Fridays NFP higher the better or lower the better?

Beginner Questions
1

Hi
I’m always confused in this. For this Fridays US non farm payroll. If the numbers are green and actual is higher than previous numbers does this mean volatile goes up or goes down? What if it shows a higher numbers but in color red?
Could someone explain in which direction will it go base on the result?
Thanks

2

Found this, How To Trade NFP As A Forex Trader - The NFP forex trading guide - Tradeciety Trading Academy
NFP is a complex subject, I wouldn’t even trade it, until after the release like the artical says.

3

I’m also wondering about this. Thanks to anyone who can answer this!

4

Forex is my main source of income, so I always prefer higher movements whatever I get SL or TP.

5

Basically this is what its all about.

Market Reaction/Volatility depends on how likely the data increases the chances of Interest Rate increases down the line which in turn increases the attractiveness and demand for a Currency.

It works in this order…

LARGER NFP NUMBER —>MORE PEOPLE WORKING --> GREATER ECONOMIC ACTIVITY—> INCREASED CONSUMER SPENDING —> INCREASED PRICES —> INCREASED INTEREST RATES TO CURB INFLATION —> INCREASED DEMAND FOR CURRENCY

  1. The Higher the number (positive/green) especially in relation to the Previous or Forecast…the greater the number of persons who now have jobs and the greater the level of Economic Activity that is expected in the months ahead.

  2. The greater the Economic Activity…the greater the amount of money consumers will have to spend. This increases the likelihood of greater inflationary pressures.

  3. The greater the inflationary pressures…the greater the need for measures to control prices. This therefore increases the likelihood of increased Interest Rates by Central Banks to curb price increases.

4 . The Increased likelihood of higher Interest Rates increases the attractiveness of a Currency because of the Higher Rate of Return it would provide.

So the immediate market reaction will reflect their expectations for the attractiveness of the Pair in the months ahead.

Now the tricky thing about these numbers is that even if the data is positive…the market reaction can be negative. This is why it is difficult to predict the reaction by the market and why it gets crazy sometimes.

This is why I simply wait - and what I recommend to traders - for the Daily Chart to reflect the net reaction by the market and then trade in that direction. Saves a lot of stress trying to guess and then trade the unpredictable reaction as it happens.

The video below is a market summary for what I have forecast for some CAD pairs. I also speak to how they will be affected by the outcome for the CAD job numbers that also come out tomorrow. The same theory can also be applied to the NFP for US and USD pairs.

Check it out

Sorry about the background “noise” at one point in the video…lol.

The section dealing with the Job Numbers is closer to the end of the video.

Enjoy.

Duane

Duane Shepherd, B.Sc. M.Sc. Economics
DRFXTRADING