Tag: Forex Reports

Categories
Forex Market

What You Need to Know About US Non-Farm Payroll Reports

Among all the regular economic announcements published by governments of major world economies, the most important is the US non-farm payroll report (sometimes called simply NFP) which is published by the United States Bureau of Labor Statistics. The market can react rather violently to these reports and there was a time when trading in these ads was a well-known strategy. Today, however, you often see most of the big players remaining out of the market during these ads.

Among all the regular economic announcements published by governments of major world economies, the most important is the US non-farm payroll report (sometimes called simply NFP) which is published by the United States Bureau of Labor Statistics. The market can react rather violently to these reports and there was a time when trading in these ads was a well-known strategy. Today, however, you often see most of the big players remaining out of the market during these ads.

Among all the regular economic announcements published by governments of major world economies, the most important is the US non-farm payroll report (sometimes called simply NFP) which is published by the United States Bureau of Labor Statistics. The market can react rather violently to these reports and there was a time when trading in these ads was a well-known strategy. Today, however, you often see most of the big players remaining out of the market during these ads.

What is the Non-Agricultural Payroll Report?

The non-agricultural payroll announcement is simply the US employment report, which excludes agriculture-related jobs, unincorporated self-employment, nonprofit organizations, and military and intelligence agencies. In other words, it is a report of the “common worker” of the United States. The report is published on the first Friday of each month at 8:30 am EST and summarises the number of jobs created or eliminated from the economy during the previous month. For example, if it is the first Friday of June 2018, the report shows the employment for May 2018. This gives us roughly an idea of how healthy the US economy is, which of course has a big influence on the dollar. News that affects the market

Other central banks also have employment figures, obviously, but Forex traders don’t pay them as much attention as the dollar is the world’s reserve currency. All major Forex pairs are somehow connected to the dollar, so it makes sense that it has a massive influence on the way money flows across international borders.

How the Report Is Broken Down

Beyond simply reporting on how many jobs are created or eliminated, the non-farm payroll report also disaggregates jobs by sector. Some of the sectors include health care, wholesale, retail, transportation and storage, mining, construction, and many more. This will give you an idea not only of how the US economy is growing but also of what specific sectors are growing. This information is also very useful for stockbrokers. For example, if you see that employment in health care is increasing, that means that there should generally be more demand for that sector. A stock trader would seek to buy HMO or some other type of company from the sector in question.

Consensus

Normally, about a week before the announcement comes out, you will begin to see predictions about the outcome of the announcement. For example, some analysts may expect to create 350,000 jobs by the previous month, while others may have higher or lower expectations. When the ad goes out as expected, it usually doesn’t have much impact on the Forex markets. However, if it veers sharply in either direction, the dollar will generally react quite strongly. This is compounded by the lack of liquidity at the time of the announcement. If you have a broker with floating spreads, you will see that spreads will expand during the announcement because most large funds will be withdrawn

Unemployment Rate

The unemployment rate is also part of this advertisement, as it is published simultaneously. The higher the unemployment rate, the weaker the economy. This is because employers will not hire workers if the economy is slowing down. It is for this reason that a rising unemployment rate is usually bad for the dollar. On the other hand, if the unemployment rate continues to decline, this means that more people are working, which means that the Federal Reserve is more likely to raise interest rates. At that point, the dollar will appreciate.

Critique

As with almost any other government data, there are many critics out there. For example, the official unemployment rate published by the Bureau of Labour Statistics is known as “U3”. It is calculated by dividing the total labour force by the number of unemployed and multiplying it by 100. One problem is that the US government sees those who are working part-time as employees, regardless of whether they want to find a full-time job. It also sees employees as those who perform at least 15 hours of unpaid family work and those who perform temporary work. To be part of the workforce, he must have been looking for work in the last four weeks. Unfortunately, it does not count those who have “given up” as unemployed, because it does not keep them in the workforce. Most people will consider the “U6” as the most predictive and correct indicator. The U6 indicator is an employment report that includes part-time workers to provide a stronger economic outlook.

Most traders consider the non-agricultural payroll announcement to be the best numbers we have to work with, so the market will pay attention to them. However, in the end, it is not very correct, because, if you look at the data a year later, you would see that they are almost always corrected and revised, usually downwards.

