Forex trading education: Is the US NFP leaked (and other thoughts about trading high risk events)?

Invariably, there are traders every month who think that the employment numbers (or other key releases for that matter) are leaked. They are likely sure that the price moves today are a reflection of that leak, and that the game is therefore rigged - mainly against retail traders as well. Woe is me they scream.

So, are the employment numbers leaked?

Call me naive, but I am not one of those people.

Instead, I believe the numbers for the biggest economic release of each and every month, are not known by anyone in the market. They are guarded. They are not known. They only become market moving knowledge at 8:30:00 AM ET when the headlines are released on the newswires.

Moreover, I will go a step further and say, I also believe that the estimates are the best estimates for the numbers. After all they come from economist who have doctorates in that sort of thing.

Now I know, there will be many who will say “They (i.e.the economists who are estimating) don’t know s%^&,”. To which I reply, “What do you know that makes you MORE qualified?”. Yet each month, traders will state, "I think the number will be weaker/stronger than expectations".

On what basis? What you "think"? Since when does that matter?

What we all potentially learn over time – if we pay attention – is everyone (well most of us) are “s%&” in peoples minds. There are many who read my posts everyday, and probably think the same thing.

It is the answer to “What do you know that makes you more qualified” that gives you credibility. If that can be answered with something that makes sense, then the “you don’t know s%^&” becomes “maybe you know your s%^&”

Sorry for my language ; )

So an economist who says "I have an doctorate in econometric modeling", gets my vote as someone who knows more than me.

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What I do know about tomorrow is this.

  • Event risk is higher tomorrow at 8:30 AM ET.
  • I know liquidity risk is higher at 8:30 AM ET.
  • I already know we have market risk and it too will be higher at 8:30 AM ET.
  • So I know RISK is in the Red Zone.

Come 8:30 AM ET, each of us has to make up our minds to the following:

  • Do I want to trade the spin of the roulette wheel and have the potential to brag, or
  • Do I get out, lighten up, wait until after when the event risk and liquidity risk is back down and the market is back to trading market risk only (there is always market risk. However, event and liquidity risk is more variable)?

My advise to retail traders is:

  • If you have a position in profit, you may have a free trade (“may” because you never know). If you want to risk that profit for a bigger win, go for it. Part of trading successfully, is putting yourself in a position (by having a winning trade) to risk profit for a greater trend move. So if you sold the EURUSD at 1.1876, and want to put a stop above 1.1876, OK. You earned that right.
  • If you have a losing position and want to spin the 50-50 wheel of chance, go and bet red and black at the casino too. What you are doing is more like gambling and less like trading. You are on your knees praying for a second chance.
  • If you absolutely must gamble by taking a position at 8:29 AM ET because you have to “be in it to win it”, (you do it without my endorsement) please take a smaller position. It is not time to make that bet that pays off the mortgage. NOTE: If you take a big bet and win, and you pay off your mortgage, understand that it was just BLIND LUCK. Don’t try it every month. You might not be so lucky next time. Be humble and thankful instead.

So good LUCK, but use your common sense. That is why we have it....