How to Trade NFP: A Complete Non-Farm Payrolls Strategy Guide

Once a month, the forex market stops what it’s doing and waits for a single number. Non-Farm Payrolls drops at 8:30 AM Eastern, and within minutes, EUR/USD can swing 100 pips or more.

NFP is the most-watched economic release in forex trading. It consistently produces volatility, clear directional moves, and trading opportunities—if you know how to approach it.

This guide covers everything you need to trade NFP: what the report contains, how markets typically react, and three strategies you can use to capture the move.

What Is Non-Farm Payrolls?

Non-Farm Payrolls (NFP) measures the change in the number of employed people in the United States, excluding farm workers, government employees, private household employees, and nonprofit organization employees.

It’s released by the U.S. Bureau of Labor Statistics on the first Friday of each month at 8:30 AM Eastern Time.

Why it matters: Employment is the backbone of economic health. More jobs mean more consumer spending, higher tax revenue, and a stronger economy. The Federal Reserve watches employment closely when setting interest rates—strong employment can lead to rate hikes, which strengthens the dollar.

Components of the NFP Report

The headline number gets the attention, but the full report contains several data points that can move markets:

1. Non-Farm Payrolls (Headline Number)

The total number of jobs added or lost. This is the primary market mover. A positive number means job growth; negative means job losses.

2. Unemployment Rate

The percentage of the labor force currently unemployed. Lower is generally better for USD. However, context matters—if unemployment drops because people stopped looking for work, that’s not actually positive.

3. Average Hourly Earnings (Wage Growth)

Month-over-month and year-over-year changes in wages. This has become increasingly important because wage growth drives inflation. Higher wages can signal future rate hikes.

4. Labor Force Participation Rate

The percentage of working-age people who are either employed or actively looking for work. This provides context for the unemployment rate.

5. Revisions to Previous Months

Often overlooked but critical. The BLS revises the previous two months’ data. A strong headline number can be offset by large negative revisions—and vice versa.

How Markets React to NFP

Understanding typical market behavior helps you trade NFP more effectively.

Scenario 1: Clear Beat (Better Than Expected)

• Headline significantly exceeds forecast
• Unemployment rate falls or holds steady
• Wage growth meets or beats expectations
• Typical reaction: USD strengthens. EUR/USD and GBP/USD fall. USD/JPY rises.

Scenario 2: Clear Miss (Worse Than Expected)

• Headline significantly misses forecast
• Unemployment rate rises
• Wage growth disappoints
• Typical reaction: USD weakens. EUR/USD and GBP/USD rise. USD/JPY falls.

Scenario 3: Mixed Data

• Headline beats but unemployment rises
• Strong jobs but weak wages
• Good headline but large negative revisions
• Typical reaction: Volatile whipsaw. Initial spike in one direction, then reversal. This is the hardest scenario to trade.

The Initial Spike vs. The Real Move

NFP typically produces a two-phase reaction:

1. Initial spike (0-5 minutes): Algorithmic trading and immediate reactions create a fast move, often with a whipsaw
2. Settled direction (15-60 minutes): The market digests the full report and establishes a clearer trend

Many traders get burned trying to catch the initial spike. The safer approach is waiting for the dust to settle.

Pre-NFP Preparation

Successful NFP trading starts before the release.

Check the Consensus

Know what the market expects. You can find forecasts on:

• Forex Factory Calendar
• Investing.com
• Your broker’s economic calendar

Review Previous Months

Look at the last 2-3 NFP releases. How did the market react? Was there follow-through or reversal? This gives you context for what to expect.

Check Related Data

ADP employment (released two days before NFP) and weekly jobless claims can hint at the NFP direction. They’re not perfect predictors, but large surprises in these reports can shift expectations.

Plan Your Trade

Before 8:30 AM, know:

• Which strategy you’ll use
• Which currency pair you’ll trade
• Your entry trigger
• Your stop-loss level
• Your profit target

Three NFP Trading Strategies

Strategy 1: The Straddle

Concept: Place pending orders on both sides of the market before the release, catching the breakout in whichever direction it goes.

How to execute:

1. 5 minutes before NFP, identify the current price
2. Place a buy stop 15-20 pips above current price
3. Place a sell stop 15-20 pips below current price
4. Set stop-losses 20-30 pips from entry
5. When one order triggers, cancel the other

Pros: Captures the initial move regardless of direction.

Cons: Whipsaws can trigger both orders. Slippage can widen your entry. Spreads spike during NFP, eating into profits.

Best for: Experienced traders who can manage the position quickly.

Strategy 2: Wait for Confirmation

Concept: Skip the chaos of the initial release. Wait 15-30 minutes for the market to establish direction, then enter.