The Bigger Picture

Foreign exchange markets have changed quite dramatically over the past decade and, although the non-farm payroll report remains very important, it is no longer as important as before, mainly because foreign exchange markets are beginning to move on different factors. For example, we are beginning to see that the dollar acts as a security currency more than anything else and traders accept more than the employment situation in several countries (including the US) will be somewhat fluid. Occasionally you get the anomaly of a bad or good month, so keep in mind that most traders are starting to see the non-agricultural payroll report as a trend to follow, not necessarily the cornerstone of indicators to see which currency to trade.

Categories
Forex Basics

The Importance Of Trading Statements

A trading statement may sound like a strange phrase, it can give the impression of simply stating trading, which is not exactly what we had in mind. Instead, a trading statement should be your overall target and goal for your trading. Think about business, most of them were set up with a mission in mind, […]

A trading statement may sound like a strange phrase, it can give the impression of simply stating trading, which is not exactly what we had in mind. Instead, a trading statement should be your overall target and goal for your trading. Think about business, most of them were set up with a mission in mind, […]

A trading statement may sound like a strange phrase, it can give the impression of simply stating trading, which is not exactly what we had in mind. Instead, a trading statement should be your overall target and goal for your trading.

Think about business, most of them were set up with a mission in mind, something that they wanted to chive. Your trading statement is set up in very much the same way. It should detail exactly what your overall aim is with your trading, for some this may be simple, others it may be complex, but it should be kept short to a single statement, something that you can always refer back to as the reason why you started trading in the first place.

Before we get into it too much, let’s take a look at some of the mission statements that are out there from various businesses and companies around the world.

Google: “To organize the world’s information and make it universally accessible and useful.”

Microsoft: “to empower every person and every organization on the planet to achieve more. We strive to create local opportunity, growth, and impact in every country around the world.”

Amazon: “We aim to be Earth’s most customer-centric company. Our mission is to continually raise the bar of the customer experience by using the internet and technology to help consumers find, discover and buy anything, and empower businesses and content creators to maximise their success.”

ASDA: “At Asda, our mission is to be the most trusted retailer. We help our customers to ‘Save money. Live better’. Learn how helping our customers to live better means Asda helps the planet too.”

As you can see, the mission outlines what their overall goal is, it helps to describe the organisation’s broad view for their future and the sort of image and reputation that they will be aiming for. More often than not it will be a very broad statement, not giving details on how it will be achieved or the steps along the way, just the overall image and endpoint that is desired.

So how can this be brought into the trading world and how exactly will you be able to make a trading mission statement of your own?

The first thing that you need to think about is exactly what you want to achieve from trading. Some people want to be able to quit their job, others just want a little bit of extra money, this will be the starting point of your mission statement. So have a think, if you wish to quit your job and to trade full time, have that as your main mission, if you just want an extra $100 per month, then set that as your mission, everything that you do from this point onwards will be to try and achieve these targets and to reach your mission’s goal.

Your mission needs to be realistic, there is no point setting a mission statement of being a billionaire through trading, it just isn’t going to happen. You need to set it to a realistic level, if you want to turn your balance of $1000 into a balance of $10,000 or $50,000 then these are more achievable targets, they may seem a long way off and that is not necessarily a bad thing as it gives you something o really aim for and to aim for it for a long time to come, keeping you focused on that target. Just remember that once you hit that target you will need to keep yourself there and not to then slip away again.

Once you have worked out what your trading statement is, you need to get it printed out and put up on the wall. This will then be a constant reminder of what it is that you wish to achieve. It needs to be there as a constant reminder so it needs to always be there for you to refer back to.

It is also important to understand that once you have hit your mission or that you are at the level that you want, you do not let things slip. You need to be able to maintain it, if you simply hit the target of the mission and then let it drop off, you are not achieving your goal, so hit it and keep it, this is the main aim of the mission, to maintain it for as long as possible, as soon as it falls, the mission has ended and it will be quite hard to then get back to it again.

So remember your mission statement should be your overall aim, something that you wish to achieve and then maintain, so have a think about yours, make sure it is realistic, and then get working towards it.

