Non Farm Payroll Trading System

The strategy that I prefer and that works the best for me is when price moves into consolidation before the report is released. I prefer to see price remain inside the consolidation range for several hours and preferably through a few sessions before the report.
This helps me to identify a clean break out candle.
If I don't see price inside of consolidation, then I will most likely stay out of the trade all together but watch the reaction. Remember, each time you trade it, it will be a different set of circumstances that can have an effect on price.
What time frame is best?
Well honestly this is a matter of opinion. Some people use a 5 minute chart to identify a break out candle, and I like using a 1 hour chart.
Getting the data:
When it comes to news services, you get what you pay for. Since most people that are new to trading have a limited budget, they try to get many things for free. There are some news feeds that are free but I wouldn't think of trading real money on the initial reaction when the news is released.
Using a break out candle as you entry and even using a larger time frame, you will have more time to confirm the numbers that are reported when the announcement is read. This means that the success of your trade wont be determined by how fast you can get into the trade after the data is available. Jumping into a Non Farm Payroll trade immediately when the announcement is read is probably the worst idea for a new trader. There are simply too many things that can go wrong.
What size stop loss should you use?
This is probably a matter of personal preference.
Some traders use strategies that only allow them to trade when the risk is no more than 20 or 30 pips. This will determine what type of time frame they will use to execute the trade.
Other traders might tell you that it's not a good idea to use a fixed number as a stop loss, if you're not incorporating support and resistance on the particular time frame that you are using.

Whether you are using a 5 minute chart or a 1hour chart, you need to identify support and resistance and then base your stop loss on that information. This is how we traded June 3 2011 Non Farm Payroll first we will look at the EUR/USD 1 hour chart.
Non Farm Payroll Trading System
This is the consolidation range I was referring to. There is about 20 hours of price moving sideways when the report wasreleased. This gives me a clear range to identify when the candle breaks out.
This consolidation is also support and resistance so I would also include the low and high to determine my stop loss placement. This next chart below is the USD 1 hour.
Non Farm Payroll Trading System
The EUR/USD and the USD looked similar to me and I used them as confirmation. If I see one pair moving or trending and I can't determine why, then I will stay out until I can find the reason. The charts below show the actual break out candles that occurred on the 1 hour time frames for each of these currencies.
EUR/USD 1 hour chart (Break out candle)
Non Farm Payroll Trading System
USD 1 hour chart (break out candle)
Non Farm Payroll Trading System
This strategy requires a clear candle break out. I also prefer to wait until the candle is closed before entering the trade.
Waiting for the break out candle and waiting for the candle to close gives me plenty of time to confirm the data and even to confirm the sentiment of the market (the reactions).
Now I haven't really discussed the profit targets.
In general, I try to use a one for one reward to risk ratio. But keep in mind that this isn't always possible.
The best method to use in finding places to take profits is to study the charts relative to the time frame you are using to enter.
This will take sometime but you will start to see patterns that repeat. This includes how far price will move after the typical break out and the time frame will also help you determine the distance price can move in a given period. Below is the trade we entered after Non Farm Payroll on June 3 rd . Please notice that I used the 1 hour chart and I waited until the candle broke out of the consolidation range.
Non Farm Payroll Trading System
This trade resulted in approximately 60 pips profit.

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