How to use Forex Factory to make trading easier (How to Analyse Fundamental events - part 1)

If this is your first time of checking out forexfactory.com, I will be providing a guide on how to use the website in this video. First step is to launch the website, and the site is forexfactory.com as I have here. You launch the site just as I have done. After launching the site, the next thing to do is to check the date that the site is displaying. Currently today, uh, is July 12th, so you also need to check at your end if the date being displayed here corresponds with your date or with the date in your country, uh, this day that you are watching this video. Then the next thing you also need to check out is the day. Today is Monday, and as you can see on my screen now, it is showing Monday, July 12th. So that's the first phase of the steps to take to be able to utilize this website, especially for our fundamental analysis. The next thing to check is the time displayed the website. So currently I have 11:36 AM and the time in my country is exactly 11:36 AM now. So I have been able to synchronize the time on this website to my local time. But if you are watching this video and the time currently displayed on the website is slightly different from your local time, so how do you synchronize the time? Just move your cursor to the time. You can either use this one or you utilize this one. Any of the two works perfectly. So once you have clicked on the time, as I have just done now, it takes you to this page. I am recording this video from a country whose time zone is GMT+1 West Central Africa. So whatever time zone your country belongs, so you need to select that time zone from GMT-11 to GMT+13, that's from Samoa. So once you have picked the time zone applicable to your country, then you the time format that suits you. You have either AM/PM or 24 hours. Once you are done, you click on Save Settings. So this one gives us a notice that we have been able to synchronize our time. So the time on the website has now been synchronized to my local time wherever I am working on the synchronization. Once I am done, I move back to the home page by clicking around this corner. So So this takes me back to the homepage where I have access to the fundamental event for the day. Okay, so once I have done that, I've synchronized the time on the website to my local time, I need to quickly have a rundown what all these figures and all these names we are seeing here, what does it mean? First of all, we have these different times shown here. This time shown here is the time the event will be made available. That's the time the event will affect the instruments that it has been specified for. So anyone who plans to trade any of this event must be on the system as at the time that is being displayed here, because it is that time that the events or the data will be made public, and the effect of the data will also be felt on the instrument, uh, we are expecting. Since we have been able to synchronize our time to the local time in our different country. So the time displayed here will be the time in our own country. It's not the time when this data will be released from different countries where we'll be trading, um, the, um, the data, but the time in our own local time. That's basically what the time here is showing. Then we have the currency. The currency represents the currency the event is going to affect. So here we have the Japanese yen as JPY was the first currency the data series released earlier today would have affected. Then we have the euro, the Japanese yen, euro, USD, USD, and then NZD. So this currency gives you a guide as to the pair you should consider to be able to trade the event. If, for example, I plan to trade this particular event that took place earlier today, I have to open a pair that has the Japanese yen. Say USD/JPY, EUR/JPY, GBP/JPY, CAD/JPY, or any other pair that the Japanese yen is present either as a quote or as a base. But in this case, all instruments where the Japanese yen can be traded happens to be a quote, but it can be any of the two sides when you are looking at some other currency that is not, um, the Japanese yen. Once you are done with the currency, the next thing you would be seeing here is the impact. And for the impact, we have different colors of envelope, and on this particular day, only 2 colors are being displayed here. The first color we have here is this yellow, and if I place my cursor on this yellow, it shows low impact expected. So this kind of event or this kind of data tends not to really have strong impact in the market, just as the name implies, it is low impact. And the impact in the market also tends to be low. So we do not need to check them out or trade them whenever they are being released. It's just for us to keep abreast of happenings in the country where those data are being released from. And the next color that we have here today is this orange, which is a medium impact event. In the case of medium impact, even though the impact is not so massive, but traders would still be able to utilize the opportunity that will be created during the release of such medium impact event to be able to trade the financial markets and get to make some profits for themselves. So quickly, since we are all aware that this yellow is not events we should look forward to, then we need to quickly filter out this yellow from the list of events we'll be having access to. So how do we get to filter out the events that are