Navigating Economic Calendars: A Detailed Look at Investing.com
Investors and traders often rely on economic calendars to keep track of important financial events and indicators. We’ve received several inquiries about the Investing.com calendar, as well as questions about the Forex Factory calendar. We’ve previously covered the Forex Factory calendar in a video, so be sure to check that out if you’re interested. This article will focus on the Investing.com calendar, examining whether it’s a viable option compared to other available calendars.
Free Economic Calendars: A Comparative Overview
There are numerous free economic calendars available, including Forex Factory, MyFXBook, and Trading Economics. Each calendar has its unique features, and the best choice ultimately depends on individual preferences and requirements.
Personally, I prefer using the economic calendar from MetaStock Zenith. Although it requires a paid subscription, it offers a comprehensive range of features. However, it’s important to note that a paid subscription is not a necessity; there are plenty of excellent free options available.
Exploring Investing.com
Let’s dive into the Investing.com calendar, starting with its navigation and settings.
Date and Time Settings
The first option you’ll encounter is the date selection. You can choose to view data for today, tomorrow, this week, next week, or select a specific date range using the calendar feature. This flexibility is handy for planning and analyzing future events. Additionally, you can adjust the calendar to display times in your local time zone by setting the GMT to your local time, ensuring that all data is presented accurately.
Layout and Key Features
The layout of the Investing.com calendar is straightforward. At the top, you have the date, followed by the time the event is scheduled, the currency it will impact, and the expected impact level. Like most free calendars, the impact rating should be taken with a grain of salt, as it may not always accurately reflect market conditions. Events such as inflation or GDP releases typically have a high impact rating, but their significance can vary based on expectations, sentiment, and other factors.
The calendar also displays the name of the event, the forecasted figure, and the previous value. Clicking on any data point opens a separate window with more detailed information about the event, including charts showing recent trends and related news articles. This additional context can be very useful for understanding the potential implications of an event.
Layout and Key Features
One of the standout features of the Investing.com calendar is its variety of additional tools. Beyond the standard economic calendar, you also have access to:
- Holidays Calendar: This shows upcoming banking holidays, which can affect market liquidity and trading conditions.
- Earnings Calendar: This provides information on upcoming earnings reports, which can be crucial for equity traders.
Moreover, you can create your own portfolio within Investing.com, tracking various asset classes. For example, you can monitor equity futures, commodities, volatility metrics, bond yields, and currencies. This customization allows you to tailor the calendar to your specific needs and interests.
Trading Strategy for Nonfarm Payroll (NFP)
The US Nonfarm Payroll (NFP) report is one of the most closely watched economic indicators, often leading to significant market movements. Here’s a step-by-step strategy for trading the NFP report:
Step 1: Analyze Federal Reserve Priorities
The first step is to understand what data points the Federal Reserve is currently focused on. If the Fed is focused on this piece of data, then the data point will have a significant amount of volatility because the Fed is in some way basing its interest rate decisions on that data release.
To quickly determine the Fed’s current focus, you can use our Professional Economic Calendar, which includes a fundamental guide. This resource helps traders stay updated on the data points that matter most to the Fed, providing a strategic advantage.
Step 2: Use High-Low Expectation Forecasts
Professional traders rely on high-low forecasts to gauge market expectations accurately. Here’s a more detailed look at why these forecasts are crucial:
- Institutional Forecasts: Professional economic calendars include high and low estimates from top institutions. This broader range of expectations offers a more comprehensive picture of potential outcomes.
- Market Shocks: When a report exceeds the high estimate or falls below the low estimate, it’s a huge shock to markets because no analyst expected it. Such deviations often result in sharp market movements.
- Lightning Bolt Feature: This tool immediately signals a deviation above the high or below the low of analyst expectations. When a deviation occurs, the lightning bolt feature alerts traders instantly, allowing them to act without delay. The quick reaction to unexpected data can be the difference between a profitable trade and a missed opportunity.
