Remapping NFPR

Remapping NFPR.....

......

from some posts on another thread......

socrates said:


Originally Posted by SOCRATES
That is very helpful tsuntzu, but you realise it is only helpful at an academic level and not at a practical level. At both levels, I may add, the NFPR serves to baffle nearly everybody as no matter what is declared, the market then goes on to do what the market does, good figures or not.

Its only use is to know the date and time of the release in order to be prepared for whatever happens at that point in time, and nothing else.



tsuntzu said:

Probably this discussion would be better served in the merits of NFPR thread. That aside we will have to agree to disagree on the level of helpfulness of this figure. I wouldn't go so far as to say it is the figure release i look forward to the most, but I generally find the market reaction to the component breakdown fits the underlying market expectation and sentiment at the time. I guess it comes down to the time scale over which you judge the market to have priced in its significance. With the sentiment at the moment fixed on the hourly earnings and the employment rate, the headline number is almost second tier in comparison.


charlie says:
i tend to agree with socrates on this one in the short term (due to my awareness/thoughts of the true nature of the market)....

in the immediate moments after the release, there seems to the untrained eye to be 'just' noise (where as it isnt noise as others are fully aware of - this is where i think socrates is coming from) but after a while when the immediate business has been done the market takes its course as tsuntzu points out.

i am interested though in the comment that.... 'after the components of the release have been digested....'

this suggests two components at work. those with orders and objectives immediately after the report, and those who are calculating and digesting the components before they make their minds up - ie the trend setters. BUT, their success in this will be much determined by the activities of the first group.

are there 2 groups? it could well be the same group - especially if you understand the 'noise'

these scenarios are not limited just to nfp, but most major releases. in fact, some quite modest numbers can cause a stir if the number is not quite what was expected.

any comments, remarks, suggested medication welcome......

perhaps to make things clearer....

the noise is essentially stop running. time to load the boat up before setting sail.

tsuntzu also remarks at prevailing sentiment.

in my experience, if there is a trend, then that trend will remain when the components have been 'digested'. the release tends to simply extend the trend as the market finds new value at a more extreme level regardless of the number. if the number is wildly different to what was expected, then the best that happens is a trading range - ive never seen a change in trend in any market i have traded - but then ive only been doing this for about 5 years - not that long in the grand scheme of things.

sorry for any confusion - i believe i had a bad pint over the weekend and i still havent recovered fully.

tsuntzu said:

Interestingly enough my angle was from the short time frame and the 'noise' just after the release of figure. I will often trade right off the bat, my reference to the component breakdown was that some will get involved just off the headline number and then wonder why the market sails the other way. There has often been occasion when the headline figure is a buy, but the market sentiment is focussed on another component, that for the particulars months release, takes on the greater significance, and calls for a sell.

As with all figures its significance to any market participant will depend on the instrument they trade and the time frame in which they make their trading decisions. Historically the NFPR has always been seen as the biggest release on the monthly calendar (for futures traders) and I cannot recall observing the degree in which liquidity drops, over any other releases

Click to expand...

thanks for making that clearer.

i tend to focus on eurofx futures, mostly off 3-5 min charts depending on the action. generally, i wont look to enter orders for about 2-3 min after the report is out (all of it) i use the same platform used in one or 2 of the larger arcades, but my news feed is dow-jones news wires, and i am on a domestic 8mb broadband connection - no reuters/bloomy or t1 connection to the mothership! i say this as i think it could help put light on the issues here.....

before the number, the orders will be pulled. in the immediate seconds after i wouldnt trust what i see due to internet latency, automated orders acting faster than me etc, but afterwards, the liquidity tends to build up slowly as the market shows its hand a bit more. i admit my attention at this point isnt laser like - im looking mostly at where price is more than what prices are. it isnt unusual to see 40-60 tick moves in the first few minutes, followed by another 100-150 in the hours following. sometimes, you just get a 40 tick trading range and thats yer lot - happened a few months back.

you mention the main number suggests one thing, and the market acts accordingly. then, the number the sentiment is looking at comes out, and price reverses. there seems to be this reversal in ec (eurofx) also, but imo, the action is too erratic during the reversal to trade (for me). this is why i see the initial move as stop running - to load the boat up at better prices when the market is thin, before kicking off the main move. my strategy is usually to assess the nature of this first move (stop running+reversal or the main thing). should i go with it or fade it? this is usually dependant upon what happens next...???...???

you mention the market is looking at x part of the release to make its mind up on. how do you know which part of the component/release this is? people may say its gunna be 'x' in your office, but if the other office across the road happens to disagree, then...... personally, i wouldnt trust a news feed for opinion either. (in fact i try and avoid even my own opinion most times - just like my girlfriend!!!) could it just be general economic feel you get over the month/what has happened in the past - eg, gdp was a real stinker, so xyz of the nfp report will be where all the eyes are?????

maybe trading a less volatile contract like the gilt (??) with t1+ quicker news feed helps see the move in slow motion in comparison to ec. i really dont know. i have never looked at a gilt chart - but have looked at the backs of the eurodollar (ge) contract - and price still seems to spike and go a bit awol after the release.


cheers

thanks for the reply. i guess the delay i have on djn + internet is the reason why i tend to side with socrates on how to trade the number: understanding the reason for the move from a technical perspective over a short term fundamental one like you seem to by using sentiment and the different components of the number.

the contract i trade could also have a lot to do with it also. i should take more notice of the bonds - especially as they sometimes lead the fx markets.

im using easy screen/refco pro. its a good platform, but im uncertain of its future now man own refco and they seem to rather push tt. from my understanding, a load of guys at martex/rts prefer refco pro over x trader, but i guess its all down to what you are used to and the ergonomics for ones style of trading. i dont tend to use the ladder order book too much anyway - in any type of trading. i prefer to use time & sales - although if i were to scalp for a tick, i can see why the order book would be better.....

