Guide to the NFP Spread Betting Market

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Financial Spreads: Spread Betting and CFD Trading
Spread Betting on the US NFP

Nonfarm Payroll Spread Betting

A guide to spread betting on the Nonfarm Payroll: Please note that we are not currently offering a Nonfarm Payroll market


Where Can I Spread Bet on the Nonfarm Payroll?

Financial Spreads offers a US Nonfarm Payroll market.

We do offer over 1,000 other markets including forex, stock indices and commodities.


Trading the NFP

The NFP represents the number of 'nonfarm' jobs added (or lost) in the US compared to the previous month.

For example, we might quote a spread of 195 - 205 (where each point represents an increase of 1,000 US jobs).

In this case, investors could speculate on the official NFP figure coming in higher than 205,000 or lower than 195,000.

If the NFP number shows that there was an increase of 250,000 jobs, then our NFP market will be settled at 250.

See below for a fully worked example.


Where Can I Access Live Nonfarm Payroll Prices?

  1. Simply log on to your Financial Spreads account
  2. In the market menu, click 'Specials'
  3. In the market menu, click 'Nonfarm Payroll'
The market will then appear in the Live Prices window.

If you can't see the prices, this is probably because the market has closed and a new market for the next month's NFP release hasn't opened yet.


NFP Market Hours

Typically, the market will only open a few days before the release itself.

When the market is open, the trading hours are between 7am and 9pm except for the day the market closes.

The market will normally close for trading 15 minutes before the NFP data is released at 1.30pm, i.e. it will close at 1.15pm.

All times quoted are correct at the time of writing and are based on UK time.


Historical NFP Trends

For a chart showing historical NFP results, please see Bloomberg NFP chart.


How to Spread Bet on the US Nonfarm Payroll

As an example, let's imagine that you look at the Financial Spreads website and the quote is:

  Nonfarm Payroll (May) Sell

215
Buy

245


This is an example of how the market works:

The Spread Betting Market:Nonfarm Payroll (May)
The Spread Betting Price:215 - 245
How the Spread Works:You can speculate on the Nonfarm Payroll market to close:

  Spread Betting Higher than 245, or
  Spread Betting Lower than 215

On the closing date for the May market, which will normally be the first Friday in June.

This spread bet works like a futures market and therefore the bet will be closed automatically on the specified expiry date (i.e. when the NFP report is released). However, you can usually close your position, during trading hours, prior to the expiry date.

Note, you do not pay any overnight financing fees on these futures markets.
Units (Points) Traded:Trades on the Nonfarm Payroll market are priced in £x per point.

Where a point is 1 point of the market's price movement, which is equivalent to 1,000 jobs in the Nonfarm Payrolls report.

E.g. if the Nonfarm Payroll market moves 40 points (or 40,000 jobs) then you would win / lose 40 multiples of your stake.
Stake:You work out how much you would like to stake per point, e.g. £1 per point, £5 per point, £20 per point etc.
Simplified Trading Exercise:As an example, if your stake is £3 per point and the Nonfarm Payroll changes by 22 points, you would win/lose £3 per point x 22 points = £66.


Worked Trading Example - Buying the Nonfarm Payroll Market

Spread betting on a high NFP number

You Now Choose Whether to Buy or Sell: The Nonfarm Payroll market settling:

  Spread Betting Higher than 245? or
  Spread Betting Lower than 215?

When the official NFP figure for May is released.

Let's Say You Want to Go Long:   Spread Betting Higher than 245
You Select Your Stake Size, Let's Assume You Choose: £5 per point
So What Next?
  • You gain £5 for each point the Nonfarm Payroll market closes above 245
  • You will lose £5 for every point the Nonfarm Payroll market closes below 245
If You Are Betting on a Market to Go Up Your Profits (or Losses) = (Closing Price - Opening Price) x stake
 
Trading Example 1
Expectations for the Nonfarm Payroll are revised higher so the market moves up to 290 - 320. So you would see this on Financial Spreads:   290   320
Close for a Profit? You may opt to leave your position open, and maybe let it run to the settlement date, or close it and take your profit. In this case you choose to close your trade by selling the market at 290.
Your Profits (or Losses) = (Closing Price - Opening Price) x stake
(290 - 245) x £5 per point
45 points x £5 per point
Your Profits (or Losses) = £225 profit
 
Trading Example 2
Some weaker US data means that economists revise their Nonfarm Payroll estimates lower.
Limit Your Loss? You could decide to keep your position open and let it run to the settlement date or close it and limit your loss. In this example, you decide to run the trade until expiry. The official Nonfarm Payroll figure for May comes in at 189,000 jobs, meaning that the contract closes at 189.
Your Profits (or Losses) = (Closing Price - Opening Price) x stake
(189 - 245) x £5 per point
-56 points x £5 per point
Your Profits (or Losses) = -£280 loss


Worked Spread Trading Example - Going Short of the Nonfarm Payroll Market

Spread betting on a low NFP number

You Work Out Whether to Go Long or Short: The Nonfarm Payroll market to settle:

  Spread Betting Higher than 245? or
  Spread Betting Lower than 215?

When the report is released.

Let's Assume You Decide to Go Short:   Spread Betting Lower than 215
You Decide Your Stake, Let's Say You Select: £4 per point
So What Happens Now?
  • You will lose £4 for every point the NFP market closes above 215
  • You gain £4 for every point the NFP market closes lower than 215
If You Are Spread Betting on a Market to Go Down Your Profits (or Losses) = (Opening Price - Closing Price) x stake
 
Trading Example 3
Some political wrangling in the US means that expectations for the May NFP report fall.
Time to Lock in a Profit? You may choose to keep your position open, and possibly let it run to the expiry date, or close it for a profit. For this example, you opt to run it until the market expires. Ultimately, the report points to just 181,000 jobs being added and so the Nonfarm Payroll market closes at 181.
Your Profits (or Losses) = (Opening Price - Closing Price) x stake
(215 - 181) x £4 per point
34 points x £4 per point
Your Profits (or Losses) = £136 profit
 
Trading Example 4
Some bullish confidence figures raise hopes for a labour market recovery so the Nonfarm Payroll market rises to 227 - 257, therefore you would see:   227   257
Close and Restrict Your Loss?You can opt to leave your position open, and possibly let it run to the expiry date, or close it, i.e. close your spread bet and restrict your loss. In this example you choose to close your position and buy at 257.
Your Profits (or Losses) = (Opening Price - Closing Price) x stake
(215 - 257) x £4 per point
-42 points x £4 per point
Your Profits (or Losses) = -£168 loss

What are Non-Farm Payrolls?

Investopedia defines Non-farm Payrolls (NFP) as:

A statistic researched, recorded and reported by the US Bureau of Labor Statistics intended to represent the total number of paid US workers of any business, excluding the following employees: This monthly report also includes estimates on the average working week and the average weekly earnings of all non-farm employees.

Investopedia explains 'Non-farm Payroll'

As well as the above definition, Investopedia also gives a useful explanation:

"The total nonfarm payroll accounts for approximately 80% of the workers who produce the entire gross domestic product of the United States.

The nonfarm payroll statistic is reported monthly, on the first Friday of the month.

It is used to assist government policy makers and economists in determining the current state of the economy and predicting future levels of economic activity."




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