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What Is NFP And Why Is It Widely Watched By Investors
The Nonfarm Payrolls (NFP) are among the biggest market movers in the Forex markets, together with central bank events or interest rate decisions. Although their impact seems to be decreasing over the last few months.
At the first Friday of every month, the U.S. Bureau of Labor Statistics releases the numbers for new job creation in the US – along with other labor market data. The data includes all paid workers, excluding government employees, private households, non-profit organisations and the farming industry.
It’s an important indicator for how well the US economy is doing and investors watch this report closely. Surprises and major changes in the released numbers can lead to significant price movements. In this article, we show you why it’s so important to understand the implications of this release, how to interpret the numbers and how to trade NFP in general.
There are three parts and news releases for each NFP day:
1) The NFP numbers: how many new jobs have been created/lost
2) The unemployment rate: the overall unemployment rate
3) The hourly wages: how much workers are earning on average
The NFP provides information about the US labor market, how well the economy is doing and what the future holds: if the economy is not doing so well, companies don’t hire as many new people and might even fire some of their employees. Subsequently, those people lose income and can’t spend their money on things which reduces the overall revenue and general consumer spending and slows down the economy further.
On the other hand, when the economy is doing well, companies hire new employees who now have more money available and can use their additional income to buy ‘things’ and boost the economy, further increasing the need for companies to hire more people to meet the demand.
The hourly wages are the final piece of that puzzle because they show the purchasing power of those jobs.
Positive NFP numbers are good for the economy and, thus, investors will buy US-Dollars, anticipating a stronger economy in the future. A worse than expected NFP often leads to a falling US-Dollar as investors sell their US-Dollars.
If you are interested in understanding more on NFP and how to trade NFP - sign up for one of our forex trading courses with one of our successful mentors. You will get really great forex trading content and mentorship like no other.
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Risk disclaimer: The information presented on our blog are for educational and entertainment purposes only. Nothing on this website serves as investment advice or recommendations. Trading is risky and you can lose more than your initial investment. MyFxMentor cannot be held responsible for any decisions visitors make. Please consult a financial advisor before making any investment decisions. Risk disclaimer.
The Road to Financial Success: Lessons from George Soros
The Road to Financial Success: Lessons from George Soros
George Soros is famously known as the man who “broke the Bank of England.” He earned this title in 1992, when he made more than a billion dollars shorting the pound sterling. As the manager of the Quantum Endowment Hedge Fund with more than $27 billion in assets under management, he is deemed a legend of trading and investment and there are many things we can learn from him.
George Soros has a net worth of $8,3 billion, making him one of the wealthiest individuals in the world, according to Forbes. Interestingly, he earned the entirety of his fortune without any initial capital or fund.
Just like all masters of their business do, Soros has his own philosophy and perspective regarding financial markets and investment. Below I cite some of his greatest quotes and the meaning behind each of these sayings.
Markets are Unpredictable – Seize Opportunities
“The financial markets generally are unpredictable. So that one has to have different scenarios… The idea that you can actually predict what’s going to happen contradicts my way of looking at the market.”
According to Soros, the markets tend to be biased and one can hardly predict when, where, and how prices will move. What is important here is to be prepared for every scenario that can take place and capitalise on the opportunities that may arise.
Trade with a Proper Risk Reward Ratio
So how you can succeed in the markets in this case? Here is another quote from Mr. Soros:
“It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right, and how much you lose when you’re wrong.”
What is important to emphasise here is that you can make money in trading even if you do not win the majority of your trades. How? Through proper risk management and risk reward. It’s really as simple as that. Employing a risk-reward ratio in your trading involves setting up your trades in such a way, so that you make for example twice the amount that you have risked (or even more); this system along with proper risk management will reward you over the course of time.
Keep it Elegant and Simple
Interestingly, Soros is mainly known as a short-term speculator. In practice, this means taking highly leveraged trading positions on the direction of the underlying markets. And here is the philosophic background for it:
“The market is a mathematical hypothesis. The best solutions to it are the elegant and the simple.”
The moral of keeping things simple in life generally pays off, and investing is no exception to this. Soros has built his financial empire by abiding by this rule. Obviously, a simple, clear and effective trading strategy certainly outdoes a complex system that does not work.
Markets Tend to Fluctuate – Study Them Well
At the same time, the nature of markets is not to be overlooked. This is Soros’ perspective on this:
“I put forward a pretty general theory that financial markets are intrinsically unstable. That we really have a false picture when we think about markets tending towards equilibrium.”
Soros advocates that markets do not tend towards equilibrium, on the contrary, they are subject to fluctuations and periodic crises. Equilibrium is merely a false assumption when looking at markets. This means that a good investor should have a good understanding of risk.
