Many beginner traders believe that the market moves solely based on charts.
In reality, some of the most powerful price movements occur within seconds, immediately after important economic data is released or following statements made by central banks.
If you do not understand what is happening during those moments and why the market reacts so strongly, you risk entering a trade precisely when the probabilities are no longer in your favor.
In this lesson, you will understand what fundamental analysis is, which economic events are the most important, and how you can adapt your trading plan according to the economic calendar.
Fundamental analysis is not useful only in trading.
It helps you better understand the economy, the relationship between different financial markets, and the reasons why prices move in a particular direction.
What Is Fundamental Analysis?
In trading, there are two main types of analysis:
• Technical Analysis, which is based on charts, market structure, and price behaviour.
• Fundamental Analysis, which is based on news, economic indicators, and political or geopolitical events.
A complete trader does not rely exclusively on one of them.
The strength comes from combining technical analysis with fundamental analysis.
When the fundamental context and technical analysis point in the same direction, the probability that the market will continue in that direction tends to be higher.
We do not need to become economists to understand these concepts.
The purpose of this lesson is to understand the essential elements and know what we need to monitor before entering a trade.
Where Do We Check the Economic Calendar?
Before every trading day, it is recommended that we check the economic calendar.
It should be part of every trader’s daily routine, just as a pilot checks their instruments before takeoff.
Several free platforms provide an updated economic calendar, the most popular being:
• ForexFactory.com
• Investing.com
Within the Xcelerate Trade platform, you also have access to the Practice section, under the Economic Calendar category, where all the important economic events of the week are displayed.
For each event, you can see information such as the release time, impact level, the affected currency or economy, as well as the Previous, Forecast, and Actual values, so that you have all the necessary information in one place.
Regardless of the platform you choose to use, it is important to check the economic calendar before every trading session.
Each event has an importance level:
• Red (High Impact) – events that can generate strong movements and high volatility.
• Orange (Medium Impact) – events that can influence the market, although their impact is generally lower.
• Yellow (Low Impact) – events with limited impact that, in most cases, do not produce significant movements.
Within the Xcelerate Trade Strategy, we are primarily interested in news marked in red and, in certain situations, news marked in orange.
Which News Events Do We Monitor?
A very important aspect is understanding that each financial asset is influenced by specific economies and currencies.
In general, news related to the U.S. dollar (USD) has the greatest impact on global financial markets.
The United States represents the largest economy in the world, and Federal Reserve decisions and economic data released in the U.S. influence most financial assets.
For this reason, regardless of whether we trade stock indices, gold, or currency pairs, it is recommended that we always check the economic calendar for USD news.
Depending on the asset being traded, we also monitor the news specific to each market:
• for GER40 (DAX), we are interested in important news from the United States, the Eurozone, and Germany;
• for currency pairs, we monitor news related to both currencies involved;
• for U.S. assets, the focus is placed almost exclusively on economic events from the United States.
Forecast, Previous, and Actual
In the economic calendar, you will encounter three very important columns:
• Previous – the value reported previously;
• Forecast – the estimate or expectation of analysts and the market;
• Actual – the value released at the time of the announcement.
At first glance, you might believe that the market reacts only to whether an indicator is good or bad.
In reality, most of the time, the market reacts to the difference between what was expected and what was released.
The greater the difference between the Forecast and Actual values, the stronger the market reaction may be.
For example, if analysts estimate inflation at 2.5% and the released value is 2.5%, the market reaction may be limited because the result had already been anticipated.
However, if the released value is 3.2% or 1.8%, the difference from expectations may generate a significant increase in volatility and rapid price movements.
This is one of the reasons why we carefully monitor the economic calendar before every trading session.
The Most Important Economic Indicators
Dozens of economic indicators are released throughout each month.
You do not need to know all of them from the beginning.
In this lesson, we will focus on the most important indicators, those that most frequently influence financial markets and that you will regularly encounter in the economic calendar.
CPI (Consumer Price Index)
CPI (Consumer Price Index) measures the evolution of inflation within an economy.
Inflation represents the general increase in the prices of goods and services.
Most central banks aim to maintain moderate inflation of around 2%, a level considered healthy for a stable economy.