interesting stuff about how you gauge the sentiment. seems to make sense, although i hate to trust what any politician says, so i wouldnt feel to easy doing what you do!!!

do you tend to have larger profit targets on these numbers? im assuming here that you are usually a scalper for a tick or 2 in the bund/gilt?

yep - i agree 100%. not wanting to derail from economic reports, but i never understood this attitude of risking 2% and looking at risk:rewards of 1:3. i mean how can anyone know for sure the market will give 3x their risk?

stil 4-7 ticks sounds pretty good for the bund. i read somewhere that most arcade people are looking for a tick per 3 contracts traded average, with most contracts scratching.

i have an old trading scar from nfp though. when i was starting out day trading, i forgot i had a resting stop order still in the market . i didnt know until my platform starts beeping at me (telling me i have a fill). the slippage was like 20 ticks, and by the time i had got over the rabbit in the head lights stage in deciding to stay in or get out, the market had reversed and i was now 40 ticks in the bin on each lot! at least i learnt the market does spike/gap intraday. quickest lesson i ever learnt! lol.

gdp numbers are my favourite though - although i try not to get superstitious about these things! last nfp (3 days ago) would have been great, but i couldnt trade cos of an unavoidable appointment elsewhere.

great thread guys! some real interesting insights and info in here

this is the worst part of the nfp report - the morning after. its always devoid of opportunity for me in the eurofx. i often end up 'pushing the envelope of opportunity' when there is no opportunity really. im usually good at self control and avoiding the boredom trades, but the monday morning after the friday before always seems to get me.

guess its great for scalpers though.

im either going to take the day off after nfp in the future, or keep it to a couple of ticks.

its obvious really - no big money to move the market after friday. all the business has been done. see what volumes up to. i guess retail sales is all there is gunna be this short week........

SOCRATES said:

That is right, when it is hands off time, there is no point in forcing, other opportunities will come along in due course. However, if you also like tight scalping and are good at it, you can skim off substantial returns whilst everyone else abstains. But it must be done with absolute control, very accurate timing and very very fast responses, and that is also great fun.

Click to expand...

yep - i guess its the work ethic that society installs on us - we must work every day - that makes me think i must trade every day.

i seem to forget i started trading to avoid doing a 9-5 in the first place!

so what do you guys make of todays international trade balance for the usa?

released at 7.30 cst - according to my radio controlled atomic clock (accurate as can be), the figure pops up on my djn at 7.30:15 (13:30:15 uk time). the market sinks......

however, the heavy selling started a few mins before at around 7:26 as i was watching my quotes. i have seen this several times over the years - the market makes its move ahead of the release. this is especially true when the resulting action is a trend, rather than wide rotations.

so:

a/ as according to socrates, the market is just going to do its own thing regardless. the big money wants the market down - so they push it down just before ahead of everyone else - when the liquidity is around

b/ the number is leaked a few minutes before hand - just like the german/euro numbers.

c/ the number was released a few minutes ahead of everyone else if you pay extra subscription - i read this somewhere. is it true?

answers on a post card to:

charlie chan
c/o:
trade2win,
discussion boards,
economic & fundamental analysis
remapping the nfpr

cheers.....

ps - apparently, the market was expecting -$67.5 bil, it got -$65.7 bil

so you think the move was more technical then? that would make sense.....

sure todays figure wasnt exactly a biggie interms of importance - and as you say the figure wasnt far off expectations. (i dont tend to keep an eye on the figures v expectations etc - im just aware of when the market is likely to kick off and trade what i see accordingly - thus the thread - maybe i should as it cant hurt can it!)

what market is that you are quoting? the bund?

i saw eurofx stops (futures) at 1.2187, 49 and 30. They got em all! then reversed and took the market back to where it began. sweet. making money was a damn sight quicker down than up though!

whos on the other end of the squawk? other props in london? is it delivered through a turret (dealer board) or just speakers on the pc?

so - what are the key nfp reports people will have their eyes on tomorrow?

last month was a non event for me - market did its business in about 3 mins (eurofx) and it was over. hope tomorrow is gunna be better!

yours,

cc

noticed on forexfactory (not sure whether their estimates mean a thing) but their saying...

previous: 138K

estimate: 180K

Quite a difference there...

An out of line figure would be great all round... NFP has become a lacklustre event compared to a few years back and an un-expected result would hopefully put a bit of volitility into a friday afternoon...

Vegas is a bit far away though GJ!

Viva Las Blackpool....

Just doesn't have the same ring to it!

tsuntzu said:

Well the rumour was that the BLS accidentally posted it 40 secs early on the web site and hence the initial move in the treasuries. It certainly went before it popped up on my bloomberg. The move in the UST's was pretty lackluster after it.

Click to expand...

It did start moving off pre 1:30, I thought I was seeing things at first...

yep - i noticed it starting to move in the eurofx futures a good 2 mins before the release. it also took some stops beforehand, then off it went. i too have noticed it starting to move prior to the release on occasions.

in my experience, the next trading day (monday) tends to be fairly void of any activity so i tend to go into range mode rather than trend mode.

Payrolls Suggestion in light of ADP

Hi All,

Just a quick bit of advice.

The ADP report earlier seems to have created genuine confusion in the interbank market as regards likely interpretation of the payrolls numbers.

With this in mind, if the pros aren't sure how they're going to react to the numbers (given the way ADP affected expectations), I don't think the average retail trader has a chance to do so sensibly.

So GJ's advice is simple:

If you do want to trade round the numbers in a few mins, trade the price action itself, not the headline number (or even revisions). If you don't understand what I mean, I advise you not to trade.

Good luck

GJ

Looks like the data was early someplace again.

G-Man