NFP Trading

Trading a major announcement like the monthly Non-Farm Jobs Report (NFP) is like sitting on a surfboard at the base of a 30 foot wave. Experienced surfers crave huge swells like this and stand up to the wave, riding out the adventure all the way to the shore. And you better believe that surfer is going to paddle out back for more. But, would your average boogie-boarder who is used to riding small waves want to give the 30-footer a try? Probably not.

The same goes with trading NFP. The resulting wave of market volatility created from this important monthly economic event can be a lot of fun to trade, if you know what you are doing. It isn’t for newbies or the faint of heart. In fact, I know many professional and experienced traders who choose not to trade on NFP Friday. Some traders who trade all month with Trade Copiers/EA’s/Mirror Trading software actually disable their automated trading software out of respect for the NFP. They would rather sit on the shore, so to speak, and watch the wave from a distance. And you can’t blame them, NFP Friday can be explosive!

Whether sitting on the shore and watching, barely stepping into the water to get your feet wet, or paddling out to ride the wave; who would want to miss out on the excitement of a 30 foot swell! Same with NFP trading, whether you just watch and observe Forex market volatility or attack the wave head on by trading on this highly volatile trading day – it is not a day to miss out on the Forex excitement.

We invite you to trade the NFP announcement with a Forex professional; whether you just join us to observe the trading, or if you would like to test the waters on a demo trading account, or ride the market wave by duplicating our trades in your live Forex trading account. Either way, see here to join a free NFP Forex trading event.

What exactly is the NFP announcement?

Reporting from wikipedia.org:

Nonfarm payroll employment is a compiled name for goods, construction and manufacturing companies in the US. It does not include farm workers, private household employees, non-profit organization employees, or government employees.

It is an influential statistic and economic indicator released monthly by the United States Department of Labor as part of a comprehensive report on the state of the labor market.

The Bureau of Labor Statistics releases preliminary data on the third Friday after the conclusion of the reference week, i.e., the week which includes the 12th of the month, at 8:30 a.m. Eastern Time;[1] typically this date occurs on the first Friday of the month. Nonfarm payroll is included in the monthly Employment Situation or informally the jobs report and affects the US dollar, the Foreign exchange market, the bond market, and the stock market.

The figure released is the change in nonfarm payrolls (NFP), compared to the previous month, and is usually between +10,000 and +250,000 during non-recessional times. The NFP number is meant to represent the number of jobs added or lost in the economy over the last month, not including jobs relating to the farming industry.

US employment data showed sustained weakness throughout 2011 and the jobs market has become an area of key focus for investors and market participants. For this reason and in this environment the market is particularly sensitive to significant NFP releases.

While the overall number of jobs added or lost in the economy is obviously an important current indicator of what the economic situation is, the report also includes several other pieces of data that can move financial markets:

1. What the unemployment rate is in the economy as a percentage of the overall workforce. This is an important part of the report as the amount of people out of work is a good indication of the overall health of the economy, and this is a number that is watched by the Fed as when it becomes low (generally anything below 5%) inflation is expected to start to creep up as businesses have to pay up to hire good workers and increase prices as a result. This initial rise in prices may mean that workers demand higher wages (especially as the economy reaches full employment) causing further inflation. In macroeconomics, this is known as the price/wage spiral.
2. Which sectors the increase or decrease in jobs came from. This can give traders a heads up on which sectors of the economy may be primed for growth as companies in those sectors such as housing add jobs.
3. Average hourly earnings. This is an important component because if the same number of people are employed but are earning more or less money for that work, this has basically the same effect as if people had been added or subtracted from the labor force.
4. Revisions of previous nonfarm payrolls releases. An important component of the report which can move markets as traders re-price growth expectations based on the revision to the previous number.

To trade, or not to trade?

Whether sitting on the shore and watching, barely stepping into the water to get your feet wet, or paddling out to ride the wave; who would want to miss out on the excitement of a 30 foot swell! Same with NFP trading, whether you just watch and observe Forex market volatility or attack the wave head on by trading on this highly volatile trading day – it is not a day to miss out on the Forex excitement.

We invite you to trade the NFP announcement with a Forex professional; whether you just join us to observe the trading, or if you would like to test the waters on a demo trading account, or ride the market wave by duplicating our trades in your live Forex trading account. Either way, see here to join a free NFP Forex trading event.

NFP Trading Results:

These results are from our Non-Farm Payroll trading only.