It has surely happened to you that price suddenly started to move like crazy. “Why is this happening?” many of you might have asked. One of the many possible reasons might be the announcement of NFP news.
What is NFP?
NFP (non-farm payroll) means the announcement of American market news. Announced are unemployment rate, average earnings, and foremost employment change. It is the largest and most important monthly announcement. This news is traditionally announced on the first Friday each month and carries a large impact on the USD and usually also CAD markets.
For example, if employment rises, it might signalize strengthening of the economy and therefore strengthens the currency. It is not uncommon that price moves 500 pips or even more in just a few minutes.
More information about announcements can be found here. Or at forexfactory (calendar)
How to trade using NFP news?
First and foremost: During the day when NFP new is announced, there are large movements in price. These movements are not limited to the exact time of the announcement. Therefore, trading binary options on this day is not recommended for more conservative traders.
Otherwise, these announcements can be traded as any other fundamental messages. We will check today’s forecast and change our strategy accordingly. The more comprehensive tutorial will be in next Fundamental analysis series article (4th part).
Overall summary of NFP
To summarize: You should never trade on the first Friday in a month unless you watch economic calendars. In these instances, the market tends to be very unstable or even unpredictable. On the other hand, if you do have some experience with the trading of the fundaments, this day might be your gold mine. 🙂