News data are the price driving catalyst in the Forex market. If you are new and don’t really understand why the market moves wildly at certain times, probably you don’t have precise knowledge of fundamental analysis. In fact, many traders in Australia are trading the market with technical knowledge. They are don’t really understand the global economy thus they lose money most of the time. But a group of traders who knows the impact of major news, always try to make a profit by trading the news. Though we have several important news in the Forex market, in this article we are going to give you a guideline to trade the NFP data.
What is NFP?
NFP stands for Non-Farm Employment Change. This data reflects the performance of the U.S economy for the last month. Usually, we have forecast data and if the actual data beats the expectation, the U.S dollar index gains huge strength in the global market. U.S dollar index measures the overall value of the green buck’s strength against the six major pairs. So positive Non-Farm Employment Change usually push the U.S dollar higher against most of its major rivals.
Trading the Non-Farm Employment Change
To trade the NFP news, you need to learn about the trading session. This data is released in the New York trading session and the professional traders wait for the actual data. But the smart traders always draw the key support and resistance level in the trading platform. Most of the time, we experience wild spike towards the nearest support and resistance level. So, these are the levels that you need to use to execute our orders.
So, should we place the trade before the news?
Placing trade before the news is more like gambling. You don’t know what will be the data. But if you trade after the news, you will fail to catch a large portion of the market movement. But news trading doesn’t mean you will have to capture the detailed market movement. Wait for the news release and look at the data. If the actual data comes better than expected, you need to buy the US dollar. But placing a random buy order is not going to work. Quickly analyze the major chart and see which pair has the perfect position to place the trade. By the term position, we are refereeing to the key support and resistance level.
Trade with a 1% risk
Since trading Non-Farm Employment Change is a very complex task, you should only risk 1% of your account balance. At times the market tends to behave abnormally since you have another news release at the same time. Expecting to win all the trades after seeing the Non-Farm Employment Change data is not going to work. You must get yourself prepared to deal with the losses. And if you lose the trade on that session, take the day off. Never try to recover the loss as it will result in a bigger loss.
Start using the candlestick pattern
To trade the major News like Non-Farm Employment Change you can also use the candlestick pattern. Look for the price action signal in the minute 1-time frame. Once you find a reliable pattern, place the trade. But the placement of the trades can be done based on support and resistance level too. Price action signals help you to determine the perfect stops for your trade. As a currency trader, you should always try to think about the safety of your capital. Unless you work with the candlestick pattern, it will be a tough task to place the right stop loss in this dynamic market.
News trading is extremely profitable but it’s designed for professional traders. AS a new trader, you should try to trade major news like Non-Farm Employment Change with real money. Use the demo account to develop your skills and then trade real news.