NFP News Trading Mistakes And How To Trade In 2024. I believe you already know what NFP is, but I still believe a definition will remind you of some forgotten aspect and will be used for newbies on the forex path. In this article, you will discover a simpler but best way to trade the NFP news release if you avoid the mistakes elaborated below. 

What is NFP?

NFP News (Non-Farm Payroll News) is a monthly release by the U.S. Bureau of Labor Statistics that reports on the number of jobs added or lost in the previous month. It is considered one of the most important economic indicators as it provides insight into the health of the labor market and overall economy.

The NFP report includes data on employment in various industries such as manufacturing, construction, and retail. It also includes information on average hourly earnings and the unemployment rate. This data is used by policymakers, investors, and businesses to make informed decisions about the economy.

The release of NFP News can have a significant impact on financial markets, as it can affect the value of the US dollar, interest rates, and stock prices. A stronger-than-expected NFP report can lead to a rise in the US dollar and stock prices, while a weaker-than-expected report can have the opposite effect.

Traders and investors closely monitor NFP News and its impact on the markets, often adjusting their strategies based on the data. The report is also closely watched by the Federal Reserve, as it can influence their decisions on monetary policy and interest rates.

Overall, NFP News is an important tool for understanding the current state of the US economy and its future outlook. It provides valuable information for individuals and businesses to make informed decisions and can have a significant impact on the financial markets.

How To Trade The NFP News

Now i have reminded you the definition of the NFP news, let’s have a look on how to trade this news events which among the most important in the American academy. This the common trader way of trading the NFP news.

Trading the NFP (Non-Farm Payrolls) News is a popular and potentially profitable trading strategy used by investors and traders. The NFP report is released on the first Friday of every month by the U.S. Bureau of Labor Statistics and contains information on the number of jobs added or lost in the previous month, as well as the unemployment rate and average hourly earnings.

Here are some steps to help you trade the NFP News effectively:

1. Understand the NFP report: Before trading the NFP news, it is important to have a clear understanding of what the report contains and how it can impact the markets. The report is a key indicator of the health of the U.S. economy and can have a significant impact on currencies, stocks, and commodities.

2. Monitor market expectations: Leading up to the NFP report release, it is important to monitor market expectations and forecasts. This can give you an idea of how the markets might react to the actual report. You can find these forecasts on financial news websites or through your trading platform.

3. Prepare a trading plan: Based on your analysis of the NFP report and market expectations, you should prepare a trading plan. This should include your entry and exit levels, stop-loss and take-profit points, and risk management strategies. Having a plan in place can help you make more informed trading decisions.

4. Be aware of volatility: The NFP report can create high volatility in the markets, which can lead to large price movements. It is important to be aware of this and adjust your risk management accordingly. Consider using smaller position sizes or placing wider stop-loss levels to protect your trades.

5. Monitor price action: As the NFP report is released, monitor the price action in the markets closely. Look for any significant movements and compare them to your trading plan. If the market moves in your favor, you can consider adjusting your take-profit levels to lock in profits.

6. Consider trading the news with a demo account: If you are new to trading the NFP news, it may be beneficial to practice with a demo account first. This will allow you to test out your trading plan and strategies without risking real money.

7. Stay up to date with economic events: The NFP report is just one of many economic events that can impact the markets. It is important to stay informed about other economic events and news releases that may affect your trades.

Remember, trading the NFP news can be a high-risk, high-reward strategy. It is important to have a solid understanding of the markets and to always use risk management techniques to protect your trades.

This is how I trade the NFP news release

In French it says” répétition est la mère de la science” . If I translate it in english literally, it means “ repeating is the mother of science”. I believe today as there are 5% only of forex traders who have succeeded in this industry, it’s simply because 95% of information shared regarding forex on the internet is irrelevant. 

The real teacher of forex is the trader himself. No matter how many courses you have taken, no matter how mentors you have worked with, if you don’t exercise your god’s given right which is your own intuition you will never be among the 5% winners in forex trading.

The NFP news release has never been published alone. This is the first thing you have to know. In the same minute, the news is published together with the Unemployment Rate, and the Average Hourly Earnings.

