NFP Trading: Non-Farm Payrolls Strategy for Forex Traders
The Non-Farm Payrolls (NFP) is probably the most important economic event for forex traders. Every first Friday of the month, the US Bureau of Labor Statistics publishes how many jobs were added or lost in the past month, excluding the agricultural sector.
What is the NFP?
The NFP is a monthly report containing three key figures:
- Non-Farm Payrolls: Number of jobs added or lost
- Unemployment Rate: The percentage of unemployed
- Average Hourly Earnings: Change in wages
The report comes out at 8:30 AM EST on the first Friday of each month.
Why is the NFP So Important?
1. Economic Indicator
2. Fed Influence
3. Market Volatility
4. All Currencies Move
How to Read the NFP
The Number vs. Expectation
- Better than expected: USD rises
- Worse than expected: USD falls
- In line with expectation: Market usually neutral
NFP Trading Strategies
Strategy 1: Wait and React
Strategy 2: The Straddle
Strategy 3: The False Break
Risks of NFP Trading
1. Extreme Volatility
2. Spread Widening
3. Whipsaws
4. Emotional Decisions
Conclusion
The NFP is one of the most exciting and profitable events for forex traders, but also one of the most dangerous. With the right preparation, strategy, and risk management, you can use the NFP to make significant profits.
