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US Non-Farm Payroll 05 Feb 10

Good day,

welcome to the monthly US Non-Farm Payroll Report.

To manage expectations, contrary to what it may seem, the main purpose of this segment is to highlight the dangers and risks of trading the Non-Farm Payroll. The koala does not support NFP trading.

While the previous NFP brought us a rush up of almost 200 pips, this NFP seemed subtle by comparison. Or it is?

While the range may not be huge, this NFP brought us swift whipsaws. Within the first half hour of the release as circled, we basically went up / down / up /down. If you were like Margin Call Tom ( Most Read Article 2009 ), you will stand to lose much pips.

The danger does not end here as this pattern surfaced twice later in the day. Tight ranging price action is a margin call magnet!

Possible reason for this? A mix of undecided opinions in the market may be the possible reason. Firstly, the NFP came in worst than expected but the unemployment rate drops to 9.7%. Secondly we have governments in Europe stating that the deficit problems are not a problem but strikes are happening and hampering plans to cut deficit.

A lucky koala reader of mine told me that he traded up when the NFP started and tried to trade up again in one of the subsequent down push. Fortunately he managed to get out of it with no pips gained or lost. However folks, this is not the way to trade!

We need to plan our trades and have proper money management.

Trade safely and i’ll see you soon!

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