In this context, it’s crucial to understand what the other news and how impactful they are on the forex market. Let’s have a quick look at the enumerated forex news above.

Unemployment Rate 

Unemployment rate refers to the percentage of the total labor force that is currently without a job and actively seeking employment. It is an important economic indicator that reflects the health of the job market and overall economy. 

The calculation of unemployment rate involves dividing the number of unemployed individuals by the total number of people in the labor force and multiplying by 100. The labor force includes both employed and unemployed individuals who are able and willing to work. 

The unemployment rate can vary depending on factors such as economic conditions, government policies, and demographic changes. It is often used by policymakers and researchers to measure the impact of economic policies and track economic trends. 

A high unemployment rate indicates a weak job market and a struggling economy, while a low unemployment rate indicates a strong job market and a healthy economy.

How Impactful is the Unemployment rate on the Forex market?

The unemployment rate can have a significant impact on the Forex market, as it is closely linked to the overall health of an economy. Here are some key ways in which the unemployment rate can affect the Forex market:

1. Interest rates: One major way in which the unemployment rate can impact the Forex market is through its effect on interest rates. Central banks often use interest rates to control inflation and stimulate economic growth. A high unemployment rate can indicate a weak economy, which may prompt central banks to lower interest rates in order to encourage borrowing and spending. This can lead to a decrease in the value of a country’s currency, as lower interest rates make it less attractive for foreign investors.

2. Consumer spending: Unemployment also has a direct impact on consumer spending. When people are employed, they have more money to spend on goods and services, which can boost economic growth. A high unemployment rate can signal a decrease in consumer spending, leading to a decrease in demand for goods and services, and ultimately affecting a country’s currency value.

3. Trade balance: The unemployment rate can also impact a country’s trade balance, which is the difference between the value of its exports and imports. A high unemployment rate can lead to a decrease in domestic demand for goods and services, which can result in a decrease in exports and an increase in imports. This can negatively affect a country’s trade balance and currency value.

4. Market sentiment: The unemployment rate can also impact market sentiment, which is the overall attitude and confidence of traders and investors. A high unemployment rate can create uncertainty and negative sentiment in the market, leading to a decrease in demand for a country’s currency.

5. Political stability: Unemployment can also have a significant impact on a country’s political stability. High unemployment rates can lead to social and political unrest, which can create instability in the government and negatively affect a country’s currency value.

Overall, the unemployment rate can have a significant impact on the Forex market, as it is a key indicator of a country’s economic health. Traders and investors closely monitor unemployment rates to assess the potential impact on a country’s currency value.

Average hourly earnings

Average hourly earnings refer to the average amount of money that an individual earns per hour worked. This is a commonly used measure of wages and income for employees. It is calculated by dividing the total earnings of all employees by the total number of hours worked by those employees.

To calculate the average hourly earnings, follow these steps:

1. Gather the necessary data: To calculate the average hourly earnings, you will need to have the total earnings of all employees and the total number of hours worked by those employees.

2. Determine the time period: Decide on the time period for which you want to calculate the average hourly earnings. This could be a week, a month, a quarter, or a year.

3. Calculate the total earnings: Add up the total earnings of all employees for the chosen time period. This includes regular wages, overtime pay, bonuses, and any other income earned.

4. Calculate the total hours worked: Add up the total number of hours worked by all employees for the chosen time period. This includes regular working hours, overtime hours, and any other hours worked.

5. Divide the total earnings by the total hours worked: Divide the total earnings by the total hours worked to get the average hourly earnings. This will give you the average amount of money earned per hour worked by all employees.

For example, if the total earnings for all employees in a month is $50,000 and the total number of hours worked is 2,000, the average hourly earnings would be $25 ($50,000/2,000 = $25).

Average hourly earnings can be used to compare wages and income across different industries, companies, and time periods. It is also a useful measure for tracking changes in earnings over time and can provide valuable insights into the overall economic health of a country or region.

How Impactful is Average Hourly Earnings on the forex market

Average hourly earnings is also an important economic indicator that reflects the overall health of the labor market and can have an impact on various aspects of the forex market.