When inflation rises too much, central banks tend to increase interest rates to slow down the economy and reduce pressure on prices.
These decisions have a direct impact on financial markets.
For traders, the U.S. CPI is one of the most important and volatile economic events of each month.
In many situations, the release of this indicator can generate extremely rapid and difficult-to-predict movements.
How Do We Use CPI in the Xcelerate Trade Strategy?
For beginner traders, the recommendation is very clear:
We do not trade on the day when the U.S. CPI is released.
As you gain experience and observe more economic cycles, you will learn to interpret market reactions more effectively on such days.
At the beginning, however, the best decision is to avoid unnecessary exposure to extremely high volatility.
NFP (Non-Farm Payrolls)
NFP (Non-Farm Payrolls) is the monthly report on the number of new jobs created in the non-agricultural sector of the United States.
It is one of the most closely followed economic indicators worldwide and provides important information about the health of the U.S. labor market and economy.
If the economy creates a large number of new jobs, it means that companies are growing, hiring, and that more money is circulating within the economy.
A strong economy encourages consumption, investment, and generally supports economic activity.
In contrast, a result significantly below expectations may indicate an economic slowdown and may negatively influence market sentiment.
How Do We Use NFP in the Xcelerate Trade Strategy?
As with CPI, NFP is an event with a very high impact.
For beginner traders, the recommendation is to avoid trading on the day this report is released and return to the market after volatility begins to stabilize.
Unemployment Rate
The Unemployment Rate measures the percentage of unemployed people within an economy.
In general, a low unemployment rate is considered a positive sign because it indicates that more people have jobs, earn income, and contribute to consumption and economic growth.
However, extremely low values are not always beneficial.
An extremely strong labor market can generate inflationary pressure because companies are required to offer higher salaries to attract and retain employees.
This may cause central banks to maintain interest rates at a high level or even increase them.
Under normal conditions, the Unemployment Rate has a moderate impact on the markets. However, when the result differs significantly from expectations, it can generate important movements.
How Do We Use the Unemployment Rate in the Xcelerate Trade Strategy?
Most of the time, this indicator is released on the same day as NFP, which is why we treat it as part of the same macroeconomic context.
For beginner traders, the recommendation remains the same: we avoid trading during these events and wait for the market to stabilize.
GDP (Gross Domestic Product)
GDP (Gross Domestic Product) measures the total value of goods and services produced within an economy over a specific period.
We can view it as one of the most important indicators of a country’s economic health.
An economy that grows consistently tends to support a stronger currency, high levels of investment, and positive market sentiment.
Many investors use GDP developments to form a bias, meaning an opinion or probable market direction for the following weeks or months.
Although a GDP release does not always produce immediate volatility, this indicator is very important for understanding the macroeconomic context.
How Do We Use GDP in the Xcelerate Trade Strategy?
We do not use GDP to look for immediate market entries.
We use it to understand the broader economic picture and to interpret more effectively the direction in which the macroeconomic context may develop over the medium and long term.
PMI (Purchasing Managers' Index)
PMI (Purchasing Managers' Index) is an indicator that measures economic activity and the confidence levels of managers in the manufacturing and services sectors.
It provides an overview of the pace at which the economy is developing and can provide early signals of periods of economic expansion or slowdown.
Most of the time, PMI does not produce very large market movements.
However, when the results differ significantly from analysts’ estimates, the impact on price can become important.
How Do We Use PMI in the Xcelerate Trade Strategy?
In general, we treat PMI as a complementary indicator.
We monitor it to better understand the economic context, but it rarely represents, on its own, a reason to modify the trading plan.
Retail Sales
Retail Sales is a report on retail activity and provides information about the level of consumption within the economy.
When people are confident in the economy and the stability of their jobs, they tend to spend more, invest, and consume more goods and services.
In contrast, during periods of economic uncertainty, consumption declines and people begin to save more.
Under normal conditions, Retail Sales has a low or moderate impact on the markets.
However, a result significantly above or below market expectations may generate an increase in volatility.
How Do We Use Retail Sales in the Xcelerate Trade Strategy?
We monitor this indicator as part of the broader macroeconomic context.
