What is Forex Factory?

In the rapidly evolving Forex market, having the information at the right moment can often mean the difference between gains and losses. Among the most proactive and highly successful Forex investors is a group that uses just one significant platform, Forex Factory.

But what is Forex Factory, how does it work, and how can you best utilize it with a broker? 

Let’s break it all down, clearly, practically, and trader-friendly.

Definition of Forex Factory

Forex Factory provides timely economic news, a powerful economic calendar, trading forums, and sentiment meters. It is intended to assist traders in following big events, understanding markets, as well as make better decisions. 

Forex Factory neither provides trading services nor brokerage accounts; it simply functions as an information center that traders often employ in conjunction with their respective trading systems or brokerage accounts.

This platform is a one-stop shop for all Forex traders to find economic data across the globe including information that impacts their trading. It presents economic news in a straightforward format that allows traders to quickly identify economic events that could impact their positions.

Economic Calendar Overview in Forex Factory

Traders can utilize the Forex Factory economic calendar to track live economic news updates, including:

• Impact level (Low, Medium, High)
• Country Levels
• Previous, forecasted, actual, and volatility alerts. 

The Economic Calendar is the top feature on the Forex Factory site due to its ability to provide traders with the most comprehensive, accurate, and current information to manage trading risk.

Traders also use Forex Factory to gather information about how the market is likely to react to an economic news event. 

Forex Factory Economic Calendar for Forex Trading

Forex Factory and Market Sentiment

Another notable feature is Forex Factory market sentiment, which displays the market position of traders in key currency pairs.

• Helps in identifying the overcrowded trades
• Useful in contrarian approaches
• Used to confirm trend strength/weakness

While it should never be used as sole policy, when combined with technical analysis and good risk control, it can significantly enhance trade quality.

Forex Factory Forum, Is It Worth Using?

Forex Factory forum is a very popular online Forex discussion forum. It is a good idea to independently verify different strategies and test them before working with actual capital. What you’ll find in the forum:

• Trading Strategy: Scalping, News Trading, etc.
• Expert Advisors (EAs)
• Trade journals
• Broker Discussions
• Analysis of the Market

Forex Factory Tools and Features

Besides its basic functions of a calendar and a news feed, Forex Factory also provides a number of more sophisticated tools that aid in a better understanding of market trends, hence a better understanding of how traders ought to act in regard to those trends.

Advanced Economic Calendar Filters

Forex Factory enables users to personalize the calendar with precision. Users of Forex Factory can:

• Customization: Filtering events by country & currency
• Showing less important news to minimize noise
• Focus on specific events such as interest rates, employment, inflation

This feature can be highly useful to various traders who focus on the chosen currency pairs or trading sessions.

Forecast Vs Actual Data Comparison

Furthermore, one of the company’s most effective tools in analyzing the Forex market is its market sentiment breakdown by currency pair. Forex Factory provides trade sentiment for currency pairs (i.e., long or short trader percentage) in its currency pair sentiment tool. Advanced traders utilize this to identify:

• Market opportunities that may be overcrowded (too many traders plugged into one position)
• Where reversals could be expected
• Trend continuation

The best way to utilize sentiments as an analytical tool are through support/ resistance levels and price action analysis.

Market Activity Tracking via Forex Factory (Session-based)

Forex Factory displays the time of active market operation, which allows traders to see which market hours their strategy will align. Examples: Active market hours coincide with the London, New York and Asian markets.

It provides traders a greater opportunity for trading success; effectively enhances trader timing, effectively eliminating time spent trading outside the most active market time frames.

Forex Factory Highlights wick-highs

Forex Factory visually illustrates anticipated high volatility prior to news releases. This is especially significant for scalpers and intraday traders. This means traders can effectively:

• Reduce their exposure prior to the announcement
• Adjust stop losses and take profit levels
• Develop breakout and news based trading strategy

Forex Factory (Optional Tool) Trade Explorer

Forex Factory provides the trade explorer, a tool designed to evaluate the trader’s success and performance. The Trade Explorer illustrates:

• Win/loss ratio
• Drawdown
• Risk/reward ratio

Trade explorers allow traders to discover their weaknesses and develop a solid understanding of their overall consistency in trading and planning. 

