You know, the safest way to trade the non-farm payroll is to advance into the future. After you know what way the price is going, you can come back and trade the right way.
And the second safest way to trade the to not trade at all. Just stay away from the non-farm payroll release.
Okay, let's assume that neither is an option for you. You want to trade, and you can't time travel.
Fair enough. Now what? How do you get in there and out again without getting killed?
Most people when they talk about news trading talk about two different ways to do it. One is to just guess what way the price is going to go.
Really stupid idea.
The other way is to straddle the price. In other words place a buy above the current price, and a sell below the current price.
This often works, but is flawed. If the price "whip-saws" and comes back sharply, you'll have a loss. And the price is volatile in a news release. This can definitely happen.
So, what of it? How do you trade the news?
Here's the secret. You need to slightly modify the straddle. You start by placing a buy and sell on either side of the market. So far, so good.
Now, you aren't going for the big score here. If the market goes through either of your orders you are now in the market. Exit as soon as you have 15 pips.
Yes, that's all.
Now, what if the market reverses before you get fifteen pips? If the market reverses, get out at your entry point. You only lose the spread (2 or 3 pips). If the price continues that direction, let it hit your other order. Exit that one after 15 pips.
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