Trading the US non-farm payrolls
This monthly event brings traders from across the world together at the same time and place. It usually also represents a slaughterhouse experience for those new to trading.
If non-farm employment change is better than expected, then the US dollar should rise and vice versa, right? Actually, an average RCC statistic of around 15% shows otherwise. The volatility in RCC between 15, 30 and 60 minutes post-event in particular suggests that line of reasoning is incorrect.
So, what is the best way to approach the situation? Most likely that of determining and remaining with the longer-term trend while exploiting the current situation. In other words if the longer term trend for the US dollar is up but non-farm employment change comes in weaker than expected and the initial market’s reaction is to sell the US dollar, our approach should be to buy the US dollar, and vice versa.
There is no doubt that the biggest profits come from taking advantage of opportunities that are generated when the markets react emotionally to some event.