News and economic events

Fundamental analysis — assessing what affects an asset’s value: the state of the economy, interest rates, inflation, employment, political events.

• A currency pair depends on the economies of both countries: EURUSD depends on what is happening in the eurozone and in the US.
• Gold (XAUUSD) is sensitive to interest rates and to demand for assets seen as safe havens in uncertain times.
• An index such as GER40 reflects the value of large German companies and reacts to news about Germany’s economy.

In this course, fundamental analysis is not meant for making forecasts. A beginner’s task is more modest: to know when important data is released and not to be caught in a trade at the wrong moment.

• Central bank interest rate decisions and statements.
• Inflation data.
• Employment and unemployment data.
• Economic growth data.
• Unexpected events: elections, conflicts, sudden statements by politicians.

Scheduled releases are collected in an economic calendar. It shows the release time, the country, the importance of the event, the forecast and the previous value. Many brokers and financial websites publish such calendars.

What moves the price is not the figure itself but how far it differs from expectations. If the data comes out as expected, there may be almost no movement; if it differs significantly, the price reacts sharply.

• Sharp movement. In seconds, the price can cover a distance that takes hours on a normal day.
• Movement in both directions. The first spike is often followed by a reversal.
• Wide spread. The difference between Bid and Ask grows noticeably during the release — we covered this in the lesson on trade costs.
• Slippage. Market orders and Stop Loss orders are executed at a worse price than set.

Example. You calculated a risk of 10 dollars: the stop is 20 points away, and with your volume one point is worth 0.5 dollars. If the stop is triggered during a data release with 6 points of slippage, the position will close 26 points from the entry. The loss is 26 × 0.5 = 13 dollars instead of the planned 10.

That’s why, in the lesson on trade costs, we advised against calculating risk right up to the limit: moments like these are exactly when you need that buffer.

1. Open the economic calendar before your trading day begins.
2. Note the times of important releases for the countries behind your instruments.
3. In your own practice trades, don’t enter shortly before important data comes out or right after it — wait until the spread and the price movement settle down.
4. If a position is already open, check that a Stop Loss is set, and remember: during a data release it may be executed at a worse price.
5. Write your news rule into your trading plan — in advance, not at the moment of the release.

• It does not give an exact forecast: the same news can trigger different reactions at different times.
• It does not replace Stop Loss or position size calculation.
• It does not make a trade safe: good data does not guarantee that the price will rise.

• Fundamental analysis looks at the causes of price movement: the economy, interest rates, events.
• The times of important releases are found in the economic calendar.
• When data is released, spread and slippage increase, and the price can swing sharply in both directions.
• At such moments, a Stop Loss may be executed at a worse price than set.
• Your news rule goes into your plan in advance; when trading on signals, follow the system’s rule.