Earthquakes, terrorism, hurricanes, or sudden political instability can throw the forex market into turmoil, but these events are fairly rare and cannot be planned for. However, the vast majority of the spikes in the forex markets are due to economic announcements that are scheduled on a regular basis. Currency traders must pay close attention to this calendar.
If the market is in motion or at rest, it will continue to be so until something fundamentally changes. The change occurs when bias is revised based on new information that hits the market and affects the majority opinion of the traders in the market. This happens when an economic report is announced.
Hence, the market may change its behavior, sometimes dramatically, based on fundamental announcements scheduled on the day’s calendar. Therefore, it would not be advised to enter a trade that has been planned based on what the market has been doing just before an economic announcement is released.
What has been happening may not continue to happen after the news is released. The speed of the market and momentum of price often changes when these announcements come out. You should be keenly aware of the scheduled announcements on the calendar.
Wait for the announcement to be released to the public and see if it has changed the market bias. If it has, create a new trade plan. If not, continue as planned. This means every currency trader should review the calendar, such as shown in Figure 9.1 ...