Oil Producers Finally Get the Memo on Prices Staying Lower for Longer—Energy Journal

Oil Producers Finally Get the Memo on Prices Staying Lower for Longer—Energy Journal

Here’s your morning jolt of news, insight and analysis on the global energy business. Send us tips, suggestions and complaints:EnergyJournal@wsj.com.   Sign up for this newsletter: http://on.wsj.com/EnergyJournalSignup   THREE YEARS ON OIL INDUSTRY COMES TO TERMS WITH CHEAP CRUDE The oil industry has finally gotten the message that crude prices may stay lower for longer, reports […]

NFP Trading in Forex and a strategy for trading

NFP Trading in Forex and a strategy for trading

Hello Forex Traders!

The NFP is around the corner again! This is always an exciting event in my opinion, even though I never was (nor will be) a news event trader. To me, the NFP event is something similar to a holiday feeling because of the anticipation of exciting times ahead. Do you have the same?

Price almost always responds in a spectacular fashion to the release of the figures and you can sense the drama in the air. Emotions are flying around as the currency pairs spike up and down. Some traders are winning a fortune, others are losing their shirt. This type of price movement is not for the faint-hearted and causes tremendous turmoil. In some cases, price resembles closely the movement of a roller coaster as it whirls down and up in a matter of minutes or even within a blink of an eye. Yet at the end of the day, the only thing which remains is a daily candle. All the emotions and movement still translate into a daily candle, just as the one before and after NFP.

NFP surely is a separate type of trading on its own right and this article will provide more guidance on how to trade the NFP. Usually Tony discusses NFP related matters but this time around I wanted to share my 2 cents as well. Before we do that, we are going to cover the basics of the NFP, discuss the importance of NFP for different types of traders, discuss this month’s NFP figures and strategy, and then explain a methodology how to trade the actual NFP.

NFP IMPORTANCE

Just to cover the details: NFP is the Non-Farm Employment Change and it calculates the total number of paid U.S. workers of any business but excludes government employees, private household employees, farm employees, and employees of non-profit organizations (to individuals). It accounts for +/-80% of the workforce who produce the entire GDP of the U.S. and is a statistic researched, recorded, and reported by the U.S. Bureau of Labor Statistics and is released on every first Friday of the month.

The unemployment rate indicates the percentage of the total labor force that is unemployed but actively seeking employment and willing to work.

These two news events are the biggest and most volatile news releases in the Forex market. Nothing matches a day like today. The news events are vital for policy makers, economists, traders, business owners, investors, etc to decipher the current state of the economy and predict future levels of economic activity.

a)      If the NFP is expanding, this is an indication of economic growth. Economic growth leads to potential inflation, which is followed by an increase of interest rates to compensate inflationary pressures, which in turn makes the currency more attractive and competitive versus other currencies.

b)      If the NFP is contracting, this is an indication of economic decrease and has opposite effect compared to the above, which makes the currency less attractive (lower interest rates, quantitative easing).

NFP Trading in Forex

What is NFP impact on forex trading?

Our ultimate guide on how to trade NFP is continuing with a series of questions to help explain the factors affecting forex market during NFP.

QUESTION 1) How do we interpret the NFP figure itself?
Traders and other stakeholders are comparing the actual NFP figure to the expected NFP figure.

a)      If actual data comes in lower than economist’s estimates – USD weakness expected / short USD

b)      If actual data comes in higher than economist’s estimates – USD strength expected / long USD

QUESTION 2) What currency pairs to trade?
Most often the best currency pairs to trade an NFP release are the majors: EURUSD, USDJPY or GBPUSD.

QUESTION 3) Do we want to trade NFP?
It depends on what type of trader you are and how risk averse you are.

The short and simple answer is: NFP is good for scalpers and long-term traders and not recommendable for intra-day traders picking 1 position a day (using 15min-1 hour time frames).

1)      Technical traders use technical analysis for the decision-making process. This trader often avoids trading on NFP days. Contrary to other news events the impacts of the NFP are so heavy that typical trading comes to a halt. This is ok: remember that the goal of a trader is not to catch every single piece of price action. That is why we have a trading plan which filters price action and allows us to focus on trade setups with positive expected returns. There are some differences depending on which time frames you use and what type of trader you are (know yourself):

  1. Intraday trader: very difficult to trade due to quietness before NFP release and volatility after it. Usually, stop levels are not safe.
  2. Swing trader: difficult but doable. A trader using 4 hour or day charts can take long-term positions if a wide enough stop loss is used to survive the volatility and if a good major turning spot is identified.
    The NFP can be the beginning of a new direction and trend so for swing traders it can be important to be active and aware of that.
  3. Position trader: chances of a trade occurring during the day are small, most of the time this trader is an end of day trader anyhow.

impact on forex

2)       Fundamental traders: the floor is yours/it’s your show.