not so important so that we'll be able to focus on the ones that are important and be able to strategize properly and take full advantage of the market, I will need to go to this icon known as filter. Um, can we see the filter icon there? Yeah, so my cursor is currently on it. So I click on the filter and it opens this page to me for me to be able to filter out, uh, events that are not so important with respect to the impact. And on the impact here, we will be able to see different colors of the envelopes that were not previously displayed when I launched the site because those kind of events are not happening today. The first color we'll be seeing here is this red. These ones are high-impact events. This kind of events are events traders all around the world usually look forward to. And if traders all around the world are looking forward to such an event, then you and I ought to also look forward to the event. So high-impact events generally, generally, and most of the time create better opportunities for us as short-term traders compared to the long-term traders who might not necessarily check out sites like Forex Factory because they are trying to position themselves for the longer-term move, not the short move that happens during the course of the day. So we have checked this orange as medium impact earlier, and then we have also looked at the yellow as low impact. The only other addition this time around is this whitish or the gray color envelope, which is non-economic. So anytime countries around the world will be on holiday, the kind of envelope that is used to signify those kind of events is this non-economic color or the gray color envelope. And sometimes when countries are also adjusting their time for daylight savings time, they also do come up with this grayish envelope color. So either daylight savings time or bank holiday. So on bank holidays, the best thing for us to do at such period as day traders is that we should also try to avoid currencies that their banks are on holiday. We are all aware that bank is a major driver of liquidity in the currency market. So if the major driver of liquidity is absent in the market, the best thing for us to also do as retail traders at that particular point in time is that we should also stay out as the bank banks. And whenever the banks come back into the business, we also come back with them, and we'll be able to enjoy better liquidity in the market at such period. Okay, so we have to quickly remove, um, or filter out this yellow envelope. So how do we get to do that? We come to this tick, then we untick it. So what we have basically done now is that we have removed from our view or from our sight yellow envelope events, which is generally known as the low impact event. Once we have unchecked the yellow, then we come to this side and apply filter. But before we go there, we have different currencies here too. So depending on the kind of currencies you trade, if there's any currency listed here that you do not want to trade, you can also uncheck it so that you are not aware of any happening in such a country because you do not want to trade it. But if you trade them, let them pump up so you can know what to do at every point in time. So we are done. So let's quickly click on Apply filter. Yes, so what we have basically been able to do now is to see the only event today that is important. Every other non-important event has been taken out of our way. And for this day, July 12th, the day— the only economic event that is of slight importance is the 10-year bond auction. From the United States, the 10-year bond auction from the United States. So what is the 10-year bond auction all about? You want to know more about the event you plan to trade. There is an envelope here that allows us to read more about that event. So just click on the open detail and a drop-down option will come up to us and show us more information about that particular event. So from this particular dropdown option, we'll be able to see the source of the event, we'll be able to see what the event measures, we'll be able to see the usual effect— that's how do traders generally trade this event whenever it comes up or whenever it is being released— so that you can also prepare yourself to join other traders all around the world to trade it exactly the way they do. And the next thing we are going to see here is the frequency of release. How often is this particular event released? This one shows monthly. So every single month, the 10-year bond auction is conducted, and the information will be also made available every single month once they are done with conducting the auction. Then we have the next release— when next will they conduct the 10-year bond auction? In this case, it is applicable to any event you are trading in the market. Then the notes— what should you take note of and why do traders care? If you are able to know why other traders around the world care about a particular event, then you will know if you are also to look forward to such an event or forget about such an event from our understanding of what that event is going to look at. Then also called— what is the other name for 10-year bond auction? It's also called Treasury auction in this case, and notes auction. So you get to see the other names for a particular event or a particular data series if there are other names for them. So once we are done with the detail, you can exit or close the detail by clicking this X here, so it takes us back