Nonfarm payroll is very important news in economic calendar from United State. This event releases every month on first Friday. Just after nonfarm payroll released, the impact on the foreign exchange market is very strong, market prices can move hundreds of pips within minutes. For experienced traders, they take opportunity to make big money from nonfarm payroll event.
Usually some traders open trading positions before this news even release, during this time the forex market price often makes false signals and moves in narrow.
So, here is the main strategy to trade nonfarm payroll news event:
5-10 minutes before nonfarm payroll released, we can put trading order in our trading platform. NFP nonfarm payroll is very hard to predict and the impact on market price also unpredictable. So with this situation, all you have to do is put pending orders in two directions (buy and sell).
And if you already have a trading position before the Nonfarm payroll, it’s better to close your trading position because even you already placed a stop loss order the market price can make gap against your trading position. With this situation, your stop loss will be useless because your broker running a gap during nonfarm payroll event. But if the market price move in the same direction with your trading position during Nonfarm payroll you can get a bigger profit, it is up to you.
Usually, after the nonfarm payroll released, the market price moves in one direction at the first minute, then followed with a sharp correction in the opposite trading direction. So, to avoid unpredictable movements we can set pending orders 35 pips from the price before the nonfarm payroll news.
The image above shows 35 pips pending orders before nonfarm payroll released.
After we put trading order, now we need to set our stop loss order, and you can set stop loss order 20-30 pips from entry trading. For profit target, I set between 70-100 pips from entry trading.
After the nonfarm payroll released the market price move very fast, and usually my 2 entry orders will open. 20-30 minutes after nonfarm payroll released – you should focus in the forex market chart. If you still have one open trading position and the market price move in the same level for 10-15 minutes – it is better you to close your profit trading position to avoid reversal movement like in the image below.
Preparing for second trading after nonfarm payroll released
After we have got profit from our first trading, now we can decide to open a new trading position. There are 2 choices for you:
- Trade in the same direction of the previous profit trading
- Wait for the market price and trade follow the new trend direction
You can open a stop loss order above highest/lowest price (10 pips above/below), and below 50% level (5 pips below 50% correction level) it because the market price tends to go back to the first price level before the nonfarm payroll released.
You must cancel one trading position if another trading position is opened. You can set your stop loss order based on risk and reward ratio.
Last trading position is about 2 hours after Nonfarm payroll released, in this trading position you can find breakout price in the market. In this time you do not need trade against market direction because if the market price reversed into half of the movement after Nonfarm payroll released, it indicate that market price will continue the last trend. In this situation you can place buy or sell stop order in the same direction of the big correction. See the image below.
Nonfarm payroll is very risky trading event, you should have enough trading skill and experience from practices before you try it in a real account.
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