Trading the news forex strategy
The NFP is around the corner again! This is always an exciting event in my opinion, even though I never was nor will be a news event trader.
To me, the NFP event is something similar to a holiday feeling because of the anticipation of exciting times ahead.
Do you have the same? Price almost always responds in a spectacular fashion to the release of the figures and you can sense the drama in the air. Emotions are flying around as the currency pairs spike up and down. Trading the news forex strategy traders are winning a fortune, others are losing their shirt. This type of price movement is not for the faint-hearted and causes tremendous turmoil.
In some cases, price resembles closely the movement of a roller coaster as it whirls down and up in a matter of minutes or even within a blink of an eye. Yet at the end of the day, the only thing which remains is a daily candle. All the emotions and movement still translate into a daily candle, just as the one before and after NFP. NFP surely is a separate type of trading trading the news forex strategy its own right and this article will provide more guidance on how to trade the NFP.
Usually Tony discusses NFP related matters but this time around I wanted to share my 2 cents as well. Just to cover the details: Bureau of Labor Statistics and is released on every first Friday of the month.
The unemployment rate indicates the percentage of the total labor force that is unemployed but actively seeking employment and willing to work. These two news events are the biggest and most volatile news releases in the Forex market.
Nothing matches a day like today. The news events are vital for policy makers, economists, traders, business owners, investors, etc to decipher the current state of the economy and predict future levels of economic activity. Economic growth leads to trading the news forex strategy inflation, which is followed by an increase of interest rates to compensate inflationary pressures, which in turn makes the currency more attractive and competitive versus other currencies.
Our ultimate guide on how to trade NFP is continuing with a series of questions to help explain the factors affecting forex market during NFP. Most often the best currency pairs to trade an NFP release are the majors: It depends on what type of trader you are and how risk averse you are. The short and simple answer is: NFP is good for scalpers and long-term traders and not recommendable for intra-day traders picking 1 position a day using 15min-1 hour time frames.
This trader often avoids trading on NFP days. Trading the news forex strategy to other news events the impacts trading the news forex strategy the NFP are so heavy that typical trading comes to a halt. That is why we have a trading plan which filters price action and allows us to focus on trade setups with positive expected returns. There are some differences depending on which time frames you use and what type of trader you are know yourself:.
It also depends on which type of movement during the NFP:. Typically the first reaction occurs so fast that is only traded by institutional traders that have access to the fastest information and technology as the reaction to the news is within a split second. Price can jump so fast that it changes within the blink of an eye. After the currency settles down and pauses for a few minutes, a trader can trading the news forex strategy the NFP released figures versus expected, compare that to price movements and technical analysis and judge whether the NFP trading can make sense.
I am curious, especially this month, to find out the direction of the U. The NFP news release is due at 8. Tons of questions as you can see. And the NFP is great a measurement to provide answers to trading the news forex strategy questions. What do you think? Write us down below!!! Now we are going to discuss how an Trading the news forex strategy strategy for the Forex market could look like. Please be aware that it is crucial for every trader to do their own demo testing, back testing, paper testing, etc before trading live.
Past results do not guarantee similar outcomes in the future. If there is not enough momentum or deviation in the NFP release, the market could quiet down after the initial reaction. In that case, there would be not much trading left to do. The bigger the deviation between expected and released numbers, the higher the chance that the market will maintain its volatility — even after the first reaction which is seen in the first minutes.
Thank you for taking the time to read this article on NFP trading in forex. We are confident that you can see the impact on forex that the NFP can have and found a strategy for trading through it. What is NFP impact on forex trading? There are some differences depending on which time frames you use and what type of trader you are know yourself: Trading the news forex strategy, stop levels are not safe. A trader using 4 hour or day charts can take long-term positions if a wide enough stop loss is used to survive the volatility and if a good major turning spot is identified.
The NFP can be the trading the news forex strategy of a new direction and trend so for swing traders it can be important to be active and aware of that. It also depends on which type of movement during the NFP: What is your NFP trading plan? Write us down below!
There are some advantages of trading the NFP: Trading the news forex strategy is a method how a Forex trader could trade the NFP: The NFP figure causes the price to spike in a direction up or down is irrelevant.
The price continues up or down for a minute or a couple of minutes and then pauses without breaking the new extreme high or low. Wait for a small pullback. Conservative traders would enter the trade 1 pip above or below the new extreme high or low. Aggressive traders would trade the retracement. Stop loss 1 pip on the opposite fractal. Hope you enjoyed this article on NFP trading in the Forex market! The following two tabs change content below.
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