Love it or hate it, non-farm payroll is announced each month — unless the government has decided to take a hiatus. And no active intra-day trader worth his/her salt would dare to ignore this time period which almost always leads to high price volatility. During the days and weeks leading to the non-farm payroll announcement you will find all sorts of contests and opinions forecasting the job report outcome. And usually, traders will find themselves in one of 3 categories: overjoyed about the profit potential, stressed about the potential draw down of their capital, or indifferent because they would rather sit on the sidelines during NFP.
Regardless as to which category that you fall in, if you want to improve your trading skills then you need to continuously improve your trading knowledge and practice practice practice.
This past non-farm payroll resulted in a double-digit percentage increase to my account balance. And I am going to share with you some quick tips on how I planned and executed my non-farm payroll trade.
Identify the trend
Determine which direction you plan to trade in based on the trend on a higher time frame. For example, if you are planning your entry using the 5 min chart, then use a higher time frame, such as the 1 hour or 4 hour to determine the trend direction.
Analyze your charts
Analyze your charts for key levels of support and resistance to determine if you expect for price to continue in the direction of the trend or reverse.
Calculate your risk
Always calculate your risk before entering a trade. It’s easy to imagine the buckets of cash that you will earn from a single trade, but you should always remember that in trading — anything can happen, at any time. This is such an important tip for becoming a profitable trade. Your first priority is to identify and manage your risk on every trade.
Plan your entry and exit
Plan to enter on a swing high — if you are selling, or a swing low — if you are buying. Plan ahead and know prior to entering the trade your entry and exit price, and be realistic. Not every non-farm payroll announcement is going to send price skyrocketing to the moon or plummeting to the deep sea.
Watch my video on how I traded the last Non-Farm Payroll announcement.