NFP (Non-Farm Payroll) Explained: What It Means for Traders

In this article we’ll dive into Non-Farm Payroll (NFP) and it’s impacts on Prop trading. We’ll cover:

• What it is.
• How it impacts the markets.
• How you can plan for it.

When you see a candle as long as the Atlantic Ocean, what’s the first thing that comes to mind? If you guessed NFP, you’re probably right and you’ve clearly been around the charts. It’s wild how one report, released once a month, can jolt the market the way NFP does. Much like FOMC red folder news has a distinct impact on trading and should influence the way you plan.

In actual fact, before any Non-Farm Payroll (NFP) report, firms often drop messages warning traders about slippage.

However, most traders experience way more than just massive slippage! So before the next one drops, let’s break it down: what is NFP, why does it hit so hard, and how can you stay ahead instead of getting caught in the storm?

What Is the NFP Report and Why Does It Matter?

The Non-Farm Payrolls (NFP) report is a key economic indicator that is released on the first Friday of every month at 8:30 AM EST. It estimates how many jobs were added to the U.S. economy during the previous month, excluding those in farming, private households, and non-profit organizations.

Think of it as a monthly compass for the U.S job market telling you about the previous month, only this time, this compass can point at chaos for unprepared traders. The NFP report also includes:

• Labor Force Participation Rate
• Unemployment Rate,
• Average Hourly Earnings
• Average Workweek Hours
• Other statistics

This report is important because it gives everyone (from traders, to investors, to government officials) a quick look at how healthy the U.S. economy is. 

Why? Because when more people are getting jobs, they have money to spend, and that keeps businesses running strong. But when job numbers are low, people spend less, and that can slow the economy.

How does NFP impact the market?

Think of the Non-Farm Payrolls (NFP) report as one of the market’s favorite thermometers, it checks how “hot” or “cold” the U.S. economy is. It tells us how many jobs were added (or lost) in the past month, leaving out farm work, military, and a few other special sectors.

In simpler terms, it’s like checking your phone to see how many people got hired last month. More jobs usually mean a strong, growing economy. Fewer jobs? That could be a red flag (and red candles)

And when those numbers come out, the markets don’t just listen, they usually react fast. 

Major and minor currency forex pairs like EUR/USD, USD/JPY & others can shoot up or drop within seconds of the release leading to some traders making money while most losing it. Crypto pairs are also not left out.

Statistically speaking, many traders lose their prop accounts on NFP day but not you because you are reading this and because you are about to find out…

How to Trade NFP (Without Losing Your Mind or Your Account)

If you are a prop-firm trader, it is important to:

Know the Rules (Especially if You’re Trading Funded)

Some prop firms restrict news trading. Make sure you’re not violating any terms, check the firm’s FAQ for their news policy. The last thing you want is to nail a trade but lose your account – to know the rules, just search “news” in the FAQs section {that’s where we put it}

Check Your Limit Orders

Make sure you don’t have any limit orders that can be triggered during the news. Also avoid entering positions just before or immediately after the release. The initial spike is often chaotic.

For Maven, we have a 2 minute period before and after the new releases but this varies based on the firm.

Follow the News in Real Time

You don’t have to guess what’s happening or when it is happening. NFP release time is usually on the first Friday of every month by 8am EST but you can keep tabs by checking platforms like Forex Factory and TradingView, they offer live updates on Non-Farm Payroll (NFP) data to help you stay ahead of the market’s reactions.

Manage Risk Like a Pro

Widen your stop-loss (or better yet, reduce lot size), or consider staying out entirely until things calm. During NFP, slippage is real and stop-losses often go ignored.

Fade or Follow?

After the initial reaction, decide: do you fade the move (if it looks like a fakeout) or follow it.

Conclusion

Ultimately, the NFP is more than just a job number report, it’s a pulse check for the U.S. economy. Whether it’s showing strong job growth, or a dip, it can send major ripples through the markets. Traders across the globe are paying attention and you should too.