Tips on How to trade the Non-Farm Payrolls

Oct 23,  · Hi, If the institutions make a big move during the non farms payrolls results does it mean that the sentiment of the market is in that direction.

By entering the trade at 1.

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The ubiquitous Non-Farm Payroll (NFP) report out of the U.S. is an example of the former. So much attention is paid to the NFP report that pundits from across the financial blogosphere attempt to predict its eventuality and impact across a variety of financial instruments.

To closely examine seasonal and non-seasonal changes, the BLS releases two monthly statistical measures: Bureau of Labor Statistics, All Employees: We will reply as soon as possible. If you have not received a response within two business days, please send your inquiry again or call Sep 7, Aug Thousands of Persons , Seasonally Adjusted. Accurately predict GDP and more to win in this competitive forecasting game. Monthly Change in Nonfarm Payrolls. FRED in the Classroom: These events can also have a significant impact on the currency markets, so it is important for currency traders to monitor the release of major economic indicators, such as US Non-Farm Payrolls NFP.

It is published by the US Department of Labor. It provides a look at the health of the US economy in general, and the labor market in particular. As one of the most important economic indicators, the NFP release can have a major impact on the forex markets and can affect the direction of the US dollar. This means that traders should always treat the NFP report as market-moving data. A NFP which is stronger than the estimate also known as the forecast indicates that the labor market is stronger than what the markets expected, and the dollar often rises as a result.

Let's use a stock market analogy to answer this question. Just like a company's stock often rises after the company releases a strong financial report, so to the US dollar can be thought of as the "stock of the US economy".

Thus, when the US releases a strong economic report, the "stock" US dollar often rises against other currencies such as the euro, pound or yen as a result. Conversely, a weak NFP report indicates that the labor market is weaker than what the markets anticipated, and a weak reading can push the dollar lower against other currencies.

Mark your economic calendar so that you can monitor the release time of NFP. Each report covers the employment change measured in the previous month. The June report, released on June 5, covers the employment change measured in May. Similarly, the May report, released on May 8, covers the employment change measured in April. The chart shows the following: When trading based on economic events, it's always a good idea to be well-versed with that particular sector of the economy.

So, for trading based on the NFP, a trader should have a solid understanding of employment conditions in the US. The more knowledge you have, the more confident you will feel trading the NFP. Don't accept the market estimates as written in stone; they are often well off the mark. Like any other piece of economic data, there are three ways to analyze the U. Trading news releases can be very profitable, but it is not for the faint of the heart.

This is because speculating on the direction of a given currency pair upon the release can be very dangerous. Fortunately, it is possible to wait for the wild rate swings to subside. The release of the NFP generally occurs on the first Friday of every month at 8: As with all aspects of trading, whether we make money on it is not assured. Approaching the trade from a logical standpoint, based on how the market is reacting, can provide us with more consistent results than simply anticipating the directional movement the event will cause.

Because the forex market is open 24 hours a day, all traders have the ability to trade the news event. The logic behind the strategy is to wait for the market to digest the information's significance. After the initial swings have occurred, and after market participants have had a bit of time to reflect on what the number means, they will enter a trade in the direction of the dominating momentum.

The strategy can be traded off of five- or minute charts. For the rules and examples below, a minute chart will be used, although the same rules apply to a five-minute chart. Signals may appear in different timeframes, so stick with one or the other. Looking at Figure 1, the vertical line marks the 8: As you can see from the chart, there are three bars, or 45 minutes, of back-and-forth action following the release.

During this time, traders do not trade until they see an inside bar. The inside bar has a square around it on the chart. This bar's price range is fully contained by the previous bar. Traders will enter when a bar closes higher or lower than the inside bar. The next bar's close is circled, as that is their entry; it closed above the inside bar's high. Their stop is 30 pips below the entry price , which is marked by a solid black horizontal bar.