Understanding High-Low Forecasts
Economic forecasts are derived from surveys of credible institutions, each providing their best estimate on upcoming data points. Retail calendars typically present the median of these estimates, which can be misleading. The median forecast doesn’t reveal the full range of expectations and, therefore, doesn’t indicate how surprising an actual data release is compared to the extremes of analysts’ projections.
In contrast, professional economic calendars include both high and low estimates. This additional information shows the analysts’ expectations at the extreme ends of their projections. Great trading opportunities arise when data releases fall outside these high and low estimates, creating market shocks that move prices significantly.
Step 3 - Choosing the Most Volatile Instrument to Trade
Using insights from institutional reports, traders can select the most responsive currency pairs. For example, if USD/JPY is particularly sensitive to economic data as outlined by the City Economic Surprise Index and NFP shows a significant deviation, this pair could be an ideal target for trading.
- City Economic Surprise Index: This report identifies currency pairs that react strongly to economic surprises. It highlights pairs that are sensitive to data deviations, helping traders focus on the most responsive markets.
- Risk-Reversal Report: This report shows market positioning, revealing a buildup of call or put options on certain currency pairs. Understanding these positions helps traders choose a pair that may have orders susceptible to liquidation upon the release of an economic data point.
- CFTC Report: This report details hedge funds' positions. If a lot of big players are long the EUR/USD but then data comes out in favor of the USD, some of those funds might have to unwind their positions leading to an outsized move. Good thing you didn’t trade the GBP/USD.
Trade Execution Steps
- Confirm Fed Focus: Ensure the Federal Reserve is currently emphasizing employment data. If employment is a primary focus, the NFP report will have a higher likelihood of moving the market. Remember if the central bank is focused on the data point, it’s because they are using that data point to make a decision on rates. This is the reason data points that are focused on cause volatility.
- Check Forecast Ranges: Before the data release, review the high and low forecast expectations for the event. Plan to trade only if the actual data significantly exceeds the high estimate or falls below the low estimate. This strategy ensures you act on genuinely surprising data and there will most likely be a follow-through reaction.
- Monitor Revisions: Check for any conflicting revisions in the data, as these can alter the initial market reaction. Make sure the primary release and any revisions align to support your trade.
- Enter Trade Promptly: Once you confirm the deviation, act quickly to enter your trade. Enter within the first 30 seconds. Speed is crucial, as market reactions to significant data surprises happen rapidly.
- Set Stop and Take Profit:
- Stop-Loss: Place your stop-loss below the low of the initial spike candle to protect against adverse movements.
- Take Profit: Aim for 15-30 pips for tier 2 events like NFP, adjusting based on market conditions and volatility. the low of the initial spike candle to protect against adverse movements.
Managing the Trade
- After the Initial Run: Look for a shallow pullback around a 23% Fibonacci retracement or near support/resistance levels. This initial pullback can provide an opportunity to enter the trade again after you’ve taken a few points off the table after your first entry.
- Break Even: Move your stop-loss to break even as soon as possible to protect your gains. Generally, the stronger the release, the shallower the pullback. The market should want to buy off your S&R level and continue to the highs of the one-minute candle and break. If that doesn’t happen, something could be off.
- Reentries: If your initial position is stopped out at break even, consider reentering at deeper retracements, such as the 38% or 50% Fibonacci levels. Use nearby support and resistance levels to guide your reentry points.
Transitioning to Financial Source Professional Calendar
For traders seeking a professional features like the ones referenced in the trade plan above – check out a professional economic calendar at a friendly price of $19.
- Powerful high low forecasts
- Lightning bolt feature
- Know WHAT economic data points will move the market with our fundamental drivers report.
- Get our interest rate tracker to know which central bank meetings to trade
- Get 3 institutional reports which will give you signals on which pairs will give you the most movement.
For a detailed list of features and to explore how the Financial Source Professional calendar can enhance your trading experience, visit the Financial Source Economic Calendar.
Conclusion
While free economic calendars like Investing.com offer valuable tools and resources, their limitations can impact your trading efficiency. Transitioning to a more comprehensive and reliable solution like the Financial Source Professional calendar can significantly enhance your ability to navigate economic data and trade it profitably!