Currency News Trading Strategy For Non Farm Payroll

If you are interested in trading currency news then this is one curreycy news trading strategy you can use to trade the non farm payroll.

The Non Farm Payroll is one of the biggest forex news that comes out each month: The non farm payroll report is released on the first friday of each month.

In short, the non farm payroll reports shows the current state of the US economy.

So…if the US economy is good, the value of US dollar goes up, if not it goes down (or Euro rises up…if you are trading EURUSD).

WHY TRADE FOREX NEWS?

Here are a couple of reasons:

• trading currency news can be very profitable-if you guess correctly which way the price is going to move.
• if you are right, the total profit you make in a news trading situation can outdo the total profits you’d make from a week of trading because  price can move anywhere from 40-200 pips in a matter of minutes.

WHY SOME FOREX TRADERS WON’T TRADE THE NON FARM PAYROLL

• trying to guess which way the price will go when the forex news is released is much like a gamble to some traders-so they will not do it.
• price can whipsaw, which means you will often get stopped out when price moves one direction then the other and it happens very quickly too.
• liquidity almost dries up as news time approaches which also means that Forex brokers increase their spreads. I’ve experienced 30-40 pips spreads on EURUSD  on a non-farm payroll…which meant that even though I did not literally see price hit my stop loss level, I still got stopped out with anyway and had a big loss when I could have got stopped out for 15pips loss.

WHERE DO YOU GET THE EXACT DATE AND TIME FOR NON-FARM PAYROLL NEWS?

I prefer to head over to  forexfactory and there you’ll  have a list of dates and times where forex news will come out including the non farm payroll news.

HOW TO TRADE THE NON FARM PAYROLL USING THE STRADDLE  TRADING STRATEGY

With the straddle currency news trading strategy, you really do not care which direction the forex market will go when the new is released.  All you care about is catching a move, whether an upward or downward move when the forex news gets out.

The straddle news trading strategy is suitable in the situation where the market travels in a tight range before the news is released.

Here are the rules of the straddle news trading strategy:

1. So just 30 minutes before the news, open your chart in a 5 minute timeframe.
2. Identify what is the highest high and lowest low in this tight range.
3. Place 2 pending orders on both sides of this tight range, a buy stop pending order at least 5-10 pips above the highest high and and a sell stop pending order 5-10 pips below the lowest low in that range.
4. Then place your stop loss on either side for each of the pending orders: your stop loss for a pending buy stop order will be the level at where you place your sell stop pending order and vice versa.
5. When one order gets activated, quickly cancel the other side that has not been activated.

Here a few take profit target options you can use:

• 2 times the range (example, if the tight range is 30 pips, then set your take profit level at 60 pips)
• 3 times the range
• or you can use trailing stop and place it 3-5 pips behind the lower swing highs (for short entry trade) and ride out the move until you get stopped out. Do the exact opposite for a long(buy) trade.

DISADVANTAGES OF THE NON FARM PAYROLL NEWS STRADDLE TRADING STRATEGY

The forex market tends to spike and whipsaw in the first few minutes when the news goes out  and this is usually trouble…. like shown on the forex chart below:

So based on the chart above, here are the disadvantages:

• if you get spikes (whipsaws), you most likely will have both orders activated and both suffering a loss due to whipsaws which means if your stop loss is 30 pips on each pending trade, then you will suffer a total loss of 60 pips.
• you can have spikes and whipsaws and have one pending order activated and suffer a loss when price reverses to active the other pending order on the other side and this will be profitable. Hopefully, this trade would enable you to recover your loss the you’ve suffered on the other other and also walk away with some profits.

On a side note:

• I remember one time when I traded a forex news and my stop loss was not activated.
• The market moved too fast and went past my stop loss without triggering it.
• I sat there horrified and tried to exit that trade and clicked many times to close that trade but to no avail-I just couldn’t close it!
• The loses kept getting bigger by the second…
• In the end, the forex brokers programs took over and closed my trade.
• That  loss alone took more than half of my forex trading account off.
• You’ll never face this kind of experience if you trade on a demo trading account…why? Because in demo trading, its a perfect world. The reality is in live forex trading with real money.

BE CAREFUL  WITH TRADING FOREX NEW LIKE NON FARM PAYROLL

•  you can lose a lot of money due the fast paced nature of market movement when news get released when you are on the wrong side. Best advice? Trade small…risk very small % of your account.
• due to spreads being high during forex news time, you may need to place larger stops. That’s why you need to trade small to keep your risk down.
• don’t go chasing to trade every forex news…there are only few that really matter like the non farm payroll and interest rate decisions.

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