How to Trade Unemployment Numbers

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Video Transcription:

Hello traders. Welcome to the newest trading course and the third module news that move the market profitably enough for us to trade.

Today I’m going to teach you how to trade the jobless claims. What we’re going to do is we’re going to the economic calendar and we’re going to look the dates and time of the release then we’re going to go to the empty form platform and go through the Euro-US dollar price action during the release.

Now, this is the economic calendar. What I’ve done here is I’ve gone through the filters on the economic calendar and I have filtered out everything but the employment numbers. Now, I have applied the filter and we are going to use a release that was big enough or the change was big enough that we had a nice break out of the levels. We are going to be using April 30th jobless claims from the United States. You can see that the previous numbers were an outstanding 296,000 and we went down to 262,000. This means that we had a decrease in unemployment numbers and this is good for the US economy, thus we have an immediate appreciation of the US dollar.

So we are going to be looking to sell the Euro-US dollar. But because we are looking hindsight right now. We already know what happens so it’s easy for me to tell you that that is what we are going to trade or do. This is why we use pending orders or buy-stops and sale stops to trade these unemployment claims because we don’t know what’s going to happen. Because the numbers are always clean and because they are always presented alone at the time of the release, the move is going to be also very clean.

How to trade unemployment numbers

So we’re going to go to the empty form platform and we’re going to go through April 30th at 3:30. Okay? So this is the time of the release, we’re going to the one-minute chart as always. But before we go through the one-minute chart, let’s go back to the hourly chart, I’m sorry, the 50-minute chart. What we’re going to do here is we’re going to locate the levels of support or resistance that we need to break, in order for us to trade this event. Remember that we are trading at the time of the release this is the price actually that we are trading at.

So we need to break with this high and you could see that this high was a strong level of resistance and then we tested it back right here. Even though we dip below, this is a fake-out and we started to trade above it. We broke above it, then we retested it with the support and then we continue to move up. And the level that we need to bring to the upside in the case we have an increase in jobless claims is this level right here.

Trading unemployment numbers

Now, because these are the levels that we need to break and price is trading at the time of the release around these levels, we are okay by putting our buy stops a few pips below, I’m sorry our sale stops a few pips below. So let me just adjust this, and color it red and thicken it up. So this our sale stop and this is our buy stop level, okay? Buy stop level.

If we have good employment numbers, price will go down and it will fill this on the short side. If we have bad employment numbers, price will go up and it will fill us on the long side of the trade. Now for the stop loss, as you can see, we have a range of around 60 pips. So we have to go to the one-minute chart, and if we go back to the one-minute chart, you’re going to see what’s going to happen. Let me just go back here, and let me show you the actual release.

All right, so as you can see we are at 3:22 pm, eight minutes before the release and we have already our buy stop level, a few pips below this level right here. And our sale stop, I’m sorry, this is the sales stop level and this is the buy stop level. So the stop-loss level for the pending order to the sale site is going to be right here below or above this high. Because if we get filled and price comes back and tests this high as resistance and comes back down, we’re okay. But if we break to the upside, the short idea is invalidated and we need to get out. So this gives us a nice 26 pips stop-loss and the same goes to the long side for this high. If we break to the upside and we retest this high as support then we go back up, it’s fine. But if we break below this level of resistance now being tested as support, we need to get out because the long idea is invalidated and we have a 20 pips stop loss.

Then the actual release comes on the wires and we are filled. And as you can see, we get filled right here okay? As we already had assumed. But what we failed to do is we failed to choose some targets to the downside. So what we’re going to do, is we’re going to choose the next level of resistance as targets. Let me just color this black, so we can know for sure what levels we are talking about. Because if we break to the downside, we are going to find buyers at the previous levels of resistance.

Now let’s go back to the one-minute chart and to the actual time of the release. You can see that we get filled, on the short side, right at the release of the numbers and then we experience some consolidation before going down. And then we ultimately hit our targets for a nice 46 pips win. Remember that these news releases, we are only looking to make between 30 and 50 pips. We are only trying to profit from the momentum or the volume that comes into the market when the data is being released. And of course, the same would have been to the long side of the trade, if we would have been filled on our buy stop at the top of price action.


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Adam is an experienced financial trader who writes about Forex trading, binary options, technical analysis and more.

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