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Non-Farm Payrolls strategy - Trading the U.S. Dollar

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Non-Farm Payrolls call and put signals

One of the most important economic indicators of the financial markets is employment data on the number of new jobs, unemployment, etc.

Along with the GDP, the employment situation of the working population is a reflection of economic prosperity and stability of the state.

For each country, the acceptable level of unemployment is different, so employment data comparison of between two countries is meaningless. Much more important is how this parameter changes in the same country over time.

What is Non-Farm Payrolls?

Non-Farm Payrolls is considered as an indicator of the U.S. economy health and one of the main indicators for fundamental analysis in Forex Binary Options market – report over the number of new jobs in all sectors except for agriculture.

Non-Farm Payrolls has a very strong impact on the market.

Agriculture is not included in the report because employment in this sector is very closely linked with the seasons– winter in the agricultural industry always requires significantly fewer employees than spring and autumn.

Non-farm Payrolls figures are used to render the testimony of other fundamental indicators – GDP, income population, the level of industrial production and construction. There is a rule stating that the increase of Non-farm Payrolls by 200,000 is equivalent to an increase of GDP by 3%.

Non-farm Payrolls report leads to a growth in volatility

Non-farm Payrolls report is issued monthly on the first Friday of the month following the reported month. It contains information not only about the number of jobs created, but also about the wages paid and hours worked in various industries. The date of a report, previous value of the index and market expectations reflected in all economic calendars.

The publication of Non-farm Payrolls causes a stir in the market and almost always leads to a growth in volatility. By opening a trade on news of non-farm employment, a trader can get a very good profit in just a few hours.

Therefore, Non-Farm is an indicator that moves the market, and the date of data publication is considered as the day of trader’s salary. Similar reports are also published in Australia, Canada, Switzerland and Germany, but only data from the U.S. has a strong influence on the Forex Binary Options market.

What is our strategy for buying call or put binary options?

Growth of the indicator indicates the development of the economy and a positive effect on the dollar.

The decline of the Non-farm Payrolls indicates that the number of working places is reduced.

Hence, consumer activity and the level of production decreases, which leads to the depreciation of the national currency.

A clear signal to enter the market is the change in the index of one side or another by at least 40,000. Stronger changes (100,000-200,000) lead to abnormal price volatility and tremendous opportunities for quick money in binary options.

Non-Farm_Payrolls_strategy

When Non-farm publishes with exceeding projected figure, it is favorable news for the U.S. dollar. Accordingly, the purchase of a Put option for EUR/USD, GBP/USD and AUD/USD is appropriate decision.

But in the case of a weak Non-farm report. The purchase of Call option on these pairs is the best decision.

The main point in trading on the news – is a thorough fundamental analysis and rapid response to data publications. This is especially important when entering into transactions on Non-farm Payrolls report, because the market reacts to the news almost instantly, and delay may deprive you of the potential profit.