Trading During Events

OptionsOptionsOptions · Jan 20, 2021

sef88 said:
Can consider selling volatility.
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Better to buy volatility.

Buy high - sell higher.

JSOP · Jan 20, 2021

longandshort said:
You can, just need to be smart about it.

Think about these items:

there may be seasonality (some months might show higher numbers than others because of some unrelated item, e.g. tax payments or when new visas get issued, etc.)

distribution should be normal, so moves beyond 1-2std should be reviewed (when has it happened in the past and how did the market react? what was the backdrop?)

understanding how NFP impacts the demand for local currency

Understanding how NFP impacts policy makers (fiscal and monetary -- remember that central banks typically have a mandate to reduce unemployment)

understand where the currency and rates are trading relative to peers

typically trust the move in rates more than the move in fx

Then, look at some forward looking data to get a feel as to what's going on:

Rolling 4wk unemployment insurance claims

Comments on employment in PMI (mfg & svcs)

etc.

Then, have a view on what's driving the trend in NFP

EXAMPLE: "as lockdowns continue to roll through the economy, I expect NFP will be very volatile, with falling NFP post-lockdown announcements and bottoming out around the time employers think policy makers will lift restrictions"

"therefore, an NFP print that is very high, given the backdrop, is likely to be noisy and contain artifacts -- watch the move in rates but generally fade an NFP rally"

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Way too "smart" for me. LOL. I would like to KISS, keep it simple and stupid. When something can't be kept simple and stupid, I just avoid it.

senumouv · Jan 28, 2021

That depends on what a person is trading. Sometimes trading after a particular event turns out to be really good and sometimes it’s not.

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Trading During Events

OptionsOptionsOptions

JSOP

senumouv