Risk Properly
“Risk taking is painful. Either you are willing to bear the pain yourself or you try to pass it on to others. Anyone who is in a risk-taking business but cannot face the consequences is no good. There is nothing like danger to focus the mind, and I do need the excitement connected with taking risks to think clearly. It is an essential part of my thinking ability. Risk taking is, to me, an essential ingredient in thinking clearly.”
if you don’t enjoy taking risks, specifically financial risks, you can hardly survive as a trader. Risk helps focus the mind he says, in a similar way, I feel like I am keener and more aware of the market when I have money at risk. But there is a fine line between being focused and being over-involved and over-trading. Risk can make you stay focused, but you don’t want to spend all your time watching the charts.
Moreover, you must really love this ‘game’ to thrive at it. Some people are just not mentally cut out to take financial risks and be able to operate effectively in the market with their money on the line.
Investment Requires Rational Thinking
“If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.”
To thrive in trading, you should be emotionally detached from it and simply base your decisions on sound judgement, consistency and discipline.
These are just some of Soros’ greatest quotes that point to his unique way of thinking and well-developed business mindset. I hope you got a great deal of inspiration and make good use of his ideas in your own trading.
Happy Trading
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Risk disclaimer: The information presented on our blog are for educational and entertainment purposes only. Nothing on this website serves as investment advice or recommendations. Trading is risky and you can lose more than your initial investment. MyFxMentor cannot be held responsible for any decisions visitors make. Please consult a financial advisor before making any investment decisions. Risk disclaimer.
Why Trading Discipline Is The Key To Profitability
What’s wrong with deviating from your forex trading plan if you make a profit anyway?
Making an occasional winning trade, even when you throw your trading plan out the window, may provide short-term pleasure, but entering trades haphazardly can adversely influence your ability to maintain discipline in the long term.
Trading is a marathon, not a sprint!
When you stop following your trading plan, you become rewarded for lacking discipline and you may start believing that abandoning a trading plan is no big deal.
An unjustified reward may increase your tendency to abandon trading plans in the future.
You may be prone to think “I was rewarded once, maybe I will be rewarded again. I’ll take a chance.”
But the positive outcomes of undisciplined trading are usually short-lived, and a lack of discipline ultimately produces the long-term trading losses.
It’s important to distinguish justified wins from unjustified wins.
A justified win is when you create a very detailed trading plan and FOLLOW the plan. A win that results from following a trading plan is justified and reinforces discipline.
An unjustified win occurs when you make a plan but don’t follow it or if you have no plan at all. You might be rewarded, but the outcome occurred by chance.
You might as well flip a coin or hang a printed copy of your charts on the wall and throw darts at it to help you make trading decisions. The win is unjustified and can reinforce undisciplined trading.
Maintaining discipline is vital for consistent and profitable trading.
You trade proven forex trading strategies, over and over, so that across a series of trades, the strategies work enough to produce an overall profit.
It’s like making shot after shot on the basketball court so as to accumulate a winning number of points. The more shots you take, the more likely you will amass points. Just look at some of the most successful athletes in the world.
The winning player is the person who first develops the skill to make the shot consistently so that at every possible opportunity, the ball is likely to go through the basket or goal posts.
They’ve developed the skill to learn how to shoot the ball the same way every single time. Consistency is crucial!
It’s the same for trading. One must trade consistently, following a specific trading plan on each and every single trade.
If you trade one approach this time, and a different approach at another time, your performance will more than likely be haphazard.
If you follow the plan sometimes and abandon it at other times, you throw off the probabilities, and you will most likely end up losing overall.
3 Tips To Help You With Building Your Discipline
1. Remain Consistent At All Times
Don’t let unjustified wins interfere with your ability to maintain discipline.
2. Follow Your Own Trading Plan
Follow your trading plan and cement in the mindset that if you follow your plan, you will end up more profitable in the long run.
3. Have A Clearly Defined Goal
Have clearly defined goals for all your trades. Know when you will exit a trade and set your profit targets. It is very important to understand goal setting in forex trading and pairing it with a consistent risk to reward ratio.
Happy Trading
Want to join the MyFXMentor Team? See trades taken by our top trading analysts, join our live trading chatroom, and access our strategy library! Simply contact us on bookings@myfxmentor.com
// MY FAVORITE BROKERS
// SOCIAL MEDIA PROFILES
Instagram: https://www.instagram.com/myfxmentor/
Facebook: https://www.facebook.com/myfxmentor
Risk disclaimer: The information presented on our blog are for educational and entertainment purposes only. Nothing on this website serves as investment advice or recommendations. Trading is risky and you can lose more than your initial investment. MyFxMentor cannot be held responsible for any decisions visitors make. Please consult a financial advisor before making any investment decisions. Risk disclaimer.