How to trade the NFP - A Strategy for Success

Commercial Content Analysts
1

Non-Farm Payroll (NFP): A Quick Guide for Forex Traders

The Non-Farm Payroll (NFP) report, issued on the first Friday of each month, is a critical economic indicator that highlights the number of jobs added in the U.S., excluding farm, government, and certain other job categories. Its release often triggers volatility in the forex market, influencing the U.S. dollar’s value.

Why Does NFP Matter?

Forex traders pay close attention to NFP because it can significantly impact currency values. A higher-than-expected NFP suggests a growing economy, often boosting the USD, while a lower figure can indicate economic challenges, potentially weakening the USD. The key for traders is navigating the market’s swift reactions to the report.

Trading the NFP Report

Strategies for NFP trading vary, with some traders preferring to act after the market settles and others aiming to capitalize on the initial volatility. Essential to success are a deep understanding of market trends and robust risk management.

I hope this added some value to your trading day, and will keep you posted with more strategies.

2

According to forecast USD going to fall.

GBPUSD - BUY
EURUSD - BUY
XAUUSD - BUY
BTCUSD - BUY
USDCHF - SELL
USDCAD - SELL

3

Thanks for your insight :slight_smile:

4

I would argue there are two strategies to trading NFP and other major data releases:

  • Stay away until the data is out, and the dust settles.
  • Be in front of the computer and jump on any direction the candles make (risky and not really a strategy)

Lots of institutions, analysts and cabdrivers make estimates, which (less the latter) serves as a basis for wether the numbers are good or bad. However, nailing the outcome, is not possible unless you work for the agency releasing the data. You can analyse all kinds of indicators, news, statements etc. but in the end, we as retail traders will have to just watch as the data is released. Most professionals too, I’d expect.
However, as I believe @ShermanK78 is hinting at, if you follow the market closely, both charts and fundamentals, you can get a feel for how the numbers might turn out. There is a certain feel of and in the market. Like yesterday, with the release of NFP. I had a feeling the numbers might be good/bad, depending on your position. Unfortunately (for my FX) I was busy with a stock daytrade, so forgot I was long NZDUSD…

1 Like
5

Indeed, that is true…thanks for your reply.

1 Like
6

Seems like a good site you got going, sorry I didn’t visit before, there are a lot of strange links posted in here so I don’t click on all :slight_smile: The pre-trade of NFP seems like it could be a good strategy, depending of course on the reaction to be strong enough to trigger an order, and not volatile enough to trigger both. Volatility is perhaps not such a big issue with NFP, but rather when several data is released at the same time.

1 Like