What Is NFP News? | Forex Successful Trader News Trading Strategy
News Trading is considered one of the quickest and strongest moves in forex. When important economic data is released, it creates large amounts of volatility in a matter of seconds. This allows experienced traders to have great profit opportunities. Of all of the economic announcements, NFP news (Non-Farm Payroll) is viewed as the most critical and profitable based on the vast profit potential it presents for forex news traders.
Demo Account News Trading
Each trader needs to practice trading on a demo account prior to using real money for trading.
Traders can utilize a demo account for:
Avfx Capital Allow with Us Clients
Determining high volatility trading
Practicing quickly entering orders
Testing their suggested stop loss/take profit levels
Learning spreads widely during the news events
Gaining self-control in quick price action
Since news trading moves so quickly, practicing on a demo account is extremely important to prevent errors associated with using real money during live trading activities.
What Is News Trading?
News trading is a type of forex trading strategy that utilizes important economic news releases to enter the market. These news releases can have a significant impact on the strength of currencies and result in large price moves.
The most common news releases used by news traders include:
NFP (Non-Farm Payroll)
Interest Rate Decisions
CPI (Inflation Data)
GDP Reports
Unemployment Rate
Central Bank Speeches
News traders will attempt to take advantage of fast-moving prices shortly after an announcement is made.
What Is NFP News?
The Non-Farm Payroll (NFP) publication is an important monthly U.S. economic report that provides information on new jobs created or lost within our economy, excluding any agricultural fields.
Highlights of NFP Report (NFP News):
-NFP Release is the first Friday of every month
-Extremely influential to USD product pairs
-Extremely volatile
-Widely monitored by financial institutions, banks, and retail investors
-If the NFP Report is good (positive) for the economy, then it will have a positive impact on the US Dollar; conversely, if the NFP Report is bad (negative), it will hurt the US Dollar.
Capital Double on News Trading Strategy (Reality Explained)
News Trading releases can allow an individual trader to double their investment, but only when combined with proven skill sets, Greater Discipline, and Superior Risk Management.
Traders who are professionals generally will have two characteristics:
-Trading with small lot sizes
-Risking a fixed dollar amount per trade
-Place trades with the fastest amount of execution possible
-Do not overtrade
-Utilize tight stop losses
Professional traders consider the possibility of greater returns when utilizing news trading methods, but with a trade-off of greater risk. The growth of your trading account should be a result of consistent capital accumulation rather than based on chance.
Forex News Impact
Forex news determines trader expectations
Interest Rates, Economic Growth, Inflation, and Employment Strength. Traders should be mindful of Trade Spreads that may widen due to high-impact events. Slippage can occur due to high-impact events on both sides. Upward/Downward Price Spikes. Due to High Impact Event Confirmation and a clear trading plan should be a trader’s focus. Trading on a guess is not an option.
Best Pairs for News Trading
The currencies that are commonly traded before Non-Farm Payroll announcements are as follows;
EUR/USD
GBP/USD
U.S. Yen
XAu$ or Gold
Due to their combined liquidity and volatility, these currencies have a lot of volatility to provide traders during news releases when news is being released in the NY session.
Risk Management in News Trading
Successful News Trading Relies on Risk Management:
Never risk more than 1-2 percent of your account balance on one trade.
Always use a stop-loss order for all open trades.
Avoid trading with large lot size trades.
Never revenge-trade after losing a trade.
If you don’t have control over your risk, you could easily lose your entire account trading the news!
Final Thoughts
When done correctly, News Trading is one of the most effective Forex Trading Strategies available. The NFP news can create enormous opportunities for traders while also having a large amount of risk associated with it. Therefore, you should always trade on a demo account before moving to a live account, utilize strict money management principles, and refrain from trading based on emotion.