Non-farm payroll report was released about 30 minutes ago. My guess is markets are largely surprised with the numbers, based on the action following the announcement. Economy registered 247, 000 jobs cut, which is fewest than a year. Also, this number is much smaller, than 330,000 or so expected by analysts. Unemployment has dipped to 9.4% from 9.5%, but this is largely attributed to accounting method, because large number of people left the work force and are no longer considered unemployed.
It has been a long standing policy of mine to not trade economic announcements, and today is no exception. By this I mean not entering new positions prior to data release and “predicting” the outcome. One never knows how the market is going to react. We had a good example for that today, with dollar pairs whipping both ways. Moves were not very small, either. I’m sure a lot of people were hurt on this indecision. Chart of 1M EUR-USD illustrates what I mean.
This was about 140 pips in, what, 15M? Bad news, considering that one of the most popular methods of trading NFP is to place straddles right before the numbers are released. When something like this happens, it is almost certain that most brokers register slippage and spreads spike. Since limit orders are executed based a “First in-first” out bases, those placing them right before announcements would be the last to be filled. This makes for a very bad day, since in this example I’m sure that many people were hit and stopped both ways. Ouch.
My own trading was on a rough side, too, but nowhere near that painful. I had couple of trades from earlier in the week. One of them was a buy in EUR-CAD. This has been live for a few days and today it came very close to reaching the objective.
My target was 1.5600 and on this platform price came to 8 pips to it. Even closer on other ones. I decided to exit it on the close of hourly candle, as I normally do. It would be a shame to be so close get so close to objective and watch the trade turn into a loss. Market has been falling hard since.
Another trade discussed on these pages was a buy of GBP-CHF. This set was made of 2 separate buy orders.
The first trade onto a loss yesterday, after being mildly positive. I decided to close it for 85 pips loss. Second buy order was left intact, but I didn’t feel very comfortable with averaging the trades here. They were of bigger size than customary for me, so only one at a time. Lower placed order, at 1.7860, was filled earlier today. After initial NFP induced lack of direction, this pair has finally moved up. I closed it for 119 pips gain. Must admit, this is rough trading, and has been all week.
Last couple of posts covered JPY crosses. All of them became very lively after NFP numbers. I will cover them in more details over the weekend, but CAD-JPY trade is still in, if only by a hair. Glad this week is almost over.
Mike K.
Got out of the jpy crosses when Europe opened. Sold jpy/usd too early after the announcement.Ditto aud and cad and gbp. Turned last nights gains into double last nights losses. Ugh. There was a lot of power in the moves and not much chance to take profit on any counter moves. Almost straight up. Covered before close. Had better days. Had better months also.
Yes, Vlad, these were moves with some authority. My CAD-JPY was stopped for about 100 pips, AUD-JPY never was filled, with price staying above the low from 2 days ago. This was the reason I didn’t want to go short all JPY pairs, in case some went this wrong.
But frankly, CAD-JPY trade was very sound, even the risk riward was very attractive. I don’t think taking that trade was a mistake in itself, because it was a high probability set up. Of, course, some will fail and this was one of them.
BTW, what do you mean by “had better months, too”?. August has just started.
I am counting the start of the month back to July 12, when Misses Whitney went on television and foretold Goldman’s outstanding quarter. Since then, my signals have been crossed. I hold as much long as short on equities, but holding short the lowest quality names has hurt me badly. I do not know if I am being stubborn by not covering my ‘junkers’ or if I would buy in at the top if I cover now. When the Baltic Drys dropped and China Construction warned about lending, I felt safe selling the yen crosses. I am going to try to absorb some of you discipline in waiting for the breaks in trendlines.
I’ve been trying NFP reports lately, and yes, the system I bought places a straddle few minutes before the announcement. Today was just awfull. The only way this would have worked is if the targets were set to very small. At any rate, “system” doesn’t provide for a good way to change targets, you have to figure it out yourself. It cost me 80 pips today. With 10:1 leverage it is 8% of my accunt. Couple more days like that and I can see how this could get ugly.
Don’t you find heart breaking when a trade gets so close to a target as eur/cad did and then reverse? On my platform it was 7 pips short, nothing when you compare it to about 170 pips target. I got out at the end of the day in disgust.
Maxim, I hope things get better for your trading, but in my opinion NFP trading will be getting less and less predictable. This can last for a few weeks, couple of month, like it was in 2004, or maybe 2005.
I’m with you, Kramer. Something like this is worse than an outright loss. I try to get out on a close of hourly bar when the target is “tickled”, just like I did today. This means that sometimes you’ll get out too soon, but that’s just the way things are. Judgment call most of the time.
[...] brought strong moves, after my post . All started with NFP report, which was already discusses, and continued through the rest of the day. Some currencies came under [...]
[...] put together. As a proof he points out to the better than expected jobless data from latest NFP report. He predicts that Asia is likely to see a faster rebound, than the U.S. and Europe, partly driven [...]
[...] weeks I had been tracking EUR-CAD, looking for CAD weakness. One good trade happened last week, in NFP report, and I was supposed keep an eye for more trades there. One good set up happened on Monday, but [...]
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