In such a case, it shows the GBP/USD or EUR/USD will trade inversely to the news. Whatever the outcome, investors need to try and combine both fundamental and technical analysis. This info indicates signs of strength in the US economy, so the dollar has a considerable advantage when trading. Whenever it’s trending positively, traders can anticipate the dollar to display bullish behaviour. Whether the real NFP numbers are below, above, or conforms to the market expectation, the market adjusts price movements based on that data. Nonetheless, the unexpected happens where the market fails to follow the policy makers projections.

Technical analysis can be employed in the NFP report using 5 or 15-minute chart intervals. Nonfarm payrolls are an important economic indicator related to employment https://www.bigshotrading.info/ in the U.S. Price spikes or whipsaws, which can tend to activate both pending orders and then hit your stop loss and you have two loses, almost at the same time.

How to Trade NFP – Key Takeaways

Watch for the spread to return to more normal levels , although slightly elevated spread levels are fine and typical following a major news event. It usually takes a couple of minutes or more for the spread to narrow to something resembling normal. The Non-Farm Payrolls is released along with the US unemployment number on the first Friday of the month.

He is a member of the Investopedia Financial Review Board and the co-author of Investing to Win. So that would mean that the EUR/USD or GBP/USD would likely trade inversely to the announcement. Remember that a result that sees the NFP report beat expectations, will likely be a positive for the USD. Firstly, you need to identify the forex pair that might be most impacted by the result. Like anything in trading, that absolute value of the NFP report isn’t as important as the expectation.

Why Beginners Are Attracted To The NFP

Using primarily TC trades, this day produced 8R (8% if risking 1% per trade) in profit within 1 hour of the news release. It is in the aftermath of the NFP report that we as retail day traders make our trades. I usually wait at least a minute, and often more, to make a trade after the NFP is released.

• This was confirmed with further bullish strength and a breakout on Thursday’s bar.
• It is intended to represent the total number of paid workers in the US, with the exception of farm, government and private-household employees, plus employees of non-profit organisations.
• The US non-farm payrolls, or ‘NFPs’, is an official statistic released by the US Department of Labor, usually on the first Friday of every month.
• The NFP came in much worse than expected and this is usually the report most people pay attention to.
• The “simple strategy”, discussed later, doesn’t produce many trades and is more something to do in the background because it doesn’t take much work/focus either.
• If the strategy provides two entry signals and both are losers, likely the price action is choppy and/or not suited to the strategy that day.
• This number is then compared to the total labor force and calculated as a percentage.

Sign up for a demo account to hone your strategies in a risk-free environment. This avoids jumping in too early and decreases the probability of being whipsawed out of the market before it has chosen a direction.

Day-Trading the Non-Farm Payrolls (NFP) Report

Well done, you’ve completed Non-farm payrolls , lesson 1 in Fundamental analysis. nfp forex meaning Go to the next lesson on Key factors that affect the forex markets.