How to execute:

1. Stay flat at 8:30 AM—no position
2. Watch the initial reaction without trading
3. Wait for a clear direction to emerge (15-30 minutes)
4. Enter in the direction of the established trend
5. Use recent swing highs/lows as stop-loss levels

Pros: Avoids whipsaws and spread widening. Clearer trade setup.

Cons: You miss the biggest part of the move. Sometimes the move is already exhausted by the time you enter.

Best for: Most traders, especially those newer to NFP trading.

Strategy 3: Fade the Spike

Concept: Markets often overreact to NFP. This strategy involves waiting for an exaggerated move, then trading the reversal.

How to execute:

1. Watch the initial spike
2. Look for signs of exhaustion (stalling momentum, rejection candles)
3. Enter against the spike direction
4. Target a 50-61.8% retracement of the move
5. Stop-loss beyond the extreme of the spike

Pros: Can capture significant retracements. Works well on mixed data.

Cons: Risky if the move continues. Requires good price action reading skills.

Best for: Experienced traders comfortable with counter-trend entries.

Best Currency Pairs for NFP

Not all pairs react equally to NFP:

Pair	Typical Reaction	Notes
EUR/USD	50-100+ pips	Most liquid, cleanest moves
USD/JPY	50-100+ pips	Strong reactions, good for trending moves
GBP/USD	60-120+ pips	Volatile, wider spreads
USD/CHF	40-80+ pips	Inverse of EUR/USD
USD/CAD	Variable	Complicated—Canada releases jobs data at same time

Recommendation: Start with EUR/USD or USD/JPY. They offer the best liquidity and most predictable reactions.

Risk Management for NFP

NFP amplifies both opportunities and risks. Standard risk management isn’t enough.

Reduce Position Size

If you normally risk 1-2% per trade, consider cutting to 0.5-1% for NFP. The volatility means larger moves—and larger potential losses.

Expect Spread Widening

Spreads on EUR/USD can jump from 1 pip to 5-10 pips during NFP. Factor this into your entry and stop-loss calculations.

Account for Slippage

Your order may not fill at your intended price. Plan for 5-15 pips of slippage on entries and stop-losses. For better execution, some traders use a forex VPS positioned close to their broker’s servers.

Use Wider Stops

A 15-pip stop-loss doesn’t work during NFP volatility. Either widen your stop to 30-50 pips (with reduced position size) or wait until volatility settles before entering.

Set Realistic Targets

Don’t expect to catch the entire move. Taking 30-50 pips profit on a 100-pip move is a successful NFP trade.

Common NFP Trading Mistakes

• Trading without a plan: Deciding what to do after the number drops leads to emotional decisions
• Ignoring revisions: A strong headline can be completely offset by negative revisions
• Chasing the move: Entering 50 pips into a move often means buying the top
• Overleveraging: NFP volatility can wipe accounts when leverage is too high
• Trading every NFP: Some months have cleaner setups than others. It’s okay to skip

For more on avoiding these pitfalls, see our guide on forex news trading for beginners.

Frequently Asked Questions

What time is NFP released?

Non-Farm Payrolls is released at 8:30 AM Eastern Time (ET) on the first Friday of each month. This is 1:30 PM GMT (2:30 PM during daylight saving time), or 5:30 AM Pacific Time.

How many pips does NFP move?

NFP typically moves EUR/USD 50-100 pips in the first hour after release. Larger surprises can produce moves of 150+ pips. The initial spike often happens within the first 1-5 minutes.

What is a good NFP number?

There’s no universal “good” number—what matters is whether the actual result beats or misses the forecast. Adding 150,000-250,000 jobs is typically considered healthy for the US economy, but if the market expected 200,000 and got 150,000, that’s bearish for USD despite being positive growth.

Should I close trades before NFP?

Many traders close or reduce positions before NFP to avoid unexpected volatility. If you have open USD positions, the release can move against you quickly. Some traders stay flat before NFP and only enter after seeing the market’s reaction.

Which currency pairs move most on NFP?

USD/JPY and EUR/USD typically show the largest and cleanest moves. GBP/USD and USD/CHF also react strongly. USD/CAD can be complicated because Canada releases its employment data at the same time.

Why does the market sometimes move opposite to NFP results?

Several factors can cause counterintuitive moves: revisions to previous months may offset current data, other components (wages, unemployment rate) may conflict with the headline number, or the market may have already priced in the result. Mixed data often causes whipsaws.

Final Thoughts

NFP offers consistent trading opportunities, but it demands respect. The volatility that creates opportunity also creates risk.

Start with the wait-for-confirmation strategy. Let the market show you its hand before committing capital. As you gain experience reading NFP reactions, you can explore straddles and fade strategies.

Most importantly, have a plan before 8:30 AM hits. Know your entry, your stop, and your target. The traders who succeed at NFP are the ones who prepare—not the ones who react.