Non-Farm Payrolls Traps

At first glance, the essence of the strategy is clear. But now imagine such a hypothetical situation: 15.30, the report is published, everyone rushes to buy the dollar with positive statistics. Suppose there are those who sell it. Question: At what moment will close the deal? Someone is quite happy with the profit received after 3 minutes (scalpers), someone after 10. Any purchase and sale (opening and closing a position) affect the course in one direction or another. And if the trend on the long time frame is relatively even and upward, then on the short (M1, M5), it will be winding, because at that moment, thousands of purchases and sales will take place.

This situation is hypothetical, but it explains in simple terms why immediately after the release of the report, the trend is not gaining strength in a certain direction but shows volatility. It happens that in the first minute the trend gains strength in one direction, tearing off the stops, then sharply turns around.

Let me remind you that on 07/07/18 the difference between the fact and the value of Prev. amounted to 54K, between fact and Forecast – 10K. And this was enough to shift the dollar towards visible growth. What we see on 08/03/18: The difference between fact and meaning Prev. – 91K, between fact and Forecast – 36K. Certainly, the market should have reacted to this much stronger in August than in September.

As you can see on the screen, instead of the growth of the euro, on the contrary, its decline is observed. It is interesting that analysts bypassed this fact, preferring not to comment on it. One of the stated versions: investor confidence in a strong US economy amid trade wars with China. And partly this version has the right to life. The fall of the Turkish lira and the continuation of trade wars, where the EU suffers much greater losses, were a stronger factor compared to the USA, offsetting even the short-term influence of Non-Farm. Bottom line: the depression on the graph.

However, these are just opinions that clearly show the probability of short-term trading risk according to fundamental analysis. Do you still agree to trade on Non-Farm Payrolls?

  • The forecast of analysts has already been paid in advance in the course of the currency pair. In part, this can be seen in the graph of the last section. I have already focused on the fact that already 3 hours before the release of statistics, traders began to bet in favor of strengthening the US dollar. And again, I remind you that you can really make money on Non-Pharm basically only in the next 3 hours. If statistics in September on the labor market disappoint traders who were ahead of the curve, even positive statistics would play against the dollar.
  • Failure to take into account the forecast for the market and the likelihood of revising statistics. I have already written about this more than once: even positive statistics, if it is worse than the forecast, can crash the dollar.
  • Anomalies. On the Internet, you can meet a situation that puzzled many traders. Released in October 2013, Non-Farm was positive, but the dollar was relatively weak. There were no accompanying reasons for this, and the last time such a situation was observed in the early 2000s. One of the assumptions is that one of the major players sold a very large amount of money too early, but there is no confirmation of this version.

My opinion: before Non-Farm Payrolls, it is better to close dollar deals and wait out volatility. Or check the level of your patience, excitement and just enjoy the risk. Conclusion. Non-Farm Payrolls is one of the indicators of the US economy, but to make money on it, you need a bit of luck. In addition to deep analysis, an understanding of the psychology of the market and a quick reaction are needed. And the winners are those who managed to play against the market, who have an instant reaction speed and the work of the broker’s servers. Alas, traders who decide to “cut easy money” can quickly lose money by stopping on volatility. Novice traders are not recommended to trade on the news. If you want to ask questions about Non-Farm or Forex – go to the chat of traders or write in the comments!

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