to what the home page looks like. And at this time, we need to move to the actual forecast and then previous. And, um, as at this time, my time here in the country where I'm speaking from is still in the morning, and as at the time this data will be released from the United States, according to my local time, is later in the evening, so I will not be able to utilize this information as at this time yet. I have to wait until 6:01 PM to be able to utilize the information that will be made available according to this data. But now what I'm going to do right away is that I will take us to a day, uh, maybe in the past, for us to have an idea of how to use each of the events that will be made available, or each of the data that will be made available by this website. So let me quickly scroll to, let's say, last week Friday and see if there were some events. That were released on that day. Okay, so we have some data series on that day, although 2 basically, and the 2 came from Canada. So let's quickly review what those data looks like by having a rundown at the actual, forecast, and then the previous. So this actual data came out at exactly the time that is specified here, and it is when this actual comes up that traders can decide to take a trade if the actual is showing to them a particular direction that the currency is going to take. The forecast is made available ahead of time, so everybody knows the forecast. It is also known as the consensus. You get to see it ahead of the release of the actual. And finally, we have the previous. What does the previous represent? The previous represents the immediate past actual. What was the figure like the last time it was released? That's what the premiums get to show to us. And let's quickly go back to the actual. And before I look in depth at the actual, I want to quickly show us something about the usual effect, which we did not pay so much attention to the last time. So let's quickly come to this employment change released from Canada last week Friday. The usual effect shows Actual greater than forecast is good for currency. Actual greater than forecast is good for currency. And the actual is out now. The actual is showing 230,000. So 230,000 people were employed in the previous month in Canada, but the expectation was that only 172,000 2,000 individuals will be employed. So from this usual effect, I can tell for sure that this data is good for the Canadian dollar. Even without looking at the usual effect, I can tell how good a data is by the color of the actual. I have first the green, and from the usual effect I just showed to us, we can categorically say that this data is good. But instead of going through the detail to check what the usual effect of the event is going to look like, you can tell the impact of the events by virtue of the color of the actual. If the color of the actual is green, it means that particular data is good for the currency in question, and when the data is good for the currency, you are expected to place a buy trade on that currency. I'm not saying on the pair, I'm saying on the currency, because the currency in this case is the Canadian dollar. So we're expected to buy the Canadian dollar according to this information. And then the next one is unemployment rate. Unemployment rate came out at 7.8%. So according to the last explanation I just gave to us, that whenever the color of the actual is green, it means that particular data is good. So this time around, whenever you have the data as being black like we have in this unemployment rate, it means the data is equal to forecast, just as expected, meeting up with consensus. So we can't really say the black is good, but we can just say the black is fairly good. So not so good, but fairly good. And there's something we also need to take note of whenever we are trading with forexfactory.com. Sometimes from a particular country or on a particular currency, 2 or more data will be released at the same time. And when 2 or more data is released affecting a specified currency, it is good that the 2 data, um, move in the same direction, or the 2 data is communicating with us the same thing. What do I mean? Like, for example, this employment change and unemployment rate, the best bet is for us to have had the 2 come out in green. That means the 2 is saying buy Canadian dollar. That is perfect, the 2 saying buy Canadian dollar. But in this, we have one saying buy the Canadian dollar and the second one say buy slightly So the two is still tending towards one direction, though the best situation or the better situation would have been the two coming out in green. So this is still a fairly time to a fairly good time to have placed a buy trade on the Canadian dollar according to these two information. But I have not showed us what the black look at the red looks like. Yeah. So like on this day. The previous day, we had data released from the United States. It is unemployment claims. So the total number of individuals who put forward a claim for jobless insurance in the United States. And before someone will put forward a claim for jobless insurance, that person must have lost job. So this particular data, if I go to the detail and you see individual effect, you are going to see actual less than forecast is good. So in this case, actual must not be greater than forecast for it to be good, but we do not need to worry ourselves about the usual effect. Once we take a look at the color of the actual, we can tell immediately that