NFP Trading Strategies You Need to Know Toroption 06.04.2017 For traders and market analysts in general, the Non-Farm Payroll report is perhaps the most important piece of U.S. economic data that has major implications on the global markets. Usually published the first Friday of each month, this major economic indicator measures the employment situation in the country. Additionally, the NFP is a key indicator for the U.S. Federal Reserve, which bases its monetary policy decisions on the report’s statistics. For the trading markets, the NFP represents a great volatility source which can cause some of the largest rate movements of any news announcement. The one element the American economy can’t live without Among the major national economies in the world, the U.S. economy presents a rare picture due to the crucial role of consumers. They account for more than two-thirds of economic activity due to things like the general propensity to borrow, high-labor costs incurred by manufacturers or the popularity of outsourcing. Thus, the health of the American consumer is extremely important for growth and both the central bank and the financial markets attach great value to labor statistics as a result. Having explained the context, it’s time to move to the most commonly used NFP trading strategies. The Slingshot Strategy Out of these three NFP trading strategies it is the Slingshot strategy that is a favorite among traders. It is very useful during a strong NFP reading, because the higher the volatility levels get to, the more profits one can make. Traders are looking to go into the NFP with their full positions in order to be able to take better advantage from the buzz of the announcement. The slingshot is based on the breakout that temporarily reverses before continuing. This takes place when a major support or resistance point is broken and the currency price does not hold below support or above resistance and moves back into its previous trading range. The Trading Reversal Strategy Another popular strategy for NFP trading is the reversal strategy. It is recommended for traders to have support and resistance levels identified at start before waiting for the news to be released. After the NFP report is unveiled, traders simply have to watch the prices to check whether the longer-term support or resistance levels come into play. It is up for the traders to figure out if these levels will hold or not and act accordingly. The long-term trading strategy Trading on the long-term is sometimes the best idea and it can certainly work great for the NFP. Traders have the advantage of picking up or adding positions at a more favorable price than during the heat of the report’s announcement.