3)      News event traders: the floor is yours/it’s your show.

4)      Scalpers: the floor is yours/it’s your show.

QUESTION 4) Can everyone trade everything during NFP?
No. It also depends on which type of movement during the NFP:

a)      1st movement à Institutions. Typically the first reaction occurs so fast that is only traded by institutional traders that have access to the fastest information and technology as the reaction to the news is within a split second. Price can jump so fast that it changes within the blink of an eye.

b)      2nd movement à open to all. The currency has moved up / down and maybe even both for a few minutes. After the currency settles down and pauses for a few minutes, a trader can evaluate the NFP released figures versus expected, compare that to price movements and technical analysis and judge whether the NFP trading can make sense.

AUGUST 2017 NFP

I am curious, especially this month, to find out the direction of the U.S. economy. The NFP news release is due at 8.30am EST time on August 4.

a)      Is the NFP figure and unemployment rate decreasing, increasing or stable?

b)      How will this affect the U.S. economy and the world economy?

c)       How will it affect the FED’s accommodative policy?

Tons of questions as you can see. And the NFP is great a measurement to provide answers to these questions. What do you think? Write us down below!!!

 

What is your NFP trading plan? Write us down below!

NFP STRATEGY FOR TRADING FOREX

Now we are going to discuss how an NFP strategy for the Forex market could look like. Please be aware that it is crucial for every trader to do their own demo testing, back testing, paper testing, etc before trading live. Past results do not guarantee similar outcomes in the future.

There are some advantages of trading the NFP:

1)      NFP is very volatile;

2)      Provides opportunity to exploit fake-outs;

3)      Quick in and out to grab pips;

There are disadvantages as well:

1)      NFP is very volatile;

2)      There could be spikes in both directions – never straddle the market;

3)      Due to emotions in this environment, key levels have less influence and market can overextend in a direction and then reverse;

4)      Stop loss size can be larger and might not be respected (depending on broker).

Here is a method how a Forex trader could trade the NFP:

STRATEGY FOR trading

  1. The NFP figure causes the price to spike in a direction (up or down is irrelevant).
  2. The price continues up or down for a minute or a couple of minutes and then pauses without breaking the new extreme (high or low).
  3. Wait for a small pullback.
  4. Conservative traders would enter the trade 1 pip above or below the new extreme (high or low).
  5. Aggressive traders would trade the retracement.
  6. Stop loss 1 pip on the opposite fractal.
  7. Exits:

a)      Target 1:1 r:r

b)      Next major resistance or support

c)       Time filter: trade should not take more than 20-30 minutes (20-30 bars of 1 minute)

Be careful though. If there is not enough momentum or deviation in the NFP release, the market could quiet down after the initial reaction. In that case, there would be not much trading left to do. The bigger the deviation between expected and released numbers, the higher the chance that the market will maintain its volatility – even after the first reaction which is seen in the first minutes.

2- 8- 2013 EU MIN

Thank you for taking the time to read this article on NFP trading in forex. We are confident that you can see the impact on forex that the NFP can have and found a strategy for trading through it. As always, Good And Safe Trading today and thank you for reading & sharing this article!

Hope you enjoyed this article on NFP trading in the Forex market!

Please write down below what you expect of today’s NFP? Thanks!

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Market Wrap Up

Market Wrap Up

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WFM +29% AMZN to acquire WFM for $42 per share
HOS +34% From yesterday, announced new credit facility
BAH -18% Investigation by DOJ, d/g to Market Perform at RJ, d/g to Hold @ Vertical
UNFI -10% Volatility impacted by AMZN / WFM deal


Options Activity

PVG.. JUL 8 CALL Activity .. 8750 block @$1.10 on OFFER.. Expire JUL 21

CLR.. JUL 38 CALL Activity .. 2958 @$0.35 on OFFER .. Expire JUL 21

FINL .. AUG 14 PUT Activity on BID SIDE .. 2200+ @$1.45 ON BID .,. Expire AUG 18

SNAP .. AUG 26 CALL Activity .. 4k block @$0.20 on OFFER.. Expire AUG 18

KR..OCT 25 Calls @ 0.70 on the offer..9k+..Expires OCT 20

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JNJ– DARZALEX® (daratumumab) Approved by the U.S. FDA in Combination with Pomalidomide and Dexamethasone for Patients with Multiple Myeloma Who Have Received At Least Two Prior Therapies

EFX– ID Watchdog Signs Definitive Agreement to be Acquired by Equifax Inc.

