Non-Farm Payrols - Q3 2009 - My BIG mistake :(

Last time I have done big FA (fundamental announcement) I have easily got 100 pips (Jan 2009 - the USD was falling, the unemployment rate was setting new records), so I thought this one will be piece of cake.

It wasn't. I totally screwed it up. I think its' a good lesson though - that's why I am sharing it with you.

First: how to do it properly:
Until further notice - I believe in two ways of trading FA, both of them share one rule:
no orders from 10 min before till 10 min after FA, including pending orders (no pending orders to be simple).

Method 1.
Open an order in a direction, that everyone is expecting  (I assume that you don't have open order yet).

Of course one can ask: how can I know what "everyone is expecting?". - Read analysis, commentaries, look at the history (H4, D1 charts). A good place to go is: http://www.forexpros.com/technical/
So once you have an idea what to expect, watch the market from something like 4 hrs before FA. If there is no clear channel visible around 2-1 hrs before FA - than I have no idea what's going on. But if there is - just buy/sell in that channel direction (of course wait for the channel high/low respectively). At about 15 min before FA, set SL (stop loss); for a downtrend - at channel  high + 10 pips, and for uptrend - at channel low - 10 pips. Then wait.
After FA time - in most cases - market will start to move in the expected direction. After first long bar on M1 move your SL to about 30-40% of the distance of the last swing(that is assuming that the move was in expected direction ;-). You can use an EA for automatic SL handling - http://codebase.mql4.com/6043
Then wait again. When people will actually get the FA figures - then either the price move will continue, or - it will reverse (like happened with me). If it will reverse, wait until it will cross the previous swing starting point. After that  - if the trend continues, wait until it will stop, retrace, and then set your pending order slightly above/below last top/bottom.

Method 2.
This is actually a second part of the Method 1. - don't open any orders before FA. When price will start to move, wait till it stops and retraces a little bit, then set pending order in the direction of the first move after announcement, with price = last maximum plus some safety margin (3-5 pips).

In both cases keep SL (StopLoss values) tight, but only at the beginning. And IMHO - use M1 chart around the fundamental announcement. The price will move so fast, so even M5 will not display the market's "inner beat".
Also in both cases, if there is high amplitude, crazy jumps - just wait. You most likely have no idea what is happening. Maybe it's the great opportunity - but there will be a next one!  So don't lose your pips in vain!

In any case - practice it several times on a demo account, before going live! This is very important.

Why not to use pending orders?
The answer is very simple: the price can move so fast, so your pending order will be executed with up to 15 pips re-quote (sic!). Or maybe even bigger.
Let's see an example:
At 15:30 my time (GMT +3) or  8:30 EST the Non-farm Payrolls change is due to be released. At about 12:00 (05:00 EST) the price reached 1.4563 - morning high, then started relatively slow, channeled decline to the pre-FA range (1.4531 - 1.4544).

Knowing the market is going to go down, I have opened pending order at about yellow dotted line.

Just before announcement time I tried to move it up, but the "trade context was busy" and after few moments of  swearing I finally managed to move the trigger to a solid yellow line. When the price went down, my order was re-quoted and finally opened at ... even below yellow dotted line (1.4505). I have got a profit of about 17 pips and then I should quickly set SL between  order open and current price. I didn't. The price went up, now I had between  -5  and -10 pips. It was a time to close and wait but I didn't. The market finally got the figures ( -263k versus -190k expected) and decided - "we cannot continue down, no matter how much we'd like to". So the price started to climb and hit my initial SL at 1.4552.

With the first method I would get mere few pips of the downward movement, then all the climb between 1.4567 - 1.4635.

With the second method I would get "only" the main dish, but of course - if the FA stats would be in the favor of the market sentiment - with the first method I would earn additional 40+ pips versus method 2.

So long, and may the force be with you!

Or wisdom, patience and peace even better...