If it is listed as a high-impact event in the economic calendar, we prefer to avoid opening new trades until the market reaction stabilizes.
FOMC and FOMC Minutes
FOMC (Federal Open Market Committee) is the committee within the Federal Reserve responsible for setting U.S. monetary policy.
Among the most important topics discussed during FOMC meetings are the following:
• the development of the economy;
• the level of inflation;
• the condition of the labor market;
• changes to or the maintenance of the benchmark interest rate.
These decisions influence the cost of money within the economy and, implicitly, most financial markets.
For this reason, FOMC meetings are considered some of the most important macroeconomic events of the year.
A few weeks after each meeting, the FOMC Minutes are also released. These documents contain details of the discussions held by the committee.
Most of the time, they confirm information that is already known.
However, there are situations in which they provide new indications about the direction of monetary policy, and the market may react rapidly and with high volatility.
How Do We Use FOMC in the Xcelerate Trade Strategy?
For beginner traders, the recommendation is simple:
We avoid trading both on the day of the FOMC meeting and during the release of the FOMC Minutes.
During such periods, volatility can increase considerably, and market reactions are often difficult to anticipate.
Speeches by Central Bank Officials
In addition to economic indicators, we must pay particular attention to speeches delivered by representatives of the main central banks.
The most important are:
• speeches by Federal Reserve Chair Kevin Warsh;
• speeches by European Central Bank President Christine Lagarde.
During these appearances, new information may be provided about monetary policy, inflation levels, the economic outlook, or the future direction of interest rates.
Even a single statement can rapidly change market sentiment and generate significant price movements.
How Do We Use Officials’ Speeches in the Xcelerate Trade Strategy?
As a general rule, we recommend avoiding opening trades approximately one hour before and one hour after such events.
This interval gives the market the necessary time to absorb the information and stabilize its direction.
Bank Holiday
A Bank Holiday is a public holiday for the banking system and for a significant number of institutional market participants.
On such days, many banks, funds, and financial institutions significantly reduce their activity or are completely inactive.
As a result, the liquidity available in the market may be considerably lower.
For strategies based on institutional flows, this is very important.
When the participants responsible for generating most of the trading volume are absent from the market, the probability of high-quality setups developing decreases.
How Do We Use Bank Holidays in the Xcelerate Trade Strategy?
The rule is simple:
• if there is a Bank Holiday in the United States, we avoid trading U.S. assets and generally reduce our activity on that day;
• if there is a Bank Holiday in another country, we primarily avoid assets associated with that market.
In practice, the best choice is to use these days for studying, analysis, backtesting, or updating your trading journal and personal statistics, rather than for trading.
Practical Rules for Trading During News Events
To simplify the analysis process, we recommend following a few basic rules:
• check the economic calendar before every trading session;
• pay particular attention to events marked in red and, in certain situations, those marked in orange;
• avoid opening trades during the release of important events;
• as a general rule, avoid trading approximately one hour before and one hour after the release of high-impact news;
• for major events such as CPI, NFP, or FOMC, our recommendation is to avoid trading for the entire session.
As you gain experience and observe more economic cycles, you will better understand which events truly influence the market and how they do so.
The Xcelerate Trade Perspective
At Xcelerate Trade, we do not view fundamental analysis and technical analysis as two separate methods of analysis.
We view them as two pieces of the same puzzle.
Technical analysis helps us identify where trading opportunities exist.
Fundamental analysis helps us understand why the market may move in a particular direction and when it is recommended that we exercise greater caution.
A disciplined trader does not ignore the economic calendar.
Before every trading session, we check the important events and adapt our plan accordingly.
Sometimes, the best decision is not to look for an opportunity, but to choose to stay out of the market until volatility returns to a normal level.
As you gain experience, you will begin to notice that certain economic events influence the markets more than others and that price reactions often follow recurring patterns.
Understanding these contexts will allow you to make better-informed decisions and avoid opening trades at times when the probabilities are not in your favor.
We recommend checking the economic calendar before every trading day and making this habit part of your daily routine.
Just like chart analysis or following risk management rules, analyzing the macroeconomic context also contributes to building a long-term statistical edge.
See you in the next lesson!