Forex Factory and the Trade Journals

Advanced traders make use of the Forex Factory forum to document and track their emotions and conditions while developing strategies.

Steps on How to Use Forex Factory Effectively

Knowing how to use Forex Factory can keep you informed, reduce risk, and give you better trading decisions. Follow these steps for getting the most value from the site.

Step 1: Create A Free Forex Factory Account

Although Forex Factory allows you to use it without registration, you can create a free account for the following additional capabilities:

• Customize the economic calendar
• Save time zone preferences
• Participate in forum discussions
• Track your favorite currency pairs

This helps to tailor the platform to your trading style.

Step 2: Setting Your Time Zone and Preferences

Log in and change your time zone so that the economic events fall into place with your local trading hours. This way, you won’t miss news releases, and you will have better timing for trading. You can also select which countries and currencies you want to follow.

Step 3: Use the Economic Calendar Daily

The Forex Factory economic calendar is the core tool. This is the necessary step for both technical and fundamental traders. Each day:

• Identify high-impact news events
• Note the involved currency pairs
• Compare forecast vs. previous data
• Plan trades or avoid trading during volatility

Step 4: Understanding News Impact and Volatility

It is helpful to be mindful of event impact levels when gauging the market’s volatility based on this information. Events will have low, medium or high levels of impact on the market and will show either little or no volatility, moderate volatility, or extreme volatility when the impact is high.

This results in significant price swings over short time periods; thus, traders who are trading high-impact news events may need strict risk management rules to protect themselves against increasing volatility, or they may want to refrain from taking positions altogether.

Step 5: Understand How Traders Are Positioned with Regards to Market Sentiment

By looking at the market sentiment section of Forex Factory, traders can do multiple things with this data. They can confirm the current trends in the marketplace, identify both bullish and bearish extremes of position and provide support for both contrarian and trend-following trading strategies. However, it is indispensable to combine sentiment analysis with technical analysis.

Step 6: Follow Forex Factory’s News Feed for Timely Updates on Central Bank Decisions

Economic policy decisions and important financial announcements. Being able to determine why the market moved; will lead to growing a trader’s confidence for the long term, thus building the foundation for long-term success.

Step 7: Learn from One Another through the Forums

Traders can use the forums to gain insight into a variety of strategies, including strategies focused on trading, risk management and creating a journal of trader’s performance, etc. It is important to note that traders should always test any new strategy in a demo account prior to executing live trades with actual funds.

Step 8: Combining The Information Found on Forex Factory 

Using technical analysis to determine trade entry and exit points will help you improve your trade accuracy.

Step 9: Execute Trades with a Reliable Broker

And finally, when you are done with the analysis part, you must enter trades with a professional broker. 

Step 10: Review and Improve

After each trading session:

• Examine how news affected your trades
• Analyze the mistakes and successes
• Refine your plan using real information
• Consistent review results in long-term improvement.

How to Use Forex Factory for Better Trading Decisions?

To use Forex Factory to the full, use this structured methodology:

• Check the economic calendar daily
• Avoid making transactions when there are high-impact news announcements, especially if you are a technical analysis expert
• Plan news trades in advance
• Using “market sentiment” as confirmation
• Combining news with technical analysis
• Adjust your risk management approach relative to the volatility
• Execute trades through a reliable Forex broker
• Consider broker leverage and real leverage 

Utilization of the Alerting System on Forex Factory

One of the more functional yet commonly missed aspects of Forex Factory is the notification system that is present within the site. Efficiency and discipline can be more easily attained thanks to the notification system. When using alerts on Forex Factory, most advanced traders use strategic methods:

Who Should Use Forex Factory?

Forex Factory has been created for a wide array of market participants. This means that the website could be essential to traders who come from different skill sets and styles. Listed below are those groups who can benefit the most from the website.

Beginner Forex Traders

The fact that Forex Factory is designed for new traders and their understanding of the basics makes it a key tool in learning and planning. A key benefit for new traders using Forex Factory is that they will understand why the market moves rather than merely seeing how it moves visually.

Forex Factory provides a straightforward way for new traders to learn about the fundamental aspects of Forex trading. The benefits available to the new trader include:

• A well-organized and easy-to-read economic calendar
• An easy to read flow of news
• Release of significant economic data on time
• An active Forex Factory forum

Technical Investors (Risk-Aware Users)

Traders who prefer to refer to charts and indicators before making a trade should also consult Forex Factory to determine whether high-impact news events are happening when they decide to enter into a trade, as this could impact or invalidate their technical setups.

