Flaky Skin And Loss Of Fur On My Dog

"Non Farm Payroll"

The unemployment data in the U.S. ('Non Farm Payroll') is undoubtedly one of the statistics most widely viewed and followed on the Forex.

◊ Taming the indicator that is the 'Non Farm Payroll'? In fact, the 'Non Farm Payroll' represent the number of creation or destruction of jobs, excluding those in agriculture.

Therefore, a primary indicator of the health of the U.S. economy, especially in periods of crisis when we know that employment is the key to open the door for a return to consumption and growth.

This impact is amplified by the precocity of the announcement as it is published only days after the end of the month. For example, it will be published on 2 of the current month for 'Non Farm Payroll' from the previous month! This makes it therefore an indicator "precursor" most advanced (leading indicator).

Another characteristic of this announcement is that it always takes place on a Friday, which will tend to increase tension and see many unwound positions in the hours before the announcement.

◊ Trader's 'Non Farm Payroll', is it easy? - Not really no. As often in finance, risk increases in proportion to earnings prospects. Let's look at the following example and see the reaction of the EUR / USD during the publication of a report of the Non Farm Payroll.

We see the pair plunge to 90 pips when the figure was better than has been published. Suddenly, the dollar revalues versus the euro. Then, after a phase of "digestion", the pair went back in reverse to return eventually 132 pips.

This sequence is quite typical for a highly anticipated announcement. You can split it into three phases:

• first wave which is in line with "logical" interpretation. In our case, a figure better than expected has propped up the dollar;
• a digestion phase, during which the opposing forces cancel each other;
• then a third phase directional, in the absence of other news, is often decisive for the end of the day.

◊ A good practice is to prepare its strategies ahead: The main

difficulty with the information provided by the Non Farm Payrolls is anticipate the interpretation of the contract. Indeed, a figure better than expected may be translated as good news for the world economy as a whole and thus become more favorable to the appetite for risk. This will mechanically reduce the U.S. dollar.

Conversely, sometimes the market will see a sign of salvation in the U.S. economy and its ability to rebound faster than others and in this case, the dollar will benefit.

So if you decide to work with this statistic (or other!), you need to know the market sentiment and predict all possible scenarios. Obviously, as in all things he must gain experience and learn to interpret these statistics and have some of the usual market to know anticipate how publications ... The golden rule is to be careful if you decide to play this strategy. You must first define exactly what your strategy according to clear rules and strict ...

Such a strategy fits into the category of short-term trading. It is rather risky and it is strongly advised not to make too important positions. With the high volumes and high volatility, executions are not always guaranteed that the exact price you'd hoped. In forex, as elsewhere, the performance is based on its risk-taking!