1. Impact on Currency Strength: Average hourly earnings can affect the strength of a currency in the forex market. A higher average hourly earnings figure indicates a strong labor market and can lead to an increase in the value of the currency. This is because higher earnings suggest a stronger economy and potential for higher interest rates, which can attract foreign investment and drive up the value of the currency.

2. Impact on Inflation: Inflation is a key factor in the forex market as it affects the purchasing power of a currency. Higher average hourly earnings can lead to increased consumer spending, which can drive up prices and contribute to inflation. This can have an impact on a country’s currency as it may be seen as less attractive to foreign investors if the inflation rate is higher than that of other countries.

3. Impact on Interest Rates: Average hourly earnings can also influence the decisions of central banks regarding interest rates. If there is a significant increase in average hourly earnings, it may signal a need for higher interest rates to control inflation. This can cause a currency to appreciate as higher interest rates can attract foreign investment.

4. Impact on Consumer Confidence: Consumer confidence is a key factor in the forex market as it reflects the overall sentiment of consumers towards the economy. Higher average hourly earnings can lead to increased consumer confidence, as people feel more financially secure and are more likely to spend money. This can have a positive impact on a country’s currency as it signals a strong economy and potential for growth.

5. Impact on Market Sentiment: Average hourly earnings can also impact market sentiment and can cause volatility in the forex market. If the figure is significantly different from market expectations, it can lead to a shift in market sentiment and cause fluctuations in currency values.

In conclusion, average hourly earnings can have a significant impact on the forex market. It is an important economic indicator that reflects the health of the labor market and can influence currency strength, inflation, interest rates, consumer confidence, and market sentiment. Traders and investors should pay close attention to this indicator as it can provide valuable insights into the direction of a currency.

Unemployment Rate vs NFP 

Now you can see that we cannot focus on the NFP news alone as the main leader on the chart. Both the Unemployment Rate and the NFP  are the biggest news that can impact your trading news direction. 

The unemployment rate and the non-farm payroll (NFP) are two important economic indicators that measure the health of a country’s labor market. Both of these indicators are closely watched by economists, policymakers, and investors to get a better understanding of the overall economic conditions.

Unemployment rate, also known as the jobless rate, is the percentage of the total labor force that is currently unemployed and actively seeking employment. It is calculated by dividing the number of unemployed individuals by the total labor force. A higher unemployment rate indicates a weaker labor market and vice versa.

On the other hand, NFP is a measure of the total number of paid workers in the economy, excluding farm workers, government employees, and non-profit organization employees. It is released monthly by the Bureau of Labor Statistics and is considered a key indicator of the overall health of the labor market. A higher NFP number is usually seen as a positive sign for the economy, as it indicates job growth and a stronger labor market.

The relationship between the unemployment rate and NFP is often seen as inverse. This means that when the NFP increases, the unemployment rate decreases and vice versa. This is because as the number of jobs increases, more people are employed and the unemployment rate goes down. Similarly, when the NFP decreases, the unemployment rate increases as more people are out of work.

However, it is important to note that the unemployment rate and NFP do not always move in perfect sync. This is because the unemployment rate is a lagging indicator, meaning it reflects past economic conditions, while NFP is a leading indicator, providing insight into future economic conditions.

Moreover, the unemployment rate does not give a complete picture of the labor market. It does not take into account individuals who have given up on finding a job, known as discouraged workers, or those who are underemployed, meaning they are working part-time but would prefer full-time employment. NFP, on the other hand, provides a more comprehensive view of the job market as it includes all paid workers, regardless of their employment status.

In conclusion, while the unemployment rate and NFP are both important indicators of the labor market, they should be analyzed together to get a more accurate understanding of the state of the economy. A low unemployment rate coupled with a high NFP number is a positive sign for the economy, indicating a strong labor market and potential economic growth.

NFP vs  Average Hourly Earnings 

Now, we can see that NFP (Non-Farm Payrolls) and Average Hourly Earnings are both important economic indicators that are often used to measure the health of the economy. While both provide valuable information, they measure different aspects of the labor market.