Day Traders and Scalpers

Since day traders and scalpers are primarily concerned with timing their entries into the market, knowing when to expect increased volatility is essential. Forex Factory provides access to information about increased volatility due to news releases that allows day traders and scalpers to better time their entries into the market and manage their risk better.

Fundamental and News Traders

Forex Factory is an essential resource for traders who base their trading decisions on economic data, interest rates and macroeconomic events. Forex Factory has a detailed calendar of how to plan and execute their news-based trading strategies, as well as access to real-time economic data.

Swing Traders

Swing traders can use Forex Factory to gain insight into the market’s fundamental drivers causing medium-term changes in price, so they can align their trades with those driving the market.

Professional and Institutional Traders

Often, professional traders will combine the data provided by Forex Factory with their own analysis and execution platforms when executing trades.

Traders Who Focus on Risk Management

Anyone serious about preserving their capital can utilize it to plan accordingly to periods when the markets tend to be more volatile or adjust their position size or simply stay out of the markets.

Pro Level Forex Factory Tips For Experienced Traders

Forex Factory is a market research and analysis tool utilized by experienced traders to give them the edge in execution timing, overall risk management and greater execution precision. To help experienced traders maximize their usage of Forex Factory, the following are pro level recommendations.

Trade the Reaction, Not the News

Knowledgeable traders recognize that the markets tend to react before the news and change direction after the news. So rather than trading on the actual report itself:

• Wait for the initial spike
• Observe liquidity behaviour and spread normalization
• Enter trades based on price reaction to trade structuring, not on emotions

Track Repeated News Patterns

There are economic events like NFP, CPI, and interest rate decisions that have a connection with types of volatility.

• Review historical responses to this same event
• Identifying a false breakout or delay in a continuing trend
• Build event-specific playbooks

As a result of this historical knowledge, you now have a statistical edge.

Utilizing Sentiment as a Contrarian Filter

Extreme long and short levels in Forex Factory Sentiment should be treated with care.

• Avoid entering late trend trades
• Check for reversal confirmations around specific technical levels
• Utilize the sentiment with volume and price action

Overcrowding in certain trades leads to failure at critical times.

Align News with Higher Timeframe Bias

Never trade news in isolation. Before defining your weekly and daily bias or determining macro trend direction. Only trade news which favors your overall market scenario. This minimizes overtrading as well as enhances consistency.

Benefits of Forex Factory

There are many reasons why Forex Factory has become one of the best sources for Forex traders to get daily, accurate, and quick access to important information regarding the Forex market. Here are 6 primary reasons for its popularity and usefulness to all traders.

Continuous Updates for Real-time Economic Events

Forex Factory posts continuous updates as economic events occur that have a direct effect on the currency pair markets. Through Forex Factory’s unique concept of real-time updates, you can see at a glance what the forecast, prior, and actual data is for each event. 

This allows you to identify whether the news you are receiving is positive (bullish) or negative (bearish).

Event Risk Classification

Forex Factory allows traders to classify events according to the level of risk associated with them. Low-risk events, medium-risk events and high-risk events are all displayed so that traders can quickly assess how they should position themselves in terms of trade, avoid entering the market, or prepare for possible volatility.

Simple and Trader-Friendly Interface

Unlike many financial sites with news articles published on Forex websites, Forex Factory prioritizes clarity and speed of information. The layout is simple and clean to enable traders to quickly react to events.

Completely Free to Use

Furthermore, all of the tools that are made accessible by Forex Factory are free of charge, which makes it possible for both experts and beginners to use them without incurring any subscription fees.

Supports Better Risk Management

Also, understanding that major events in financial news are slated for specific dates allows traders to take advantage of this information by deciding whether to increase, extend, or minimize trades.

Works Perfectly with Professional Brokers

Forex Factory offers traders the relevant analyses as well as the timing. Brokers give traders quick execution of trades with a low spread and clear orders.

Forex Factory vs Other Forex News Websites

Compared to many Forex news platforms, Forex Factory differs in the following ways:

Potential Forex Factory Limitations

Forex Factory is a great resource for traders who are looking to understand the forex market and the different factors involved in making a trade in Forex as beginners. Although this program has many great features, any trader using this tool should be aware of its limitations.

