Retail traders misled by economic calendar impact labels

A social media post yesterday showed many retail traders upset over sharp price moves triggered by Fed Governor Waller. Their frustration came from the forexfactory calendar — the most popular tool among retail traders — showing his speech as a low-impact event (yellow folder). Because most of them filter the calendar to display only high-impact events (red folder), they were caught off guard and suffered losses.

The underlying issue is flawed education. Trading influencers advise retail traders to stay out of the market 30 minutes before and after a high-impact event, without recognising that the low, medium and high impact classifications are meaningless.

Economic calendars assign those labels based on past volatility, but they do not adjust for shifting contexts. The NFP report always carries a high-impact label, yet today it might be more accurately called medium-impact, as the Fed is focused on inflation and the CPI will determine whether a rate hike comes in September.

Central bank members ought to be rated according to their recent policy leanings — hawkish or dovish. Fed Governor Waller moved markets significantly yesterday because he is among the most influential policymakers and struck a more dovish tone than in his recent hawkish remarks. That departure from expectations prompted the market to price in fresh information.

The economic calendar also omits unscheduled events. Breaking news, reports, leaks and the like can only be tracked through real-time news feeds such as investinglive.com. The US-Iran conflict, for instance, did not appear on any calendar (except possibly Trump's), so a trader relying solely on the calendar would have missed both the news and a chance to profit. The same applies to the ceasefire announcement at the start of April, which sparked a big stock-market rally.

To sum up, markets do not move because an economic calendar assigns a yellow, orange or red folder to an event. They move when fresh information shifts prevailing expectations. A trader who mechanically follows calendar labels is effectively outsourcing judgment to a simplistic system that overlooks context, market expectations, positioning and changing narratives.