How to trade NFP??
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  1. #1
    hashimoto007 is offline Newbie
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    Default How to trade NFP??

    I heard NFP is the most volatile news release for forex traders, it can move the market any where from 50~200+ pips in a matter of minutes, is that true?
    And i also heard that "revision" number is very important when trading this news, any suggestion for trading NFP,and how to do with the revision number??

    Thanks

  2. #2
    dannybly's Avatar
    dannybly is offline Junior Member
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    If you want to trade forex for NFP I would recommend trading IMM currency futures using a pro platform like X-Trader where you will get far better execution on your orders than in retail spot fx.

    To properly trade the release I think you will also want access to a bloomberg or a reuters terminal where you can see the number come out in real time.

    IMO the real opportunities exist when the number comes in way off expectation and the market reaction will be obvious - the only challenge then is to get into the market fast enough, which is easier said than done as it will be highly illiquid before the number comes out.

    Here is a typical market reaction:

    Payroll Employment Up > Bond Market Down, Stock Market Up
    Unemployment Rate Up > Bond Market Up, Stock Market Down

    Payroll Employment Down > Bond Market Up, Stock Market Down
    Unemployment Rate Down > Bond Market Down, Stock Market Up

  3. #3
    hashimoto007 is offline Newbie
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    Quote Originally Posted by dannybly View Post
    If you want to trade forex for NFP I would recommend trading IMM currency futures using a pro platform like X-Trader where you will get far better execution on your orders than in retail spot fx.

    To properly trade the release I think you will also want access to a bloomberg or a reuters terminal where you can see the number come out in real time.

    IMO the real opportunities exist when the number comes in way off expectation and the market reaction will be obvious - the only challenge then is to get into the market fast enough, which is easier said than done as it will be highly illiquid before the number comes out.

    Here is a typical market reaction:

    Payroll Employment Up > Bond Market Down, Stock Market Up
    Unemployment Rate Up > Bond Market Up, Stock Market Down

    Payroll Employment Down > Bond Market Up, Stock Market Down
    Unemployment Rate Down > Bond Market Down, Stock Market Up
    thank you so much, and would "ADP Nonfarm Employment Change" give some impact on NFP?

  4. #4
    dannybly's Avatar
    dannybly is offline Junior Member
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    I think first and foremost you want to pay attention to the data coming out of the Bureau of Labor statistics:

    Bureau of Labor Statistics Home Page

    I'm not sure how much influence data from a third party such as ADP or the Monster Employment Index (Monster Worldwide - Bringing People Together to Advance Their Lives) will have.

    One more comment on the NFP and the US Dollar:

    A strong payrolls number could send interest rates higher, making the USD more attractive to foreign investment as well as being bullish for US stocks. Conversely a weak number could push interest rates lower and have the opposite effect.

  5. #5
    Admin250 Guest
    trying to get an order fill at the price you want during that release can be very difficult. I would stay away from trying to buy/sell right at the release of US jobs data.

    I've found in recent NFP releases to wait for the initial spike and then fade back to the prerelease market level. Of course, it all depends on what the actual number and revisions are as well. Anything crazy out of the realm of expectations may lead to a prolonged move from pre release price levels, so we'll just have to wait and see.

  6. #6
    hashimoto007 is offline Newbie
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    Quote Originally Posted by dannybly View Post
    I think first and foremost you want to pay attention to the data coming out of the Bureau of Labor statistics:

    Bureau of Labor Statistics Home Page

    I'm not sure how much influence data from a third party such as ADP or the Monster Employment Index (Monster Worldwide - Bringing People Together to Advance Their Lives) will have.

    One more comment on the NFP and the US Dollar:

    A strong payrolls number could send interest rates higher, making the USD more attractive to foreign investment as well as being bullish for US stocks. Conversely a weak number could push interest rates lower and have the opposite effect.


    Thanks again!

  7. #7
    hashimoto007 is offline Newbie
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    Quote Originally Posted by vlad250 View Post
    trying to get an order fill at the price you want during that release can be very difficult. I would stay away from trying to buy/sell right at the release of US jobs data.

    I've found in recent NFP releases to wait for the initial spike and then fade back to the prerelease market level. Of course, it all depends on what the actual number and revisions are as well. Anything crazy out of the realm of expectations may lead to a prolonged move from pre release price levels, so we'll just have to wait and see.
    Thanks a lot! I have a bloomberg account, so i could get the actual number in real time, but if the release is obviously better or worse than the forecast number, do we still need to wait and see? do i possibly have enough time to get the first spike?

  8. #8
    dannybly's Avatar
    dannybly is offline Junior Member
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    That's great that you have access to a bloomberg terminal and the data in real time - as I said ealier if you are trying to catch the initial move I would trade fx futures where you have a guaranteed counterparty etc etc

    If you want to try trading the number through a retail fx broker I would suggest testing it out in a demo and being very cautious.

  9. #9
    Admin250 Guest
    Quote Originally Posted by hashimoto007 View Post
    Thanks a lot! I have a bloomberg account, so i could get the actual number in real time, but if the release is obviously better or worse than the forecast number, do we still need to wait and see? do i possibly have enough time to get the first spike?
    I think trying to get in a position right at the release is very difficult, high risk trade as the market moves very fast and you are prone to slippage, even when you have limit orders. It's not impossible, but very risky.

  10. #10
    hashimoto007 is offline Newbie
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    Quote Originally Posted by dannybly View Post
    That's great that you have access to a bloomberg terminal and the data in real time - as I said ealier if you are trying to catch the initial move I would trade fx futures where you have a guaranteed counterparty etc etc

    If you want to try trading the number through a retail fx broker I would suggest testing it out in a demo and being very cautious.
    Thank you as a newbie, i'm not so familiar with futures trading, but i'll have try in a demo account this time. thanks again!

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