The non-farm payroll is a key economic indicator among the biggest market movers in the Forex markets, together with central bank events or interest rate decisions. It’s an important indicator for how well the US economy is doing and investors watch this report closely, as a result, many analysts, traders, funds, investors and speculators anticipate the NFP number and the directional movement it will cause. With so many different parties watching this report and interpreting it, even when the number comes in line with estimates, it can cause large rate swings.
Forex Trading can be very profitable, but it is not for the faint of the heart. This is because speculating on the direction of a given currency pair upon the release can be very dangerous. Given the fact that the market is particularly sensitive to the NFP release, it consistently causes large tradable moves in the Forex market. Moreover, since the majority of the market participants are focusing on and interpreting the NFP report, it creates a favorable environment for active traders.
At Gateway Financials we attempt to capitalize on the real market move after the speculators have been wiped out or have taken profits or losses. The purpose of this is to attempt to capture rational movement, instead of the irrational volatility. Approaching the trade from a logical standpoint, based on how the market is reacting, provides us with more consistent results rather than simply anticipating the directional movement the event will cause. By controlling risk with a moderate stop, we are assured to make a potentially large profit from every huge move.