this data is either good or bad. And from this data now, we can see here that 373,000 persons filed for jobless insurance as against 345,000. That is an extra 30,000 individuals. Filing for jobless insurance. That is not so good for the United States dollar. So in this case, the United States dollar would have been weakened as a result of this data released from the United States. So I have made mention of some critical things that we also need to understand how they work. I said we buy the currency. I'm not saying we buy the pair. So I need to quickly go to the next step, which how do we select the pair to trade, or how do we know the type of trade to place according to the pair we are considering? So we can use the example of unemployment claims to be able to take a trade on that, or to be able to explain what a typical trade is going to look like at this point. So unemployment claims says sell dollar. So according to the data, Data says sell USD. That's what the data said. The data said we should sell USD, and there are some instruments that contain the US dollar that we can trade according to this data. So we have some series like this. Then we have another set like this. This is another set. If you take a very close look at these four sets, on these four sets we have the USD as the first currency. On that particular pair, which means the USD here is the base. But in this particular series, we have the USD as the second currency on the pair. So in this case, the USD is known as the quote. The first series, we have the USD as the base. The second series, we have the USD as the quote. But the directive of the fundamental still remains the same thing. Sell US dollar. So how do I sell US dollar by trading USD/CAD? How do I sell US dollar by trading AUD/USD? That's what we want to quickly look at. So let me take the example of USD/CAD. So we have USD/CAD. In the case of USD/CAD, USD is the first currency, so it is known as the base. Canadian dollar is the second currency, is known as the quote. And at every point in time, I can sell one to buy the other one in as much as I'm having just a single trade. So if I am selling USD, at that same time I must be buying Canadian dollar. And if I am buying the USD, at the same time I must, uh, be selling the Canadian dollar. So that is looking at each of Of the currency on a particular pair individually. So now let's look at it as a pair, USD/CAD. If I place a sell trade, sell USD/CAD simply means— sell USD/CAD simply means sell USD. So sell USD because USD is the first. Is the base. So whatever thing you are doing on the base is what you are doing on the entire pair. So sell USD/CAD means sell USD, and buy USD/CAD means buy USD. And according to this detailed explanation I've given to us here, if I am selling USD, it means at that same time I am buying the Canadian dollar. And if I am buying the USD, it means at the same time I am selling the Canadian dollar. But which one are we going to go with according to the data? The data, which is unemployment claims, said sell US dollar. So sell US dollar means sell USD/CAD. And this same sell USD/CAD is applicable to all of this pair I have here. While in the case of these other ones, while USD happens to be the quote, I am going to have a buy trade on them all. So buy here, and I'm going to sell these ones here to be able to take advantage of the information just being released by Forex Factory from the Department of Labor in the United States. So that's basically how to utilize the information from Forex Factory for us to be able to take our trades. Okay, let me also quickly show to us some other functionality of this website apart from this timed event or this timed data. We can also access breaking news on this website. So when you come to news here and you click on it, it gives us an update about the market, what is currently happening in the market. You get to see it, the latest stories, everything, breaking news, everything would be seen on the news when you click on news. What you have just worked on was calendar where we had the opportunity to view different economic events and when they will be released. And if your chart is not opened and you want to quickly view what is happening in the market, you can go to Markets here and you'll be able to pick the instrument you want to view the chart. So currently this one is trying to open the chart of EUR/USD. Uh, yeah, it's coming up there. So I can also select the time frame where I want to view the chart of EUR/USD. Maybe someone is telling you that there's a pattern now on EUR/USD that is showing so, so, so, and so, and so. Oh, then you can quickly take a look at the market session and then get to see what the chart is looking like on the Forex Factory. So from 1 minute to, to 5 minutes, to 1 hour to 4 hours, just like our normal trading platform. So once we have checked this, we can also get to discuss with other traders around the world by visiting the forums. So different traders come up with whatever they have in mind, so which you can be a part of some of these forums. By clicking on forums, then we get to see and get to update ourselves about happenings in the market, which very good for us and which will help us in our trading. If you have any other videos you would like us to talk about, please quickly go to the comment section and drop the title of whatever topic you would also like us to look at, just as we have checked out Forex Factory, um, in this video. Do enjoy your day. Bye.