Here is one forex news trading system called the Non Farm Payroll News Forex Trading Strategy.
Now, with this Non Farm Payroll News Trading Strategy, you do not really care which direction the market moves when the data or the news comes out.
What you really care about is just placing your pending orders and whichever side the market breaks out in, you have a trade in that direction.
In order to do that, you have to place two opposite pending orders:
- a buy stop pending order to catch the price breakout to the upside
- and a sell stop pending order to catch the breakout to the downside.
Another thing I’d like to mention is that, the best situation where this news trading strategy can be applied is when the market is trading in a tight range before the news is released.
If you have so many price whipsaws and spikes before the news released, it wouldn’t be a good situation to trade using this system.
- about 30 minutes prior to the the non farm payroll news is due, open a 5 minute chart.
- Find the range: this is the highest high and lowest low in this 5 min chart.
- Then place 2 pending but opposite orders on both sides, a buy stop pending order at least 5-10 pips above the highest high and and a sell stop pending order 5-10 pips below the lowest low in that range.
- Then also place stop loss on either side for each of the pending orders: your stop loss for a pending buy stop order will be the level at where you place your sell stop pending order and vice versa.
- When the non farm payroll data is released, one of the pending orders will get activated. Then immediately cancel the other pending order that was not activated.
Where To Take Profit?
There are a few options you can use to take profit:
- two times the range or three times the range: for example, if the range is 40 pips, then set your take profit at 80 pips or if 3 times the range, your take profit would be 120 pips (which would be essentially risk:reward ratio of 1:3)
- Another way is to have no take profit target at all but just use trailing stop and riding our the massive price move until you get stopped out like shown in the chart above.
Disadvantages of The Non Farm Payroll Forex News Trading Strategy
- just before or right after the non farm payroll data is released, sometimes, price can behave erratically causing spikes and whipsaws and this can cause you to suffer a double loss (remember? you got two pending orders?) as you wouldn’t really have much time to cancel the other pending order. This happens so fast!
- there is also a tendency to get very bad fills on your order as liquidity tends to dry up so you get filled at the worst possible price by your forex broker.
- spread also tends to increase dramatically and this can impact on where you place your stop loss.
Advantages of The Non Farm Payroll Forex News Trading Strategy
- 100-200 pips profit potential in just a few seconds or a few minutes.
- with this trading system, you will always catch whichever direction the price moves during news release compared to a news trading system where you wait to actually see what the news data is before you take a trade and by the time you take a trade, price has moves 100 pips already in seconds.
Forex News Trading Is Not For The Faint-Hearted
Believe me, it is exciting to trade forex news like the non farm payroll.
You want to know why?
Well, it is this:
Within seconds, if your trade goes well without any hiccups, you can be staring at 100-200 pips in profit.
Now, for a 1 standard contract, that is$1000 to $2000 dollars in profit right there!
On an ordinary trading day, you’d be lucky to accumulate that kind of profit within 1 or 2 days!
But this happens in Non Farm Payroll news time in seconds and even in just a few minutes.
But having said that, you should be extremely careful. You can lose a lot of money trading the non-farm.
The lure of quick money is tempting but avoid it: never risk your entire account or a larger percentage of you trading account for non farm payroll trading or any news trading.
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