With difficulties. Some analytical resources, due to the volatility and short-term impact of this report, do not even dare to make a forecast on it. Why the following screen clearly shows:
The reaction to Non-Farm is highlighted in yellow. I think it is noticeable that there are much stronger fluctuations than the movement after the report, which is not always well predicted.
Nevertheless, there are several trading strategies:
- Buying or selling on a currency pair of volatile instruments: the US dollar paired with the euro, Canadian and New Zealand dollars, the British pound, the Swiss franc. The position opens in the first seconds in the direction of the alleged fact. If it is assumed that the fact will be more than the forecast – a long position, less – a short one. I note that the meaning of Prev., in this case, does not play a role. Example: if Prev = 250, forecast – 180, Fact. – 220, then the position should be opened in the long direction, despite the fact that Fact. less Prev Reason: the forecast has been known for a long time and the market has already won back its change in comparison with the value of Prev. (previous period). If the forecast for the actual value does not match – no luck.
- Placement of two pending orders simultaneously before the publication of the report. Everyone decides the entry-level individually. Both orders are insured by taking profit and trailing. With a one-pointed trend, you can get a good profit in a few minutes. But the risk of error at the entry points remains. And if both orders are triggered due to volatility, the trader receives a loss.
The question in news trading is at what point to enter the market: before the report is released or after? In the first case, there is a risk of not guessing (that is why there is a place to trade on pending orders), in the second – not being in time.
Consider a specific example. On September 7, 2018, at 15.30 a Non-Farm report was published.
As a result of July (report 03.08.18), the number of new jobs created fell by 157 thousand (subsequently, after revising the statistics, the amount changed to 147 thousand). However, analysts’ forecasts were in the direction of increasing this indicator in August to 191 thousand, but the statistics exceeded the results – 201 thousand new jobs created. This is more than optimistic since the forecast for September is a decrease in the indicator to 185 thousand.
Investors immediately reacted by betting on the dollar (red five-minute candle at 15.30). Those who would miss this moment would enter the market with much greater risks and less profit. Please note that by the end of the session, those who were betting on a short position in the euro began to close them. Logically, the end of the working day, because the course gradually went up. Added to this is Trump’s statement that for the first time in the past 12 years, economic growth (4.2%) has exceeded unemployment (3.9%).
Now consider the reaction of the market on a larger scale.
This figure shows that on the eve of the report’s release, the trend was relatively even and reacted more likely to other fundamental factors. Given the forecast of labor market analysts, traders have already begun to take short positions in relation to the euro, betting on the growth of the US dollar. After the release of statistics, the EUR / USD rate went down and only by September 11 the exchange rate recovered. In this case, the position could be held longer than 3 hours, but a triple swap, the risk of force majeure and volatility make this unprofitable. Short summary: 1. We monitor the behavior of the trend 3 hours before the release of statistics and compare it with the forecast. It is better than the trend is horizontal. 2. We ensure the position with stops, taking into account the probability of slippage. 3. We open a position immediately after the release of statistics, a delay of 5 minutes is fraught with a loss of the meaning of opening a transaction. 4. Do not be greedy or panic: close the deal in 30 minutes if there is no reversal. Or we put trailing (the length depends on the trader’s desire) and exit the market 1.5-2 hours after the opening of the transaction.