The monthly release of the NFP (Non-Farm Payrolls) figures is a highly anticipated moment for all traders. And this is with good cause, because the Non-Farm Payrolls has been historically known to shake up the market place quite a bit. Using a reliable NFP prediction strategy is something that many traders are after.
Just like most other news releases on the economic calendar, traders will use these figures to determine the strength or weakness of the underlying economy. NFP looks specifically at whether the US economy is expanding or contracting, based on the number of jobs added to the labour force. Having a NFP prediction strategy is a good way to be part of this action.
The NFP Prediction Strategy
This particular strategy has been tried and tested at Forex Watchers and Urban Forex. The videos above are two examples of live trading this strategy in a webinar.
The strategy itself is fairly straightforward. Find a correlating group and trade in the direction of the last daily candle. You can either choose to get in before the news is released or after. Both has it's pros and cons. Prior to the news spread are significantly lower, but there's the risk of the news spiking you out. After the news spreads will be higher, but you will have a bit more certainty on the direction - even when you miss a chunk of the move.
Final Words
Regardless of whether you intend to trade the news or maybe stand aside; remember NFP can be an exciting and will often bring unexpected volatility. If you do decide to trade, stick with your news trading plan and strategy, and always keep an eye on risk / reward levels. Because of the high excitement, emotions will come into play and it's not unwise to use a demo account for the first few times you trade NFP.
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FAQs
Usually, this is done using the average of a group of professional analysts – if NFP significantly 'beats' or 'misses' this consensus, a major market move may follow.
What are the projections for nonfarm payroll? ›
Non Farm Payrolls in the United States increased by 142 thousand in August of 2024. Non Farm Payrolls in the United States is expected to be 130.00 Thousand by the end of this quarter, according to Trading Economics global macro models and analysts expectations.
How to read a forecast for NFP? ›
To Trade NFP's take the forecast then add and subtract 50,000. If the release is higher than 50,000 then the release is out of range and EUR/USD drops below its normal range. If, on the other hand, NFP is below 50,000 then it's out of range and the EUR/USD goes higher to break its ranges.
How to trade the NFP and make profit 100%? ›
Technical analysis can be employed in the NFP report using five or 15-minute chart intervals. The trading strategy involves waiting for the market to settle after the report is published, setting a small stop after a signal, and closing the position about four hours later.
How to master NFP? ›
The most important advice for trading the NFP: You never trade the actual NFP numbers. You trade people's expectations and reactions to those numbers. The screenshot below shows a very common behavior and it highlights the importance of waiting out the first initial knee-jerk reaction.
Which pair moves most during NFP? ›
Top Currency Pairs for NFP Trading
- EUR/USD. EUR/USD is the most traded currency pair in the forex market, making it one of the best pairs to trade during NFP. ...
- GBP/USD. GBP/USD is another major currency pair that reacts strongly to NFP data. ...
- AUD/USD. ...
- USD/JPY. ...
- USD/CAD. ...
- USD/CHF.
Is Nonfarm Payrolls a Leading or Lagging Indicator? The nonfarm payroll report is not a leading indicator but provides a snapshot of incidents that affect the overall economy.
Is NFP a leading indicator? ›
Understanding Nonfarm Payrolls and Their Significance in Forex Trading. Nonfarm payroll, or NFP, is a key economic indicator in the USA, the world's largest economy.
What happens when NFP is high? ›
A higher-than-expected NFP figure can indicate a resilient economy and higher consumer demand. As a result, companies perform better; earnings are higher, as is investor confidence. This can cause the stock market to rise.
What is the best time frame to trade NFP? ›
A 30-pip stop is generally recommended and a maximum of two trades can be undertaken in this way. Most of the movement will occur in the four hours after the release of the NFP reports, so you'll want to exit in this timeframe or use a trailing stop.
How does NFP data affect forex? NFP releases have a general tendency to cause large movements in the forex market. If the Fed decides to lower interest rates to combat high unemployment, it reduces demand for the dollar, causing it's the dollar's price to fall.
How does non-farm payroll affect the stock market? ›
The monthly nonfarm payroll (NFP) report can have a significant impact on the stock market. Strong jobs report: Can lead to higher stock prices because investors feel confident about the economy. Companies may also have more revenue to invest in growth.
How does non-farm payroll affect gold? ›
When the NFP report shows positive employment data, indicating a strong job market and economic growth, it tends to boost investor confidence and risk appetite. In such cases, investors may shift their focus towards riskier assets, such as stocks, which can reduce the demand for assets like gold.
What is the non-farm payroll forecast for the US? ›
Nonfarm Payrolls Private in the United States increased by 118 thousand in August of 2024. Nonfarm Payrolls Private in the United States is expected to be 125.00 Thousand by the end of this quarter, according to Trading Economics global macro models and analysts expectations.
How many pips does NFP move gold? ›
Let's also take a look at the XAUUSD statistics. As noted earlier, following an NFP announcement gold can move as much as 25 dollars (2500 pips). This, however, isn't a norm.
How do you predict forex movement? ›
Technical analysis in forex enables traders to predict movements by analyzing historical data and identifying trends and potential reversals. These indicators offer insights into trend direction, volatility, and momentum, empowering informed decision-making in the dynamic forex market.
What is the best time to trade NFP? ›
Trading ahead of the NFP release
As it is a widely expected event, we can see that the volatility goes down before the NFP is published. It is recommended to stay out of the market during the early Friday trading hours, as you may be affected by the sudden changes in volatility.
How many pips does NFP move on average? ›
How many pips does the NFP usually move? The first hour following the release of non-farm payrolls data usually sees the EUR/USD currency pair move by 50 pips and the USD/JPY currency pair move by 64 pips.
What happens when NFP is higher than expected? ›
A higher-than-expected NFP figure can indicate a resilient economy and higher consumer demand. As a result, companies perform better; earnings are higher, as is investor confidence. This can cause the stock market to rise.
