Welcome koalas to my new segment.
I call this Margin Call Fridays!
The purpose of this segment is to show folks the dangers of trading during Non-Farm Payroll releases.
I have been trying to tell folks through forums, twitter, private messages, screaming in my blog posts etc but no one seems to want to listen! I felt like a grumpy old koala. Therefore i intend to show it here for all to see the high volatility of the price movement during NFP and the dangers should you attempt to trade.
The chart will cover 2 hours before and 4 hours after the release in the 5 minutes time frame.
Expect a monthly coverage and hopefully all will realize the dangers of NFP.
It is interesting to note that 2 hours before the actual party, folks probably believed that the release would be better than expected due to the previous month. Hence the inclination was towards a stronger US Dollar.
When the time for release struck, all madness broke lose. The actual release was much worst than expected and it resulted in a rush of almost 200 pips up. All this in a mere span of half hour or so.
If you were on the wrong side of the fence, the result was probably disastrous.
For folks who were on the right side of the fence, fine that was a great run. However, can you do that for the next time or the next next time?
After the spike up, the price dipped and took out late comers seeking to join the bull part that was already over.
In the end, the price settled down and went on to resume a bullish climb.
No doubt many accounts were margin called and hence please always have proper money management.