Good day Forex Traders,
making money in forex is not an easy task. Today we are reviewing the latest NFP to see the horror of trading during the event.
In the previous review, we noted a mild reaction due to the the Easter Holiday season. There were less market participants and hence less volume. While there was an increase in employment, the unemployment rate remained the same.
Looking at the EUR/USD 5 minutes chart above, we could see the 2 hours leading up to the Non-Farm Payroll ( labeled with the star ) offered no clues to the wild intensity ahead.
The employment figures increased. This caused an initial knee jerk reaction favoring the US Dollar and the currency pair dipped around 150 pips at its lowest. Many unwary traders probably speculated a bullish momentum for the US Dollar and increased their bets.
We must always consider all factors and upon close observation, one would have realized that the unemployment rate had increased to 9.9%! This was due to the greater number of job seekers. After around two hours when the excitement of the release had faded away, investors started to realize the full implication of the NFP figures and as observed above, the currency pair started to recover. The US unemployment crisis was far from being over.
Typical of NFPs, this round trip of 150 pips probably wiped out margin accounts on both directions as investors tried to pick tops and bottoms. In forex trading, proper money management and good planning is a must and speculating during NFPs probably isn’t the right way to trade.
Related Forex Articles from the Koala Forex Training College.
- The US Non-Farm Payroll and the EUR/USD
- The US unemployment crisis
- Proper money management is important in forex
- Proper planning of your trades is important in forex
