Today's Trade: Thursday 03 October

Jarratt Davis

Special Consultant to the FPA
Hi Jarratt;

Thanks for sharing your insights.

A quick general question for you. Taking Friday's NFP - The predicted is greater than the previous, I understand that the Market will price this in generally and we can expect the dollar to get stronger (in this case) leading up to consolidation prior to the announcement. When does this generally happen? Would it have already happened or is it something we can look to trade in the next day or so?

Many thanks

Hi Simon,

Thanks for the question

Basically this is one of those things that on the one hand can be a great way to make pips but on the other very tricky to trade consistently.

Very often the price will tend to rally at the beginning of the week or most often the day before the figure is due to come out. If you read the financial news, you will frequently see articles talking about a rally because certain data is expected to be positive etc...

The problem is that intra day sentiment can be affected by so many other variables, and those variables can be fleeting and fickle. So one day we might be expecting a great NFP figure (Tomorrows has been cancelled) but if something else has happened to cause traders to sell it instead they will basically ignore the 'anticipation' trade.

That trade definitely exists but I would say it is more of a 'boredom' trade ... So if the figure is coming out on the GBP and its expected positive .... The GBP will rally the day before ONLY if there is nothing else going on, like no other news or central bankers speaking. (This is the safest time to trade it)

It's very important to let you know that I do not really look for these as a set up, but I am aware that it happens.... I just have never really found a reliable way of working out when the market will pay attention to it and when something else will take precedent.

Hope that makes sense, and if you have any more questions please just let me know :)

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Hi Brian,

That is a solid area of resistance for sure, so you could certainly use it as a target area.

You could trade a break out, and I sometimes do just that but generally I do prefer to buy the dips as it gives you a better chance of not going through draw down periods while you wait for the trade to play out etc...

Hope this helps!

Thanks Jarrett sure does help.
cheers Brian
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Yes perfect sense thankyou...I've got to be careful of those 'boredom' trades as you call them