Nfp trading: Trading the Nonfarm Payroll Report

forex traders

Once an initial long trade is place this is the practice of opening additional positions at a lower price with the view of bringing the average opening price of the position down. Please note that this strategy can be applied to any currency pair that includes the US dollar as either the base or counter currency. So these are a couple of levels that you can look for trading opportunities.


So whenever high impact news releases, the price tends to do a few whips before it goes back to its normal market condition. The data is usually delivered on the first Friday of any given month and can create high volatility in the financial markets. Strive to use strategies that not only work for news but work in normal trading conditions as well. Then you only need one skill set and don’t need to change strategies every time volatility increases. Avoid taking more than two trades per day with this strategy.

What is non-farm payroll?

Simply put, if risking 1% of the account per trade, making a 3R profit adds 3% to the account. Watch for the spread to return to more normal levels , although slightly elevated spread levels are fine and typical following a major news event. It usually takes a couple of minutes or more for the spread to narrow to something resembling normal. No BS swing trading, day trading, and investing strategies.

Non-farm employment change represents the change in the number of employed people during the previous month, excluding those who work in the farming industry. The more people are employed, the better the economic conditions are. If the economy is growing, companies hire more people. When people get jobs and stability, they start to spend their additional income and therefore, it boosts the economy. On the other hand, unfavorable economic situation drives firms to employ fewer people and even fire some of their workers. Thus, people lose their income and start to spend less money.

The non-farm payroll report is a key economic report for the FX market. The headline number represents the number of added jobs over a month, excluding farm jobs, government jobs, employees of NGOs, and private household employees. Whether you’re a fundamental trader or primarily rely on technicals, the NFP report regularly creates large price-movements in the market that can affect your trading performance. Occasionally, the report can send shockwaves through the market if the actual number significantly differs from market expectations. The simple strategy, discussed last, is designed to take advantage of the larger movement that follows a major news announcement like the non-farm payrolls. News events like the NFP seem to go in and out of favor, meaning people tend to care more about them at certain times than others.


Volume is typically lower, presenting risks and opportunities. Jobs growth is a measure of how many nonfarm jobs the U.S. economy added in the prior month as estimated by the U.S. This avoids jumping in too early and decreases the probability of being whipsawed out of the market before it has chosen a direction. Technical analysis can be employed in the NFP report using 5 or 15-minute chart intervals. A Bull Market is any financial market where prices are rising or are expected to rise.

Non-farm payrolls (NFP)

The NFP component usually gets the most attention because it measures the actual number of paid employees (full and part-time) in business and government establishments. The concept is profitable and has been for many years. It was a good trade, but due to the big stop loss size a trailing stop loss would have also worked well. Keep the stop loss to 20 pips or less, or below the high/low of the inside bar, whichever is smaller. Below is the chart for July 8, 2022 which included the NFP release. THEN watch for patterns and strategy setups we will discuss below.


If the reaction to NFP reports is muted, and the price isn’t moving much, that probably means this strategy isn’t going to produce much either. This strategy takes little effort, but the overall profits are pretty small too. The NFP only comes out once per once month, so there aren’t a lot of trades.

Big initial move with a small inside candle is the best combination. Below is the March 4, 2022 Simple NFP Day Trading example on a 15-minute chart. This trade resulted in about a 2.3R profit or 2.3x the stop loss amount if holding till the 3x target but having to get out a little early because of the 4-hour time limit. Use this if the overall volatility is relatively low.

It reduces the overall consumer spending and, as a result, the economy slows down. Bureau of Labor Statistics releases the numbers for new job creation in the US – along with other labor market data. The data includes all paid workers, excluding government employees, private households, non-profit organizations and the farming industry. Although its importance has dimmed somewhat in recent years, the NFP is still one of the most significant economic indicators.

Using primarily TC trades, this day produced 8R (8% if risking 1% per trade) in profit within 1 hour of the news release. More profit was possible if trading longer, as shown. If the price has moved at least 15 pips in the last 2 hours, that’s enough to trade the 1-minute chart. If it has moved less than 15 pips in that time, be very cautious, especially if your spread is close to 1 pip or more. It is in the aftermath of the NFP report that we as retail day traders make our trades.

Tips and Tricks for the Simple NFP Day Trading Strategy

During high impact news release, the market is in a low liquidity environment. Because the NFP figure displays how many jobs have been added or lost in the sectors covered by the report, it is sometimes known as non-farm employment change instead of NFP. There is no right or wrong way to trade, but ideally, we want our wins bigger than our losses.

What Is the Nonfarm Payroll Report?

The 1-minute strategies are clearly more profitable. The trade is done and then we are on to the next one. There was more potential on this day, but I was recording a video and wanted every trade I took to be a little more perfect than usual. The video is below and provides lots of tips for live trading and what to look for and avoid. The “simple strategy”, discussed later, doesn’t produce many trades and is more something to do in the background because it doesn’t take much work/focus.

I usually wait at least a minute, and often more, to make a trade after the NFP is released. Sometimes a chart or a candlestick pattern may provide a decent entry signal if it is located at a certain level. A pin bar is one of the most reliable and famous candlestick patterns, and when traders see it on the chart, they expect the price to change its direction soon. Trading after the release is a little more cautious, but also comes with its own set of risks. The initial knee-jerk reaction to the NFP headline isn’t always the “end-all, be-all” of market movement for the day.

Similarly, if the average hourly earnings fall below expectations, this signals that the Fed could adopt a looser monetary policy and drive the US dollar down. Conversely, a lower-than-expected NFP number signals that the US labour market struggles and that the Fed could cut interest rates to support the economy. As such, the NFP report shows the strength of the US labour market over a given month and often creates enormous volatility in the currency market. The Federal Reserve follows the report closely to determine future adjustments to its monetary policy.

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