Categories
Forex Risk Management

Monthly Returns: Reviewing and Goal Setting

What is the satisfying rate of return that we can achieve during a period of one month? Do we really need to aim for any kind of speedy results? There are a lot of different types of traders out there, experts, professionals, beginners, people who trade just for fun, or people who think they are doing just great so they want to set some goals for the future. That part of pursuing the goals could be very tricky in forex trading. Naturally, we all want to be better and more successful in areas like trading psychology, money management, and trade entries. We want to acquire wealth and knowledge as well but for that, we need discipline and a killer strategy. Before all of that, we need to achieve patience, because that skill could be our most powerful weapon in most cases.

What is the satisfying rate of return that we can achieve during a period of one month? Do we really need to aim for any kind of speedy results? There are a lot of different types of traders out there, experts, professionals, beginners, people who trade just for fun, or people who think they are doing just great so they want to set some goals for the future. That part of pursuing the goals could be very tricky in forex trading. Naturally, we all want to be better and more successful in areas like trading psychology, money management, and trade entries. We want to acquire wealth and knowledge as well but for that, we need discipline and a killer strategy. Before all of that, we need to achieve patience, because that skill could be our most powerful weapon in most cases.

What is the satisfying rate of return that we can achieve during a period of one month? Do we really need to aim for any kind of speedy results? There are a lot of different types of traders out there, experts, professionals, beginners, people who trade just for fun, or people who think they are doing just great so they want to set some goals for the future. That part of pursuing the goals could be very tricky in forex trading. Naturally, we all want to be better and more successful in areas like trading psychology, money management, and trade entries. We want to acquire wealth and knowledge as well but for that, we need discipline and a killer strategy. Before all of that, we need to achieve patience, because that skill could be our most powerful weapon in most cases.

We are really glad to see people are starting to look at things in terms of percentage return and not pips when it comes to what we are able to achieve over a certain amount of time. Percentage return tells the tale pips probably not. We can hear every once in a while someone saying: “Oh, this robot gave me 350 pips a month, my trading signals generate this many pips every month”. This might be a very misleading number for a couple of reasons. One, we all know that pips have different amounts behind them which means we could make thousands of pips and on the plus side at the end of the year and still only hit 3 or 4 % of the return.

It doesn’t mean a lot. Two, if somebody is going to advertise a robot for example and say: “Hey, this thing made 10.000 pips in the month of November!” That could be true but what we didn’t know is that for example, the ATR of the pair we traded this week, the NZD/AUD was at 60 pips, the ATR for gold usually sits right around 1500 pips a day. It fluctuates up and down but on average that’s about where it sits. So to catch 10.000 pips for a month if we hit a really good trade it’s not impossible but it’s rather pretty improbable. But to tell something like this to an average forex trader might be super misleading.

People who are just getting into the forex world would probably believe anything you are willing to serve for them. Therefore percentage return could be that thing that we want to focus on. The percentage doesn’t lie, especially over a long period of time. The problem is that over a period of one year, for example, we are going to have up months and down months. That doesn’t suppose to be a huge problem. We all have those months, it is important to learn how to play the game. We are all aware of how the market is one crazy inconsistent beast. So to aim for any kind of monthly return might be a silly goal. We might drive ourselves absolutely insane because we are not going to get there consistently. Soon after we might end up frustrated and that emotion could easily lead us to take trades we should not be taken or we might go over leverage.

Traders, why we think trading the daily chart might be a good idea? Why we wait for our indicators to tell us to shoot? It’s because we have this awesome luxury of allowing the market to come to us. If it doesn’t come to us and there are no trades out there, we don’t have to take them. That is one of the biggest advantages that we have. So setting unrealistic profit targets for the month shouldn’t be the path we want to try walking along. A lot of traders and firms do things the wrong way. The traders are trading 15 hours a day on all sources of stimulus, getting very little sleep, and ending up with poor mental capacity because they have to hit these targets every day, every month. This could be short-sighted and pretty foolish because the market isn’t always on our side.

Not having something like patience could lead us to something like trying to have monthly profit targets which could potentially lead us to a lot of mistakes that we don’t want to be involved with. On the other hand, having patience allows us to do things the right way and at the end of 6 months period or even better 12 months period, we might be well-ahead of those people that were tearing their hair out trying to score their monthly profit target. If we want some real figures, if we want a real blueprint we might consider focusing on long-term results. We should never-ever force our trades, instead, we could try to give our systems a decent time of run and they might give us back a decent return. With a good money management structure, an ounce of discipline, and well-shaped trading psychology we could become unstoppable. Traders, think about that.