NFP (Non-Farm Payrolls) Trading Strategy (How To Trade It – Backtest)

NFP reports are known to induce volatility in the financial markets, as well as set the tone for price movements each month. So, it is in your interest as a trader to know how to read the NFP report and have a reliable NFP trading strategy. How do you trade the NFP (non-Farm Payrolls) numbers)?

The NFP (Non-Farm Payrolls) trading strategy is based on the report released every month by the US Department of Labor, which presents the number of new jobs created during the previous month, in all non-agricultural businesses, within the United States. Published every first Friday of each month, at 8.30 am Eastern time, the report primarily discloses the increase or decrease in jobs in the United States compared to the preceding month. It is an essential indicator of the current state of the US economy.

In this post, we take a look at the Non-Farm Payroll Report trading strategy. At the end of the article, we provide a backtest of the strategy.

Related reading: – Many other macro trading strategies (hundreds)

What is NFP?

The Non-Farm Payrolls (NFP) is a report released every month by the US Department of Labor, which presents the number of new jobs created during the previous month, in all non-agricultural businesses, within the United States. The report primarily discloses the increase or decrease in jobs in the United States compared to the preceding month and it is an essential indicator of the current state of the US economy.

NFP is usually released on the first Friday of every month at 8.30 am Eastern time. The report includes the number of non-agricultural jobs added to the US economy over the month, excluding private household employees, employees of the federal government, farm employees, and employees of nonprofit organizations. In essence, the NFP is a key economic indicator of the US employment market.

Because the NFP report consistently causes one of the largest rate movements of any data release in the financial markets, every first Friday of the month is a unique day for traders, as volatility is usually dried up until the NFP data is released and what follows is a period of huge price swings. Given the effects of the data on market movements, many analysts, traders, f