In this article we will give you a set of instructions for how to profitably trade currencies after the non farm payroll news announcement with specific tools, indicators, and techniques. We will show any forex trader how to enter trades in a window of time after the non farm payroll news announcement. Most forex traders believe and/or are told that you should not trade non farm payroll news. This is not true at all, this article will detail and show traders how to profitably trade non farm payroll, after the news comes out, and give you a time line of how and when to enter trades and under what conditions.
What is Non Farm Payroll
Non farm payroll news is reported each month by the US Bureau of Labor Statistics. The news announcement gives out the number of paid US workers of any business, but excludes government employees, farm employees and non-profit organization employees. Volatility statistics indicate that the non farm payroll news announcement is the most volatile of all scheduled US Dollar economic news drivers. The average movement of currency pairs is higher than any other news driver, so this is why traders are interested in trading to take advantage of this.
What to Look for After Non Farm Payroll
The best thing to do is to wait until after the NFP news announcement at least 10-15 minutes for the initial price spikes to settle down. Then start to monitor the trading tools and charts we show you in this article and in the example below. In some cases the tools and indicators may show you a good trade entry point ahead of the NFP announcement, in this case you must have your stops at break even prices on any open trades ahead of the NFP news announcement, or exit the trade manually ahead of the news.
Any trades you make after non farm payroll news would have the same characteristics as you would have in any good trade, the rules for forex trade entries are exactly the same. The only scenario you must be careful about is if a pairs gaps up or moves up suddenly 100 pips or more in the first few minutes after the NFP news announcement, this is when an entry can become much riskier.
Most traders expect movement from the USD pairs after non farm payroll, this is logical since it is a news announcement related to the US economy. The example below shows that you can look for trades on any USD pair, however with this trading system you can look for trades on any of the 28 pairs we follow in the eight major currency groups. So this is yet another myth we are breaking about trading after NFP. In the example below the US Dollar (USD) was weak and the Japanese Yen (JPY) has some strength, so the USD/JPY pair move strong after the NFP news driver. Using the same logic, any one of 28 pairs can be traded after NFP, even non USD pairs.
Traders sometime look at the NFP predictions and results to try to trade from this information, we do not think that this is the correct approach. Just wait for the news to come out, then wait for the price spikes to settle down. At that point you should trust your tools and indicators presented in this article, because they are highly logical and work well in almost every situation. Demo trading NFP will prove your system.
Example Post NFP Trade
On June 3, 2016 here is how trading unfolded, after the NFP news announcement, about 15-20 minutes later, the 107.80 support area was broken on the USD/JPY. This pair continued down to an intra-day low of 106.60, so 120 pips was possible. This pair closed the day at 106.62. This pair was getting close to support on the H4 time frame, but in many cases we have seen on trending pairs, post NFP movements can be used to enter strong trends with considerable additional pip potential. See the images below of the USD/JPY post NFP news sell signal and chart movement with breakout point.
The indicators you see above includes The Forex Heatmap®, which gives live buy and sell signals for 28 pairs in real time, even after strong forex news drivers like NFP. The chart setup you see is some very simple exponential moving averages combined with support and resistance levels. The heatmap is indicating clear USD weakness in real time and the trend indicators are showing the trend and support and resistance levels.
The USD/JPY sell was not the only trade available after NFP. The EUR/USD also gave a buy signal after NFP, it also broke out and into a trend in the D1 time frame. This also served as an entry point into a trend with additional upside potential. So the EUR/USD moved up on the same USD weakness and this pair is in an uptrend that should continue much higher on a larger time frame based on support and resistance analysis. So you could have also caught a buy entry on this pair as well while maintaining significant pip potential going forward. Another great trading opportunity after NFP on the same day.
After selling the USD/JPY we would advise scaling out lots, or closing out half of your lots on that sell position. Then let the additional lots ride the trend. Similarly on the EUR/USD buy position, you could scale out profitable lots, then ride the new D1 time frame uptrend higher with a break even stop in place.
It is certainly possible to trade the non farm payroll news, just after the NFP news announcement, and this type of trading is certainly possible for any one of 28 pairs, not just the USD pairs. You just need the right trading system that is flexible enough to give you accurate entry signals with very low risk, under these market conditions. This article gives exact instructions on how to trade non farm payroll profitably, after the news announcement, and also shows you the trend and entry indicators used. If anyone tells you not to trade non farm payroll they are simply mistaken, or the trading system they are using is inadequate or not flexible enough for all market conditions. These same trading techniques and real time indicators also work after all of the volatile news drivers on the world economic calendar across 8 different currencies we track daily.
To contact Mark Mc Donnell you can email him at Forexearlywarning.com.