Forex Factory Does not Have any Trade Execution or Brokerage Capabilities

Forex Factory does not act as your broker and does not have the ability to let you place trades, manage your different trading account types or provide liquidity to you. It is important that you find an online trading platform and a trustworthy broker in order to execute your trades based on the analysis you receive from Forex Factory.

Economic Data Does not Dictate the Direction of the Market

Economic data is simply an indicator of the potential price movements in the market; therefore, it is not a guarantee of where the market will move. The market will adjust based on a number of factors including:

• Expectations that are already priced into the market
• The central bank‘s tone and forward guidance
• Overall market sentiment

If you do not conduct any technical analysis or analysis of the context, you will likely make some false assumptions based on the information that is provided through Forex Factory.

Market Sentiment may not Be Indicative of Market Action

The sentiment that Forex Factory uses to indicate market position is the retail trade position, not the institutional trader’s flow of capital. There are often long periods of extreme sentiment, therefore if you only rely on Forex Factory’s sentiment, you may enter a trade too early or from an incorrect perspective.

Beginner Traders’ Overwhelm from Data

The overwhelming amount of data available to the beginner trader, in the form of news, events, opinions, forums, etc., can lead to overtrading and emotional reactions to most of the above without a structured approach.

Varied Quality of Forum Content

There is a lot of good information on the Forex Factory forum; however, there is also:

• Unproven strategies
• People who boast of unrealistic results
• Opinionated and emotional commentary from other traders

As such, traders should think of the Forex Factory forum as a source of ideas for the development of their personal trading strategy, not as a signal, and test everything that is found there before using it.

No Personalized Trading Signals Provided

Forex Factory does not provide traders with buy or sell Forex signals. Therefore, traders will need to figure out what they want to do with the information provided and develop their own trading strategies. 

This is a strength for professional traders but a drawback to many novice traders who are looking for an automated approach to trading.

Missing Key Information Due to Incorrect Time Zone Settings

If time zone settings are not set properly, a trader may:

• Miss important news announcements
• Enter trades late
• Mismanage open trades

Setting up the time zone properly is very important for creating an effective plan.

Why Use Forex Factory with STP Trading?

By utilizing the Forex Factory as a tool for trading evaluation, accompanied by an efficient tool like STP Trading, a noteworthy combination is achieved. STP Trading enables you to react instantly on the insights you gain from Forex Factory. Benefits of trading with STP Trading:

• True STP execution model
• Competitive spreads
• Fast order execution
• Access to global Forex markets with real time analysis 
• Secure and transparent trading environment with services like hedge in negative margin and anti call margin
• Professional trading platform such as Metatrader 5 

Common Mistakes Traders Make When Using Forex Factory

Ultimately, when traders use Forex Factory, it is possible: 

• Haphazardly buying every news event without a plan
• Passing on risk management in a period of volatility
• Blindly following forum strategies
• Misinterpreting sentiment information 

Forex Factory is a medium, not a system. The secret to success lies in discipline, strategy, and quality.

Convert Your Market Knowledge into Actual Trade Execution Power

When market-moving events occur, it becomes even more critical than ever to comprehend the effects of timing, spreads, and order execution speed. If you want to take your knowledge from Forex Factory and turn it into a genuine opportunity, you need to act on it. Open an account with STP Trading so that you can take full advantage of all the latest trading features that are being offered. 

FAQ

Is Forex Factory free to use?

Yes. Forex Factory is a global resource that is free for all traders.

Does Forex Factory offer trading accounts?

No. Forex Factory does not offer any type of brokerage. To execute trades, you need a broker site.

Is the Forex Factory well-suited for beginner traders?

Absolutely! It is very helpful in developing an understanding of how economic news can impact the currency markets; however, all new traders should proceed with caution when using it.

Should I only rely on the Forex Factory for trading decisions?

No, Forex Factory should only be utilized in combination with additional forms of analysis such as technical analysis, risk management, and a reputable brokerage for executing orders.

Does Forex Factory provide real-time economic data?

Yes. The majority of the economic releases available on Forex Factory will provide an update after they are officially announced. This is very useful for traders who plan to take advantage of News-based strategies.