Yesterday, I saw on social media many retail traders complaining about the big moves triggered by Fed Governor Waller. The reason for their complaints was the fact that on forexfactory calendar, which is the most used one by retail traders, Waller’s speech was marked as a low-impact event (yellow folder). Since most of them filter the calendar to just show the high-impact events (red folder), they got taken off-guard and lost money.
This is the problem with wrong education. Trading influencers teach retail traders to avoid trading 30 minutes before and after a “high-impact event”, but they don’t know that the low, medium and high impact labels are useless.
The economic calendars label the events like that based on historic volatility, but they don’t account for changes in context. The NFP report, for example, is always labelled as high-impact, but today it would be better to mark it as medium-impact because the Fed’s focus is on inflation and the CPI will be the deciding factor for a rate hike in September.
Central bank members should be labelled based on their recent policy stance, that is hawkish or dovish. Fed’s Waller moved the markets a lot yesterday because he’s one of the most influential governors and he sounded more dovish compared to his recent hawkish comments. Therefore, he deviated from the expectations and the market priced the new information.
Another very important thing that the economic calendar doesn’t include is the unscheduled events. These are breaking news, reports, leaks and so on that can be known only if you use real time news feeds like investinglive.com. The US-Iran war, for example, wasn’t on any calendar (except Trump’s calendar), so if a trader focused solely on the calendar, he/she would have missed the news and the opportunity to make some good money. The same goes for the ceasefire announcement at the start of April that eventually led to a huge rally in the stock market.
In conclusion, markets don’t move because an economic calendar assigns a yellow, orange or red folder to an event. Markets move when new information changes the prevailing expectations. A trader who just blindly follows calendar labels is effectively outsourcing judgment to a simplistic system that ignores context, market’s expectations, positioning and evolving narratives.
This article was written by Giuseppe Dellamotta at investinglive.com.