Employment rate or how to trade unemployment
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- Actually
Professional traders always monitor the level of employment, but although the reaction to the publication is delayed or may be generally poorly expressed in the stock or commodity market, the foreign exchange market usually gives a quick speculative reaction, quite suitable for how to make money on binary options.
The risk of losses in such transactions usually increases by an order of magnitude, but if you act wisely, you can earn more on one successful NFP (Non-Farm Payrolls) than in two weeks of careful medium-term trading. So let's get started.
How employment statistics affect the economy and financial markets
The rule is simple: the growth of employment always stimulates the strengthening of the national currency, the intensification of consumer and corporate lending, the growth of sales of not only consumer goods, but also goods of accumulation.
When the level of employment increases, it is recommended to take real binary options signals only for the growth of the national currency, invest in national stocks at least in the medium term.
Lower employment leads to lower GDP (Gross Domestic Product), increased pressure on the budget (benefits, pensions, and subsidies), lower consumer costs and retail sales. This is a clear sign of structural problems in the economy, a recession, dependence on imports, and a crisis in the commodity market.
Reverse conditions: the employment rate falls, we trade for a fall in the national currency, we sell stock assets and raw materials that prevail in the country.
What is the optimal level of employment? It all depends on the country - the economist considers normal employment of 60-70% with an unemployment rate below 5%.
Basic statistics on employment
Unemployment rate
Shows the share of the unemployed (officially unemployed) population: the ratio of the number of unemployed to the total labor force.
Only those who are interested in finding a job are taken into account, excluding those who study, do not work in principle, etc
The higher the unemployment rate, the worse the expectations in the economy. The decline in the number of unemployed people, of course, has a positive effect on top binary options signals for all currency pairs. This is true for the currencies of all countries.
When opening deals on real binary options signals, it is necessary to clearly understand what caused the decline in this rate: currency devaluation, speculative import growth, political or natural disasters.
In general, the trader's actions in connection with the indicated unemployment information should be synchronized with the reaction of the Consumer Confidence Index.
Employment rate
The ratio of the number of employed not to the total population of the country, but only to that part of it that is considered economically active - from 18 to 72 years
The employment rate is the opposite of the unemployment rate; the pair demonstrates the economic state of the country. This means that when employment increases, it is recommended to use binary option strategy signals to increase the currency; if the numbers are negative, then you need to use bearish short-term options for all national assets.
It is the American labor market that has the strongest impact on the stock and foreign exchange markets. FedReserved employment statistics is considered a key indicator of the "health" of the national economy of the USA, at the same time it is most often used for market manipulation.
ADP Private Sector Employment Index
This index shows the change in the number of employees for the previous month, regardless of the agricultural sector and government employees.
Automatic Data Processing, Inc. (ADP) is the leading statistics division in the United States and provides payroll services; handles over 500,000 jobs for almost 450,000 business entities (over 25 million people) in all general industrial sectors.
Published on the first Wednesday after the end of the month at 14.15 UTC, two days before the NFP data release, it is considered an important leading indicator for the NFP forecast. If the value is higher than the forecast, trade auto binary signals for the growth of the dollar; below the forecast, the dollar falls.
The NFP report strongly affects many markets (foreign exchange, stock, US Treasury bonds, interest rates, and the commodity market) due to the dollar's status as the world's reserve currency.
The report is published by the US Department of Labor on the first Friday of each month at 13: 30 UMC. Let's comment on the most important data:
- Average hourly wages (m/m).
Reflects the change in the level of average hourly wages for the main industries, except agriculture. It helps to assess the dynamics of inflation - a sharp increase in wages, ahead of productivity, indicates the beginning of an increase in inflation.
The value above the forecast shows a positive result for the US dollar (growth), the rates are lower than expected - we look at how binary options signals work on a PUT option.
- Average length of the working week.
The average number of hours spent on work by non-agricultural workers. The length of the working week is given by indirect, but quite important trading binary signals: if these terms are reduced, then problems will arise in the economy.
This is an important factor that determines both industrial production and the income of the population in the current month.
The dynamics of the indicator is seasonal in nature, during holidays, technical, natural or political force major (for example, a shutdown in the United States), these data are considered incorrect.
As always, values higher than expected give a positive result (growth) for the dollar; values lower than forecast - bearish binary options Forex signals for the dollar.
- Change of the unemployment numbers in the non-agriculture and the private non-agriculture sector (separately).
The total employed population in the Non-Farm sector is about 80% of the workers who produce all of America's GDP, showing how many jobs were created or lost in the US economy in the past month.
An increase in the number of jobs indicates the growth of the economy, leads to an increase in household income, and therefore consumption expenditures, which are reflected in GDP; provides good support for the growth of the stock market as a whole.
Monthly changes and adjustments to the data can be quite strong and not always logical. Higher-than-expected data shows a speculative rise in the dollar, but more often with a pullback. It can almost always continue until the close of the European session. The data below the forecast guarantees a very negative short-term market for the US dollar.
Recommendations about use …
- How to trade on the USA labor data output? If you are a beginner with a minimum deposit, then the answer is unequivocal - no way, especially for free binary options. Before and during the publication of the NFP, speculators hunt for your deposit immediately after the statistics are published. Study fundamental levels of employment, estimate medium-term trends.
- If you have a successful experience of trading on the news, your broker does not stand in the way of your short-term speculation, then the most profitable, at the same time the most exact binary option strategy will be a quick opening of a CALL or PUT option immediately after publication with an expiration of 3-5 minutes.
- The most reasonable tactic would be to enter the second M5-M15 candlestick - for a pullback or a confident general movement - after the data is published and available for analysis. Assets: USD/JPY, EUR/USD, AUD/USD, USDX.
And here is an excellent economical calendar. Wishing profits for everyone!