News and the economic calendar

Some days the market drifts. Other days a single number moves it 100 points in seconds. The difference is usually news. This lesson shows you how to see it coming.

What the economic calendar is

The economic calendar lists scheduled government and central bank releases, along with the date, the time and the expected impact. Most calendars mark each event as low, medium or high impact. As a futures day trader, you care most about the high-impact ones.

Many free websites and most trading platforms show the calendar. Set yours to Eastern Time so the times match your trading day.

The big 3

• CPI (Consumer Price Index): the main inflation report, released monthly. It usually comes out at 8:30am ET.
• The jobs report: monthly employment data, usually on the first Friday of the month at 8:30am ET.
• FOMC rate decisions: the Federal Reserve's interest rate announcement, released at 2pm ET on decision days, about 8 times a year. A press conference usually follows.

Other reports, like retail sales, PPI and GDP, can also move the market. Start with the big 3 and add more as you learn how your market reacts.

What happens around a release

In the seconds around a big number, the market can jump several points at once. 2 things happen that cost traders money:

• Spreads widen. The gap between the best bid and the best offer grows as traders pull their orders.
• Slippage grows. Your order fills at a worse price than you expected, sometimes much worse. A stop can fill well past where you placed it.

How traders plan around news

Many traders stay flat into the release and trade the reaction. They close positions a few minutes before, let the first wild move happen, and look for a setup once price settles. This gives up the first burst and avoids the worst slippage.

A few other habits help:

• Check the calendar every Sunday and again every morning.
• Write the release times on your daily plan.
• Expect the 9:30am ET open to be extra volatile on days with an 8:30am report.
• On FOMC days, expect quiet trading before 2pm ET and fast trading after.

Practice

Open an economic calendar now and find the high-impact events for this week. Write down the day and time of each. Next week, watch the 5-minute chart during 1 release without trading it and note how far price moved in the first minute.