KEN– Kenon Announces Agreement with a New Investor for Investment in Qoros

MT– ArcelorMittal led consortium reaches agreement regarding Ilva lease and purchase agreement

NVCN– Neovasc Announces German Court Ruling

MDVX– Medovex Corporation Receives First Three Commercial Orders for DenerveX(TM) System

XXII– 22nd Century Meets with FDA on Modified Risk Tobacco Product Application for World’s Lowest Nicotine Tobacco Cigarettes

Social Media and Desk Chatter Information

Trump: “Effective immediately, I am canceling the last administration’s completely 1-sided deal with Cuba” – CNBC

Fear $AMZN.  Today reinforces why $W Wayfair shareholders should be concerned. Citron pressing short tgt$50  Multi chan/valuat/supply chain – CITRON

NTIP inc. share buyback. Try finding a $100m market cap co. paying a nice dividend and buying more stock. #bullish. — SPRUCEPOINT Comments

APC .. unconfirmed chatter circulating on name, XOM mentioned

PF ..Talk Betaville out with comments that they are in takeover talks

Insider Transactions and Company Filings

RILY.. FORM 4 .. CEO P    28,000  A  $ 15.5504

GAIN .. FORM 4 .. CEO P    20,000  A  $ 9.25  P    4,000  A  $ 9.257

CDTX ..  FORM SC 13G Filed by Prosight Management, LP 5.2%

About the Author

The TradeXchange is an online financial media outlet delivering real-time, high-priority, actionable information traders need to make quick and informed decisions. Visit Thetradexchange.com.

South Africa’s Mining Sector Has Collapsed

South Africa’s Mining Sector Has Collapsed

Further to the last item above, things are looking ever-tougher for the South African mining sector. As I’ve discussed in the past, the fall of South Africa over the last decade has been phenomenal. With the nation going from world’s top gold producer, to now barely breaking the top 10. Anecdotally, it’s well known that miners…

America’s 25 Most Affordable Housing Markets

America’s 25 Most Affordable Housing Markets

Homeownership in the United States reached 63.6% this year, close to its lowest level since the Census Bureau began tracking the data over 50 years ago, and down from a peak of 69.2% in 2004.

Fears about buying a home stemming from the subprime mortgage crisis likely have driven down home buying. So, too, has the ongoing shift of the American population to cities. Today, approximately 80% of Americans live in urban areas, compared with the 63% who did in 1960. For many Americans, homeownership in cities is prohibitively expensive, and becomes more so every day as available real estate is bought up and the housing market recovers.

This is not to say renting is a cheaper alternative. In many cities, rent on a three-bedroom apartment costs over half average monthly wages.

Nevertheless, even as real estate prices continue to rise, there remain many housing markets throughout the United States where homeownership and renting is very affordable. In these places, rent costs less than one-third of average wages, monthly payments are as low as 12.5% of wages, and the typical home costs a fraction the average U.S. sale price. Based on data provided by ATTOM Data Solutions and 24/7 Wall St.’s calculations, we identified the 25 counties where housing is the most affordable relative to average wages.

Click here to see America’s most affordable housing markets.
Click here to see the detailed findings and methodology.

Next Week

Next Week

Next Week

June 16, 2017

Central Banks: Monetary policy meetings in the Philippines, Mexico, Norway, New Zealand and Hungary. Bullard, Dudley, Mester, Kaplan, Fisher, and Evans are Fed officials who will speak publicly. So will JorTdan of the SNB and Kuroda of the BOJ.

Special Event: Second runoff round of French Parliamentary election on the 18th.

Japanese Data: Trade balance, department and supermarket sales, all industry index, and manufacturing PMI.

Selected Other Asian Statistics: Chinese property prices and index of leading economic indicators. Hong Kong current account and unemployment. Indian index of leading economic indicators and South Korean PPI.

Euroland: Purchasing managers index, construction output, current account, and consumer confidence.

Members of the Euro Area: German and French PMIs. German and Portuguese PPIs. Italian and Portuguese current accounts. Greek import prices and CPI. French GDP, Spanish trade, Italian orders and Dutch consumer sentiment.

U.K. and Switzerland: British public finances, distributive trades survey, and industrial trends survey. Swiss M3, current account, trade balance and macroeconomic forecasts.

Nordic Europe: Swedish and Norwegian unemployment. Icelandic CPI and wage inflation. Danish retail sales and Swedish consumer confidence.

Eastern Europe: Polish industrial output and PPI. Hungary’s current account.

United States: Quarterly current account. Monthly existing home sales, new home sales, K.C. Fed manufacturing index, and index of leading economic indicators. Weekly jobless insurance claims, consumer comfort, energy inventories, chain store sales, and mortgage applications.

Canada and Mexico: Canadian and Mexican retail sales. Mexican wholesale turnover.

Australia, New Zealand, and Switzerland: Australian motor vehicle sales, house prices, and index of leading economic indicators. New Zealand services purchasing managers index and consumer confidence. South African current account, CPI and index of leading economic indicators.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

Tags: Economic Data Calendar




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