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NFP trading idea

  • #1
  • First Post: Mar 3, 2006 7:18am Mar 3, 2006 7:18am
Here is trading idea I came up with for trading the NFP. Pull up
daily chart of eurusd and add an MACD (12,26,9) indicator and
look at the trend since the last crossover on the 1st day of each
month. I researched the last 14 NFP announcements, and for 12
of those months, the pip movement on NFP day was in same
direction as trend of MACD of eurusd on the daily chart that
continued since first day of the month. For the other 2 months,
there was not a clear signal. I am looking at using currency
options to trade NFP using this method. Much less risky than
trading spot.
  • #2
  • Mar 3, 2006 8:42am Mar 3, 2006 8:42am
Quoting eagle4x
Here is trading idea I came up with for trading the NFP. Pull up...
I am looking at using currency
options to trade NFP using this method. Much less risky than
trading spot.
Just wondering if you have also researched the movement of the options @ NFP.

I'm thinking that for the Option to have a sufficient move to be worthwhile, it would have to have a reasonably close expiry date to the NFP and threrefore [depending on strike of course] be trading @ premium.

Maybe you have aklready, but you may want to cosider Option Spreads.
March 1st MACD Bullish
Buy April Calls, Sell Aug Puts. @ 'n' Spread
If your strategy works, the April Calls will move much farther than the Aug Puts thereby Increasing the Spread.
{April & Aug just pulled out of the hat. No other reason for choosing them}

Haven't traded Options in years and don't really feel like diong the research to "Find a Spread Trade" but I think you should understand what I'm saying.
  • #3
  • Mar 3, 2006 12:30pm Mar 3, 2006 12:30pm
Currency options are completely different than equity options. You cannot
trade spreads, or sell currency options. With currency options you indicate
the pair, how much you are willing to risk, and the price you think the pair
wil either touch or not touch by a certain date, and the program will calc.
the payoff. If it the price does not reach your target, you lose your
invested amount. With Oanda, you can close your trade for a lesser amount
before expiration if it has not reached it's target. However, FXCM does
not have this feature.
For trading NFP with options, I think there would be more profit potential to
place the trade the day before the annoucement, because if done before that,
the payoff is not as much. I think another good method to utilize currency
options for trading NFP, is to trade the spot, and use the options as a hedge.
This way, you get the benefit of the much higher leverage trading spot, as
well as having a hedge if the trade moves against you.
  • #4
  • Mar 3, 2006 12:55pm Mar 3, 2006 12:55pm
Quoting eagle4x
Currency options are completely different than equity options. You cannot
trade spreads, or sell currency options. With currency options you indicate
the pair, how much you are willing to risk, and the price you think the pair
wil either touch or not touch by a certain date, and the program will calc.
the payoff. If it the price does not reach your target, you lose your
invested amount. With Oanda, you can close your trade for a lesser amount
before expiration if it has not reached it's target. However, FXCM does
not have this feature.
For trading NFP with options, I think there would be more profit potential to
place the trade the day before the annoucement, because if done before that,
the payoff is not as much. I think another good method to utilize currency
options for trading NFP, is to trade the spot, and use the options as a hedge.
This way, you get the benefit of the much higher leverage trading spot, as
well as having a hedge if the trade moves against you.
All true if all you know is Forex.

Check this out
http://www.cme.com/trading/dta/del/p...roductType=cur
  • #5
  • Mar 3, 2006 1:26pm Mar 3, 2006 1:26pm
Bemac, you are referring to futures contracts, which are different than currency options offered by certain forex brokers. However, I didn't know about these. I will research this some more - learn something new everyday. Maybe this will be even better. Thanks.
  • #6
  • Last Post: Aug 30, 2014 1:35pm Aug 30, 2014 1:35pm
Trade higher time frames and nfp will be always to your advantage and you cannot wait untill the next nfp release
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