On January 10, I wrote how to trade the U.S. unemployment and NFP report by doing a strangle with Nadex binaries.
You can review the trading plan outlined in the article HERE.
To summarize, the article stated the EUR/USD usually moves about 100 pips from high to low after the NFP release. It also said to look at 10, 11, or 3 PM binaries that were out of the money with low risk and no stop loss needed, as all risk is capped on the U.S.-based and CFTC regulated Nadex Exchanges binary contracts.
As a trader, you did not have to pick a direction: if the market moved far enough up or down, the trade would be profitable. The plan was to look for a binary strangle that had a cost of less than $25 with a goal of making a 100% + return on risk the same day.
The NFP and unemployment numbers were released and the EUR/USD did exactly as expected. From low to high, it exceeded the average and moved 119 pips. From release to high, it moved 101 pips. The NFP report came in at 74k, much lower than the expected 196k. The unemployment rate came in a bit better than expected at 6.7 percent, compared to an expectation of 7.0 percent.
Related: How To Trade Unemployment & Non-Farm Employment Change With Low Defined Risk
The unemployment number, however, dropped mainly do to people dropping off the unemployment statistics rather than employment conditions improving. Thus, the NFP number was the big mover and this caused the USD to get massively weaker. Traders believed this would potentially lead to less tightening on QE and in monetary policy, therefore weakening the dollar.
Below is the chart of the EUR/USD
You could have entered each sid
No comments:
Post a Comment