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Trading the NFP this friday

  • #1
  • First Post: Dec 6, 2006 4:34pm Dec 6, 2006 4:34pm
Previous: 90K
Estimate: 125K
ADP: 158K

What are the possible results and outcome?

NFP will come out better than 125K and USD rallies.

NFP will come out between 90K and 125K; based on historic charts, some eople trying to beat the spike will short the USD (as they think thought the number is below estimate), while cooler heads will buy USD (as they think the number is above previous). Whipsaw will occur.

However, last July, ADP conditioned traders for a big NFP number and when NFP came out lower than the ADP estimate but higher than previous, USD was shorted. Will we see something like this come friday?

What if the previous 90K was revised upward? will that be a cause to BUY USD? Based on last 2 NFP's upward revision ruled the day.

What if there is a revision downward?

The market is gearing for a strong number but FED warned us to expect 100K jobs for the next few more months to come.

Is the market indeed conditioned for a strong or weak NFP? Based on the price, its still neutral - we are back to before ADP was released.

We have to plan our NFP trade day as early as possible. I am looking for the following scenarios:
1. Upward Revision, NFP >125K = BUY USD
2. Upward Revision, NFP < 125K, NFP>90K = Buy USD
3. Upward Revision, NFP < 90K = Whipsaw
4. No Revision, NFP > 125K = BUY USD
5. No Revision, NFP > 100K, NFP < 125K = Whipsaw, Buy USD
6. No Revision, NFP < 100K = Short USD
7. Downward Revision, NFP > 125K = Neutral
8. Downward Revision, NFP > 100K = Short USD
9. Downward Revision, NFP < 90K = SHORT USD

I personally like to see #1 and #9 come out this friday.

Watch for Revision. Remember, Revision has x2 effect to the current number. A +50K revision is about +100K added to the current number. A -50K would be like -100K to the current number.
  • #2
  • Dec 6, 2006 4:43pm Dec 6, 2006 4:43pm
In the past where the dollar is overbought or oversold there has been a lot of position liquidation the day before NFP. As the dollar is now wildly oversold it makes sense to short EUR/USD at resistance now (towards 1.335) then you should already be in profit by the time NFP arrives. You can then hold the position or reverse it when the news hits.
  • #3
  • Dec 6, 2006 4:54pm Dec 6, 2006 4:54pm
Quoting BurgerKing
We have to plan our NFP trade day as early as possible. I am looking for the following scenarios:

3. Upward Revision, NFP < 90K = Whipsaw
9. Downward Revision, NFP < 90K = SHORT USD

I personally like to see #1 and #9 come out this friday.
What is the difference between upward revision and downward revision?

If the actual is 90K wouldn’t that be a downward revision from previous? How do you know what the revision is?
  • #4
  • Dec 6, 2006 5:38pm Dec 6, 2006 5:38pm
Quoting jtl
What is the difference between upward revision and downward revision?

If the actual is 90K wouldn’t that be a downward revision from previous? How do you know what the revision is?
The revision is a change to the previous month's number. When the numbers are released, they are an estimate, which later gets revised to the exact number the following month. So on Friday morning we'll get last month's exact number and this month's estimate at the same time. Hence all of Burger King's scenarious...
  • #5
  • Dec 6, 2006 5:46pm Dec 6, 2006 5:46pm
Thanks.
  • #6
  • Dec 6, 2006 6:18pm Dec 6, 2006 6:18pm
I hope the banks dont try to get more blood on their hands during this one. As i feel this one is the most important of the year. It will determine the highs set for this year, and next year I think. Which will become eventually major resistances. (After the long term rally has finished, thats what i mean). If we do see a crap NFP... I would say gbp/usd hits the target right on the spot of 2.020.
  • #7
  • Dec 6, 2006 6:27pm Dec 6, 2006 6:27pm
In July, the market was preconditioned for a very very good NFP number. And when the NFP came out far below the ADP (though still better than Previous number), USD was shorted. (Review Historic Charts)

In August, September, October and November, the market is not "preconditioned" by ADP as traders were disgusted with July's way off ADP. And traders traded Previous vs Actual.

Today, Market seems like being preconditioned once again expecting a good job number.

What perhaps could give good jobs last month?

US had Thanksgiving and Black Friday sales. If I were a Retail Store getting ready for such a big day, I'd prepair my stocks well in advance and perhaps hire extra hands to help out with the huge sales.

OR drive my employees like slaves and have them work extra hours a day for the whole week.

Anyone in USA could confirm if you noticed extra hiring in those retail stores?

At the meantime, I'd try digging up history and see how NFP is doing during year end.
  • #8
  • Dec 6, 2006 6:43pm Dec 6, 2006 6:43pm
damn bk you are doing some serious thinking these days

you already know how i trade, i like to see a hard move that goes against the current trend, because that causes widespread pain, and pain makes people do irrational things (as we all know from personal experience). this is my favorite scenario, but i see no possibility for pain this friday.

where are all the players right now? they are short the dollar! but this dollar trend is still young, and not everyone is on board yet. so if the dollar rebounds on NFP, there will be sellers there that want to get in the market, but havent yet, and these new sellers will sustain the dollar suppression.

so whats the play here? if the dollar strenthens, i think you wait for the new sellers to come in and then join them. if the dollar weakens, well, i dont see a good play here.
Relax and be happy.
  • #9
  • Dec 6, 2006 6:49pm Dec 6, 2006 6:49pm
Quoting BurgerKing
1. Upward Revision, NFP >125K = BUY USD
2. Upward Revision, NFP < 125K, NFP>90K = Buy USD
3. Upward Revision, NFP < 90K = Whipsaw
4. No Revision, NFP > 125K = BUY USD
5. No Revision, NFP > 100K, NFP < 125K = Whipsaw, Buy USD
6. No Revision, NFP < 100K = Short USD
7. Downward Revision, NFP > 125K = Neutral
8. Downward Revision, NFP > 100K = Short USD
9. Downward Revision, NFP < 90K = SHORT USD
interesting plan you got there BK. im eager to see how this works out...
Relax and be happy.
  • #10
  • Dec 6, 2006 6:52pm Dec 6, 2006 6:52pm
Quoting merlin
damn bk you are doing some serious thinking these days

you already know how i trade, i like to see a hard move that goes against the current trend, because that causes widespread pain, and pain makes people do irrational things (as we all know from personal experience). this is my favorite scenario, but i see no possibility for pain this friday.

where are all the players right now? they are short the dollar! but this dollar trend is still young, and not everyone is on board yet. so if the dollar rebounds on NFP, there will be sellers there that want to get in the market, but havent yet, and these new sellers will sustain the dollar suppression.

so whats the play here? if the dollar strenthens, i think you wait for the new sellers to come in and then join them. if the dollar weakens, well, i dont see a good play here.

What do you mean by dollar suppression? You mean if the NFP is good, then the dollar will rally further and those who are selling the dollars are looking to take profits and join in on the party? Also where does the revision of the NFP print out since Bloomberg doesn't read the revision till later...Where do they receive the data from when its coming across the wires? If the number is disappointing and the revisions is upward then it gonna whipsaw right?
  • #11
  • Dec 6, 2006 7:11pm Dec 6, 2006 7:11pm
hello guys ..

Just help me in this question ..

When placing Pending Orders for NFP .. how many pips away will be fine for it ?!?!

THANX .
  • #12
  • Dec 6, 2006 7:22pm Dec 6, 2006 7:22pm
Well, you are pretty sure it's gonna be a mover. So anything you feel comfortable with that won't spike you in. This goes back to knowing your own broker, how they widen, how they spike and judging it from there.

I go +10 -10 ish unless it is being very spikey.
The basis of a democratic state is liberty. ~ Aristotle
  • #13
  • Dec 6, 2006 7:25pm Dec 6, 2006 7:25pm
Quoting tremon333
You mean if the NFP is good, then the dollar will rally further and those who are selling the dollars are looking to take profits and join in on the party?
no i mean if NFP is good, dollar will rally, then after a while it will run into a brick wall of sellers. when it hits this wall, sell.

Quoting tremon333
Also where does the revision of the NFP print out since Bloomberg doesn't read the revision till later...Where do they receive the data from when its coming across the wires?
it's actually quite an interesting process how this works. in brief, there are a bunch of reporters sitting in a highly secured room somewhere in Washington DC. at 8:15am they are given the NFP report from the BLS. they sit in this room for 15 minutes and write a story about the report. then at 8:29 there is a countdown, 10, 9, 8, you get the picture. then at exactly 8:30 they are allowed to "transmit" their story to their respective news organization. the reporters work for companies such as bloomber, reuters etc etc. i know this sounds like a crazy process, but this is really how it's done.
Relax and be happy.
  • #14
  • Dec 6, 2006 7:31pm Dec 6, 2006 7:31pm
Quoting merlin
no i mean if NFP is good, dollar will rally, then after a while it will run into a brick wall of sellers. when it hits this wall, sell.


it's actually quite an interesting process how this works. in brief, there are a bunch of reporters sitting in a highly secured room somewhere in Washington DC. at 8:15am they are given the NFP report from the BLS. they sit in this room for 15 minutes and write a story about the report. then at 8:29 there is a countdown, 10, 9, 8, you get the picture. then at exactly 8:30 they are allowed to "transmit" their story to their respective news organization. the reporters work for companies such as bloomber, reuters etc etc. i know this sounds like a crazy process, but this is really how it's done.

What do you say we all pitch in and buy one of those guys somethin' real nice.:
Profit is where readiness meets Opportunity
  • #15
  • Dec 6, 2006 8:08pm Dec 6, 2006 8:08pm
Ohhh god, the monster that is non-farms. Man, use low leverages for this and becareful. Get the numbers and use your head for this report, better than straddling, dangerous with this high volume volitility report. GL, hehe, ill sit this one out...

Retraces are not known for this report. So dont fade this one if anyone is looking for it.
  • #16
  • Dec 6, 2006 9:34pm Dec 6, 2006 9:34pm
There's almost always a pullback of the initial spike to a Fib level then a continuation but true you shouldn't try to fade it or straddle it - wait for the retracement then get in.
  • #17
  • Dec 6, 2006 11:35pm Dec 6, 2006 11:35pm
Quoting notouch
There's almost always a pullback of the initial spike to a Fib level then a continuation but true you shouldn't try to fade it or straddle it - wait for the retracement then get in.
There will be a retrace TRUE. but to which level?

Must you wait for the 1st minute's move to decide which is the FiB level? Or wait for 5 minutes?

Knowing at which level *is* the big GUESSING GAME.

This is why I trade half via Straddle and another half via Market Order.
  • #18
  • Dec 6, 2006 11:42pm Dec 6, 2006 11:42pm
Quoting BurgerKing
We have to plan our NFP trade day as early as possible. I am looking for the following scenarios:
1. Upward Revision, NFP >125K = BUY USD
2. Upward Revision, NFP < 125K, NFP>90K = Buy USD
3. Upward Revision, NFP < 90K = Whipsaw
4. No Revision, NFP > 125K = BUY USD
5. No Revision, NFP > 100K, NFP < 125K = Whipsaw, Buy USD
6. No Revision, NFP < 100K = Short USD
7. Downward Revision, NFP > 125K = Neutral
8. Downward Revision, NFP > 100K = Short USD
9. Downward Revision, NFP < 90K = SHORT USD

I personally like to see #1 and #9 come out this friday.
BK, merlin et al,

Maybe it's just me (or the Louis the Tray, another one of those +$250 dinners) but how can you have #1 and #9? Aren't they mutually exclusive?? Did you mean #1 OR #9??

Help a brotha on this one!!
  • #19
  • Dec 6, 2006 11:45pm Dec 6, 2006 11:45pm
Personally,

I think Non-farm Productivity is throwing everyone off track, as is ADP. Both indicate increased productivity and more jobs (right). That's the setup. IMHO Non-farm Payroll will show dollar weakness and send cable toward the magical 2.0000 level.

But what do I know. It's 12:46 am est, 05:46 gmt and WAAAAY past my bedtime.

Goodnight and Goodtrading.
  • #20
  • Dec 7, 2006 12:15am Dec 7, 2006 12:15am
I would like to straddle this report since the movement is unpredictable.
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