NFP measures the total number of paid workers in the US, excluding farm workers, government employees, and non-profit organization employees. It is released monthly by the Bureau of Labor Statistics and is considered a key indicator of economic growth and the overall health of the labor market.

On the other hand, Average Hourly Earnings measures the average amount of money that workers earn per hour. It includes both full-time and part-time workers and is also released monthly by the Bureau of Labor Statistics. This indicator is important because it reflects the purchasing power of workers and their ability to contribute to economic growth through consumer spending.

One key difference between NFP and Average Hourly Earnings is the scope of their measurements. NFP looks at the total number of workers, while Average Hourly Earnings looks at the average earnings of those workers. This means that even if the NFP number is positive, indicating job growth, if the average hourly earnings are low, it could indicate a decrease in the standard of living for workers.

Another difference between the two indicators is their impact on the stock market. NFP has a more significant impact on the stock market as it reflects the overall health of the economy and can influence investor confidence. On the other hand, Average Hourly Earnings may have a smaller impact as it only reflects the earnings of workers and not the overall employment situation.

In terms of policy implications, NFP is often used by policymakers to make decisions about monetary policy and interest rates. If the NFP number is low, it could indicate a need for stimulus measures to boost the economy. On the other hand, if the NFP number is high, it could indicate a need for tightening monetary policy to prevent inflation.

Average Hourly Earnings, on the other hand, is used to monitor wage growth and could influence decisions on minimum wage policies and labor market regulations.

In summary, NFP and Average Hourly Earnings are both important indicators of the labor market and the economy. While NFP provides a broad overview of employment trends, Average Hourly Earnings measures the earnings of workers and their purchasing power. Both indicators should be considered together to get a complete picture of the health of the labor market.

NFP News Trading Mistakes And How To Trade In 2024

As I said earlier in this article, experience has taught things that no mentor can tell, no internet or maybe a book. Just because on the internet it is all about copy and past, and there is almost no originality. That’s the reason why fault forex teaching spreads.

You can now understand that every forex news event that is published has its own characteristic attached to it. The same applies for the NFP news release. This news is never published alone but followed by the Unemployment Rate and The Average Hourly Earnings,.

This is evident enough why sometimes you trade and experience candle chart instability. The candle on the chart may go up and down very fast and sometimes can stop in the center.

As a result, your account is blown. This is why most professional traders stay away from news trading. But, if you are like me, I like taking risks and getting money fast, therefore we are the ones who need to adapt to the market behaviour to always be profitable.

Even though all the news released on the NFP day will impact the chart, I recommend you focus on the NFP news release direction. So if you have predicted the NFP to be bullish, also on the chart this will be the final destination.

But, in order to avoid all the mistakes that will make your trade being ejected before the end of the news follow these:

Mistakes to avoid while tradingNFP news events

Lot Size

It’s crucial you understand that lot size is the number one reason why you get ejected while trading the NFP news or any impactful news event. Lot size refers to the total area of a piece of land, typically measured in square feet or acres. It is used to determine the amount of space available for building or development purposes. 

Lot size can also refer to the number of units or properties within a particular land area. In real estate, the lot size is an important factor in determining the value and potential use of a property. 

It is often listed in property listings and is a key consideration for buyers when making purchasing decisions. Lot size can vary greatly depending on location, zoning regulations, and type of property.

How to set lot size for events? Your broker has something called margin call limit notification, this an automated protection for your account to not blow. But at the same time, this automated system can be the enemy to your progress.

So, to calculate what lot size will help you not be ejected while trading, take 1% percent of your total account balance and divide it by two.

For example, you have a $100 balance on your trading account, your 1% lot size is 1. But don’t trade with lot size 1 but 0.50.

Another solution I have for you as a bonus for reading this article, always split your trading in multiple trades with little lot size at a time. Let’s say, 0.10 lot size times as many trades your balance will allow. This can save you a lot of time.

When the news plays  up and down, instead of being ejected from your trade, some trades will close automatically and you will stay in the game and finally make the money.

To read part two of this article subscribe below so you will be the first to receive it directly in your email address. Have a question? Leave in the comment section below… Cheers

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Risks Disclaimer: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite.