Learn strategies for day trading the non-farm payrolls (NFP) report, one of the biggest market moving events in forex. These are strategies you can build off whether day trading the EURUSD or the GBPUSD.
You’ll learn ways to make money trading actively, using a 1-minute chart and grabbing multiple trades.
You’ll also learn a simple method you can apply using a 15-minute chart. Trade it in the background while doing other things.
Understanding the Non-Farm Payrolls
The Non-Farm Payrolls is released along with the US unemployment number on the first Friday of the month. If that day is a holiday, then it may be released on the second Friday of the month. Check an economic calendar to see when it is released if unsure. The data is released by the US Bureau of Labor Statistics.
It is released at 8:30 am EST (New York time). The Next Release is October 6, 2023
The NFP and employment data provide traders, investors, and businesses with insight into how the US economy is performing. This in turn is used to assess where interest rates may go. Interest rates are a key driver of currency price moves.
As retail day traders, we don’t need to worry about what the actual number is, or what it implies. The strategies you’ll learn here are focused on capturing price movement, not making predictions about the future based on hindsight NFP numbers.
The report causes swift and sometimes large price moves as traders and institutions react to the NFP news. While there’s often a large reaction in the seconds following the announcement, volatility and large price moves may follow for the next several hours.
When to Place Trades
It is in the aftermath of the NFP report that we as retail day traders make our trades. I usually wait at least a minute, and often more, to make a trade after the NFP is released.
Don’t place or hold day trades through the NFP announcement. It is essentially gambling because even if you pick the price direction correctly, the bid-ask spread can widen so much in the seconds leading up to and following the announcement that you get stopped out anyway.
Wait for the announcement to come out. There will often be plenty of trading opportunities after the release.
Watch for the spread to return to more normal levels (based on your broker), although slightly elevated spread levels are fine and typical following a major news event. It usually takes a couple of minutes or more for the spread to narrow to something resembling normal.
THEN watch for patterns and strategy setups we will discuss below.
Why Trade the EURUSD or GBPUSD
The EURUSD typically has the lowest spread of any currency because it is the most actively traded forex pair in the world.
The GBPUSD is another heavily traded currency pair. Its spread is usually bigger, but it also tends to have higher daily movement than the EURUSD.
As of October 4, 2023, the EURUSD has average daily movement of 72 pips, while the GBPUSD moves 91 pips per day, using a 5-week average. The GBPUSD is moving about 25% more per day.
The flip side is that the GBPUSD spread can sometimes be substantially bigger than the EURUSD. There’s a tradeoff there. Check the typical spread with your broker. If the GBPUSD and EURUSD spreads are similar, then GBPUSD may give you more movement to capitalize on. If the spread is much bigger in GBPUSD, then the EURUSD is the better bet with the lower spread
My preference is the EURUSD; it is the only currency pair I day trade.
When day trading, the smaller the spread and the lower the commissions the better. If you’re going to day trade, compare forex brokers (which vary based on which country you are in) because there can be big differences between them.
GBPUSD and EURUSD NFP Day Trading Strategies
Let’s get into the strategies.
The “simple strategy”, discussed later, doesn’t produce many trades and is more something to do in the background because it doesn’t take much work/focus.
The active strategies that follow can produce much bigger profits and provide more trades, but require more screentime and focus.
Active NFP Day Trading Strategy
When I day trade the EURUSD I use the 1-minute chart. It provides ample trading opportunities most days (with news events or not), and because the stop loss is relatively small it’s possible to capture multiple 2R or 3R trades throughout the day.
Read what “R” means here. R is a good way to compare risk and profit across strategies. Simply put, if risking 1% of the account per trade, making a 3R profit adds 3% to the account.
A 15-minute chart may only capture one such trade a day in a 1 or 2 hour trading window. (See a comparison of which day trading time frame is best for you here.)
Use the following 1-minute chart methods to day trade the NFP. Use these methods on any day, or at any time, not only following the NFP.
- Exit existing trades at least 2 minutes before high-impact news announcement. With a big announcement like NFP or an interest rate announcement, I will exit trades about 5 minutes before.
- Wait till the news announcement comes out. Only consider taking trades once the spread narrows. A somewhat elevated spread is fine, I just don’t want it really big (compared to normal).
- Then look for the following patterns to form (see examples on charts below):
- If the price has moved at least 15 pips in the last 2 hours, that’s enough to trade the 1-minute chart. If it has moved less than 15 pips in that time, be very cautious, especially if your spread is close to 1 pip or more.
- Set a profit target at 2.5x the stop loss amount. If my stop loss is 4 pips, for example, I use a 10 pips target. If the SL is 3 pips, I use a 7.5 pips target. Stop loss and profit target placement are also discussed in the pattern articles listed in step 3.
- To take a trade, there should be enough movement for the price to be able to reach the target. Prior waves provide this information. See the Price Action Day Trading Cheat Sheet for how this works. There is no point taking a trade with a 5 pip stop loss and a 12 pips target when the price is only making small moves of only 7 or 8 pips before reversing.
Click on the links above to explore these strategies. The DPV and TC are covered in the EURUSD Day Trading Course. That said, the other strategies provide ample opportunities as well. And you will see lots of examples of TCs trades in the charts below.
Here are some examples. The charts below are Mountain Time, not EST. Therefore, NFP is released at 630 on these charts. These are charts I post daily on Twitter following the trading day (assuming I traded).
Below is a NFP day trading chart from September 1, 2023.
Below is a chart from August 4, 2023.
Here is a chart from June 2, 2023. Some nice moves.
Live EURUSD chart by TradingView
Here is the chart from January 6, 2023.
Here’s the chart from Dec 2, 2022. More than 3R potential.
Here’s the chart from November 4, 2022. There was more potential on this day, but I was recording a video and wanted every trade I took to be a little more perfect than usual. +2.7R. The video is below (after the charts) and provides lots of tips for live trading and what to look for and avoid.
Below is the chart from October 7, 2022. Great +8R day in a little over an hour of trading.
Here is the chart from May 6, 2022.
Using primarily TC trades, this day produced 8R (8% if risking 1% per trade) in profit within 1 hour of the news release. More profit was possible if trading longer, as shown.
Below is the chart from June 3. Took a little while to catch a trade, but caught a Rounded Bottom following the announcement. I also noticed that I could have taken a TC at 6:39 (8:39 EST) for another 2.5R profit. You can see I got a little greedy after 7:10 am. I was looking for a bigger move based on the EURUSD Session High/Low Strategy but it didn’t materialize. Got some partial profits instead.
Below is the chart for July 8, 2022 which included the NFP release.
Notice the closing out of trades and not holding trades when the NFP comes out. There was a nice opportunity I missed at 6:45, but as the uptrend progressed after 6:50 there were profit opportunities.
Below is a video of a recorded session while day trading the NFP on November 4, 2022.
Active Non-Farm Payrolls Strategies Profitability
Trading the 1-minute generally provides multiple trades each day, whether around an NFP announcement or not. We can use the same patterns day in and day out.
In this way, these are just EURUSD strategies, which could also be used for trading the non-farm payrolls release.
While the 15-minute chart strategy (discussed below) provides us with 4 trades in 7 months, the 1-minute strategies provided us with many trades following NFP releases.
The 1-minute strategies are clearly more profitable. They grab the profit (or loss) quickly. The trade is done and then we are on to the next one.
Is it easy? No. Trading isn’t easy. Most day traders lose money. It’s up to each of us to define how we want to trade. Maybe you will only trade Trend Continuations (TCs) and only on a certain time frame at a certain time of day. Or maybe you will focus on RBs and RTs. Maybe you’ll trade all the strategies.
Whatever you choose doesn’t really matter. Whatever we pick, it’s your job to get better at them.
As you can see, I noted on my charts where I missed some opportunities or made mistakes so that I can try to improve those areas. That’s what trading is all about.
Passive or Simple NFP Forex Day Trading Strategy
The idea of the Simple NFP Day Trading strategy is that it’s based on a longer time frame. You await the signal and then sit in the trade. The volatility will eventually move the price to your profit target or stop loss. There isn’t a whole lot to do.
This strategy takes little effort, but the overall profits are pretty small too. The NFP only comes out once per once month, so there aren’t a lot of trades. Any given trade could be a nice winner, but over the course of the year, this strategy won’t make you rich.
I’d recommend doing this in the background alongside other forms of trading, or to get an extra few percent each year. It’s not a strategy to be relied on exclusively.
This strategy uses a 15-minute chart.
Here are the Simple NFP Day Trading Strategy rules:
- The price should move at least 30 pips within 15 to 30 minutes of the news release. If the price only moves a few pips on the news, then obviously the market doesn’t care about it, so neither should we, and this strategy wouldn’t be used. If the price does move 30 pips or more then we start watching for an inside candle…
- Wait for an inside bar to form after the news is released at 8:30 EST. This means the absolute earliest trade that could occur is at 9am EST.
Don’t take trades with the strategy after 10 am EST. Much of the move has likely already happened.
An inside bar/candle is one that occurs totally inside the prior candle. The 8:30 EST candle is usually big. After that, we’re waiting for a candle totally inside the preceding candle (candle wicks and all). That could be the 8:45 candle if the high and low are inside the high and low of the 8:30 candle. But an inside bar may not occur till 9 or 9:30.
The price doesn’t need to be inside the 8:30 candle, it just needs to be inside the prior candle. For example, if the 9:45 candle is inside the 9:30 candle, then that’s an inside bar and can be used to possibly take a trade…
- Buy if the price moves above the high of the inside bar.
Sell if the price moves below the low of the inside bar.
The current candle does not need to complete or close. If the price moves above the high or low of the inside bar, the strategy is to take the trade right then.
- Place a stop loss above the inside bar high if going short.
Place a stop loss below the inside bar low if going long.
Inside bars can still be really big. Keep the stop loss to 20 pips or less, or below the high/low of the inside bar, whichever is smaller. Even 15 pips is a good maximum in nearly all cases.
- Place a profit target at 3x the risk amount. For example, if risking 10 pips on the trade, put a target at 30 pips from your entry. If your risk is 15 pips, put a target at 45 pips.
- A 2x profit target is also acceptable. Use this if the overall volatility is relatively low.
- You could also use a trailing stop loss with a profit target, or use the trailing stop loss on its own to exit the trade once the price starts turning against you. This could be a moving average or an ATR Stops (see Stop Loss article in Step 4) for example.
- If the price hasn’t reached the target or stop loss, exit the trade 4 hours after entry. The news we were trading has been digested by the market and other factors are likely playing out now. This could be an exit method on its own, or could be combined with a trailing stop loss. If you are still in a trade after 4 hours, trail the stop loss so you lock in any gains in the event of a price reversal.
- A 2x profit target is also acceptable. Use this if the overall volatility is relatively low.
- Avoid taking more than two trades per day with this strategy. Losing trades happen. An entry signal may occur and then hit the stop loss. If the strategy provides two entry signals and both are losers, likely the price action is choppy and/or not suited to the strategy that day. Control losses. What matters is making money over many trades.
Lots of examples below.
Simple NFP Day Trading Strategy Examples
Here is the example from January 7, 2022. This was a pretty big stop loss. It managed to get to the 2x target but not the 3x target before the 4-hour time limit for the trade.
It was a good trade, but due to the big stop loss size a trailing stop loss would have also worked well.
This trade resulted in about a 2.3R profit or 2.3x the stop loss amount if holding till the 3x target but having to get out a little early because of the 4-hour time limit.
Live EURUSD chart on TradingView
Below is the example from February 4, 2022. The trade did not hit either the 2x or 3x profit targets. If allowed, it would have eventually hit the stop loss. Because of the large stop loss, a trailing stop loss would have worked better here.
If holding till the 3x profit target, this was a loss of -1R or the price hitting the stop loss.
Below is the March 4, 2022 Simple NFP Day Trading example on a 15-minute chart.
The inside candle forms at 9:30 and the price never really gets going. If not using a trailing stop loss, this trade is stopped out. Once again the stop loss is larger, near 20 pips, so a trailing stop loss isn’t a bad idea.
-1R or partial loss if using a trailing stop loss.
Below is the example from April 1, 2022.
No trade due to lack of movement after the announcement.
Below is the example from May 6, 2022.
No trade. The signal occurs too late.
Below is the chart for the simple NFP strategy from the June 3 announcement.
It produced a 3R profit.
Below is the July 8 non-farm payrolls day trading strategy example.
No trade because there are no inside bars until later in the day.
Tips and Tricks for the Simple NFP Day Trading Strategy
Generally the smaller the inside bar, the easier it is for the price to hit the target. With an 8 pip stop loss, it’s easier for the market to move 24 pips (3×8) and hit our target compared to if our stop loss is 20 pips and it needs to move 60 pips (3×20).
I tend to avoid bigger stop loss trades. If I do take them, I’m more inclined to use a trailing stop loss because I know that it’s harder for the market to move bigger amounts to reach the profit target.
News events like the NFP seem to go in and out of favor, meaning people tend to care more about them at certain times than others. Reaction to the NFP can be quite muted for months in a row, often when overall volatility is low. This is why when using this strategy we need to see a minimum amount of movement immediately following the announcement.
Other times, the NFP can cause huge reactions, where the price runs 100 pips in an hour or two following the announcement.
Notice this. If the strategy is working recently and there is lots of movement, keep using it. If the reaction to NFP reports is muted, and the price isn’t moving much, that probably means this strategy isn’t going to produce much either. Opt not to trade it.
We also get an idea of how interested the market is based on the initial reaction to the news. Big move, more interest. Small move, less interest. Big initial move with a small inside candle is the best combination.
Knowing when to trade is important. Coming up with rules for when NOT to trade is just as important.
Simple Non-Farm Payrolls Strategy Profitability and Other Options
At the start of the article, I said to use these strategies to “build off”. This simple NFP day trading strategy is profitable, but it generally only produces a handful of trades per year since the NFP is only released once per month.
For the 7 months above, there were two winning trades totaling 5.3R, two losing trades totaling -2R (or less), and 3 months where there were no trades. That works out to an average of 0.5R per month. The rest of 2022 produced slightly less than that. Some years the average is closer to 1R per month.
The concept is profitable and has been for many years. You can find ways to improve it, or trade it as is.
To get more trades you may want to consider using a 5-minute chart with a similar strategy. This may provide more trades each month because you may have several inside bars over the 1 or 2 hours following the NFP release. Let me know in the comments in you try it. I haven’t. I spend most of my time on the 1-minute chart.
A 5-minute candle will also have a smaller stop loss, so targets are likely to be achieved more quickly which means moving on to the next trade.
Alternatively, if you want to take full advantage of the price movements following the NFP announcement (and the price movements that occur every day) you can use a 1-minute chart as discussed above.
Final World on NFP Day Trading Strategies
The active 1-minute NFP strategies are designed to capture the regular movements that occur every day, but can also be used to capture movement in higher volatility environments like the aftermath of a news release.
The simple strategy, discussed last, is designed to take advantage of the larger movement that follows a major news announcement like the non-farm payrolls.
There is no right or wrong way to trade, but ideally, we want our wins bigger than our losses. Losing trades WILL happen no matter what method we use. This is why I always set a profit target that is a multiple of my stop loss. That way, over many trades, even if only winning 40% of trades, for example, the wins cover the losses for an overall profit.
A 50%+ win rate is great. Many pros are around the 50% win rate with many of their strategies. It is the bigger wins relative to losses that create the profits.
Strive to use strategies that not only work for news but work in normal trading conditions as well. Then you only need one skill set and don’t need to change strategies every time volatility increases.
The EURUSD Day Trading Course provides methods for day trading regardless of whether conditions are volatile or normal. The methods in the course use the 1-minute chart, which means multiple trades can often be taken within a short amount of time, which means more profit and less screen time. Use the methods on normal days or big news event days.
By Cory Mitchell, CMT
Disclaimer: Nothing in this article is personal investment advice, or advice to buy or sell anything. Trading is risky and can result in substantial losses, even more than deposited if using leverage.