Profit from the Non-Farm Payroll report and other major economic data reports with the straddle trading method.
Straddle trading is a good strategy to pursue if you believe that a stock or in this case a forex pair price will move significantly, but your not sure which direction it will move. The USA Non-Farm Payroll Unemployment Report is the largest financial data report in the economic universe and it can move very big especially if the number is outside of consensus estimates higher or lower. The disadvantage to straddle trading is that the price could whipsaw in both directions entering both of your long and sell limit trades making it harder to manage for some novice traders. If it does whipsaw and enters both of your limit trades now you have a hedged position.
How Forex Straddle Trading Works
Below is a EUR/USD chart example of how to setup a forex straddle trade.
Enter two limit trades. A buy-stop trade for an upside breakout, and a sell-stop trade for a downside breakout, along with stop-loss price entries for each trade and enter into the market about 15 minutes before the Non-Farm Data Report hits.
Find consolidation high and low of the last 6 to 8 hours of 20 to 60 pips range. Place the two limit orders in the market before the news. The first order to buy 3 pips above the consolidation and the second order to sell 3 pips below the consolidation range. Stop losses are placed below the range when buying or above the range when selling.
Take profit upon your discretion or once the volatility and price calms down after the report and price move. Don't ever let a profit turn into a loss.
Review the EUR/USD Chart for an Example Forex Straddle Trading Method
Consolidation high: 1.2050
Consolidation low: 1.2015
Place an order to buy at 1.2053 with stop loss at 1.2012
Place an order to sell at 1.2012 with stop loss at 1.2053
In the chart below the sell order was triggered at 1.2012 and the EUR/USD went down about 100 pips which is a very nice very fast large profit.