Trading the Nonfarm Payroll (NFP)
The nonfarm payroll or NFP is an economic news item which comes out once a month in the US and details the number of jobs added or lost in the economy over the month. This is always a big event and in most cases, massive movements in all markets are seen when it is released.
You can read more about the nonfarm payroll through the Wikipedia entry here: http://en.wikipedia.org/wiki/Nonfarm_payrolls
I’m going talk about trading the nonfarm payrolls…. don’t do it! In my experience I’ve found that regardless of positive or negative news, the market can move either up or down… 50% chance. If you are in a position when the news comes out, you maybe lucky and make a killing but on the other hand, you could lose a fortune. Remember if you’re gambling, you’re not trading and over the long term, you will lose money.
A lot of traders ensure that they are out of any positions prior to the NFP figures and will trade after the markets have settled. I do know that there are people who have traded these markets but it’s personally not something I feel comfortable with.
However, I did have a position open a few days back, a long trade on the GBPJPY market. It had already moved around 30 pips in profit for me so I didn’t mind risking the profit for a potential greater gain (with the stop at breakeven). When the NFP figures came out, you can see that the market shot up… but it didn’t hold up here and started falling. I closed out my trade for 40 pips in profit.
You can see the price action spike when the NFP figures came out:
