One of the most important documents you can come across in the world of trading is the nonfarm payroll report. Essentially, it is a report on the state of the US economy issued by the US Bureau of Labor Statistics. This information affects all types of trading on a global scale, so keeping track of it and knowing how to react when it comes out is of outmost importance for every trader. In this article, we will show you the significance of this document and how it can help you trade binary options. Read on and discover an important tool in your quest for profit!
Nonfarm Payroll | What is it?
Like we said earlier, nonfarm payroll is issued by the US Bureau of Labor Statistics. This is done every first Friday of the month, so you can expect increased volatility of the market on these days. This is because nonfarm payroll shows how many new jobs were created during the last month, which sectors of the US economy were the most active ones in this respect and what’s the situation with the unemployment rate. Based on this, predictions can be made regarding the government’s future moves and decisions and the way the US economy is going to develop in the following month. Because the US economy is the largest and most influential economy in the world, every nonfarm payroll is an extremely important Market Event. So how do you need to trade when it comes out? That’s in our next paragraph.
Nonfarm Payroll | How to trade?
As mentioned earlier, increased market volatility is the hallmark of every first Friday in the month, thanks to the nonfarm payroll report. Because of that, long-term options are preferable. Simply, it is extremely difficult to correctly predict movement immediately after the report is issued, so stepping back and waiting for things to calm down is the smartest thing to do. You can get a general idea of where the economy is heading from the data in the report, but the market needs some Time to adjust and incorporate new information. On top of that, many traders believe that the first move the price makes after a nonfarm payroll is published is usually not the right thing to put your money on. This may not be true all the time, but it gives you a pretty good idea of how hectic things get in these circumstances.
Nonfarm Payroll | Conclusion
As you can see, every nonfarm payroll has a huge effect on the market, so knowing how to behave and trade when it comes out is of outmost importance. These are some of the basic principles you need to know, but if you want to know more, we suggest you closely examine the data in every report. That way you can see the nuances and how the market reacts to them. As always, careful analysis is the key to success. However, if you want to educate yourself some more, we suggest you take a look at our other articles. There is much more to learn.