A significant event many investors look forward to each month is the release of the Nonfarm Payrolls (NFP), one of the most significant events in the investors’ calendars. The report consists of data outlining the state of the employment market in the U.S. and registers the amount of jobs that were added to the employment register or lost during the preceding month.
The NFP is commonly viewed as the most important constant occurring news event of the economic calendar. For instance, in the forex market the publication of the data directly influences the movement of the U.S. dollar and many other major currencies such as JPY and CAD. In other words, all currencies paired with the USD will experience a rapid hike or fall in market action after the publication of NFP data.
Forex and binary options traders are keen to follow the extra liquidity that pours into the market. This fluctuation gives currencies an extra boost which makes them move to a significant extent and subsequently help investors gain profits. For example, shorting the USD would be wise if the numbers are below the expected and conversely going long if numbers are better than forecasts had indicated.
NFP the Market Shaker
Many binary options and forex investors see the report as a failsafe market mover. However, market does not always perform or correlate as predictable as expected. It needs to be remembered that each month is different from any other month and a number of variable determine the direction of the market. For instance, when there’s a significant inconsistency between the expected and the actual results.
With binary options investing, timing is crucial. By the time you watch the news or read the newspaper, make sure to check out your broker’s website and place a trade because there a good chance the market had already moved several pips just seconds after the release of the NFP numbers.
There is generally hardly any delay between the publication of the NFP data and the market reaction to it. Considering the fickle nature and impact of NFP on the global markets, all forex traders should make sure to keep the day in mind and mark it in their trading calendars as quite possibly the most significant occasion of the month, apart from earth-shattering happenings such as wars or natural calamities.
Generally there are several ways of trading the news and market slopes. Trading NFP can be a thrilling and often lucrative opportunity for investors who wish to enter into an unpredictable market. Irrespective of the chosen strategy, it is at all times imperative to keep a close eye on risk and return levels while diminishing the usage of leverage in case the event unpredictability causes the market to move against you.
This article has been contributed by Dennis Mitzner, acclaimed journalist and editor-in-chief of Binarries.com – professional binary options broker review site and market news & analysis provider.