Trading the Non-Farm Payrolls Report

Fundamental analysis, which is very popular among traders dealing with stocks and other securities at the stock exchange, lends itself to well-founded criticism from traders of the forex market.

The main reason is that influence of financial statements on the price of one stock cannot be compared to the influence of certain news on the national currency rate of the whole country.

Unfortunately, the fundamental analysis in the forex market turned out to be less effective, because the exchange rate stability depends not only on the economic indicators but also on the competent policy of the central bank and the political leadership.

Nevertheless, for successful trading, there is no need to be strictly tied to a certain scenario, because the fact of price momentum at a certain time, as well as the sharp increase in liquidity, can be an excellent opportunity for the implementation of any impulse trading strategy.

Actually, in this article, you will get acquainted with one of such momentum strategies, which allows you to earn on such news as Non-Farm Payrolls.

Non-Farm Payrolls Trading Strategy

Non-Farm Payrolls is a momentum trading strategy based on fundamental analysis, namely, on such a key macroeconomic indicator of the U.S. economy as Non-Farm Payrolls.

It is worth noting the multicurrency strategy, as price momentum due to the news release appears on all currency pairs with the dollar, which allows you to use it on many assets simultaneously.

And also it is worth noting that the main objective of this strategy is to catch the price momentum, so it can be applied in any time frame.

Non-Farm Payrolls: Predictable Unpredictability

NFP is the key news for all speculative traders, which can show us how strong or strengthening the United States economy is and as a consequence the dollar.

The fact is that Non-Farm Payrolls show the number of people employed in the non-agricultural sector.

The reason the news is so important is that the non-agricultural sector of the economy, the lion's share of which comes from industry, is responsible for filling 80 percent of the nation's GDP.

Thus, by tracking employment, one can predict the dollar exchange rate and draw conclusions about the country's changing economy.

Typically, when a Non-Farm Payrolls report is published, the market is characterized by maximum volatility. The price can go down by 100-200 points in a very short period of time, but speaking about the after-effects of the news.

The news itself is published every first Friday of the month, but its interpretation is not so simple. The fact is that at the moment of Non-Farm Payrolls there is a simultaneous publication of unemployment statistics.

Since the data can contradict each other, the market becomes virtually unpredictable and only in rare cases, when the news is in unison, the price has a more focused movement.

Nevertheless, even though it is almost impossible to predict the behavior of the price after the news publication, it is safe to say that it will cause strong price spikes, which are captured by the strategy.

Rules of Non-Farm Payrolls Trading Strategy.

In order to work with the Payrolls strategy, we will need an economic calendar through which you will monitor the news release.

It is important to understand that postponing the data releases is a normal phenomenon for the strategy, so it is very important to track such changes in time. Our economic calendar can help you with this - https://adrofx.com/forex-market-economic-calendar :

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Once you know the date and time of the news release, you have to set two pending orders, namely, Buy Stop and Sell Stop, a couple of minutes before the publication.

The pending orders themselves are placed at a distance of 25-30 points from the current price, which allows you to get rid of the triggering of two orders simultaneously that can occur due to sharply increased volatility.

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Once the price reacts with price momentum and one of two pending orders triggers, the second one must be deleted as a non-operating scenario.

Stop Loss should be placed in the opposite order or you may not place it at all under the condition that you do not delete the second pending order, which will block your loss.

Profit is fixed with the help of a Trailing Stop, which should be moved as long as possible after the price, to squeeze out the maximum price momentum.

In conclusion, it is worth noting that the Non-Farm Payrolls report is one of the most highly volatile news, which makes quotes on all currency pairs with the dollar move.

The described rules of momentum strategy can be applied to absolutely any strong news that can move the market.

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