 to 10 percent of your equity.