How to Trade the ADP Employment Change: A Comprehensive Guide


The ADP Employment Change report offers a glimpse into the private sector employment trends in the US, released monthly by the ADP Research Institute. 

This guide will share the exact strategy that professional traders use to gain an edge over the 95% of losing retail traders. By following our step-by-step guide, you’ll learn how to effectively trade the ADP Employment Change report and enhance your trading outcomes.

Understanding the ADP Employment Change Report

The ADP Employment Change report provides an estimate of private sector employment growth or contraction. Released two days before the official Non-Farm Payrolls (NFP) report, it is considered a precursor to the NFP and a significant indicator of labor market health.

What is ADP?

ADP, or Automatic Data Processing, Inc., is a company that provides human resources management software and services. The ADP Research Institute produces the ADP Employment Change report, which is based on anonymized payroll data from approximately 500,000 companies in the US, covering about 26 million employees.

Why ADP Employment Change Matters

  1. Early Indicator: As it precedes the NFP report, the ADP Employment Change offers early insights into labor market conditions.
  2. Market Influence: Significant deviations from expectations can lead to notable market reactions, particularly in currency and equity markets.
  3. Predictive Value: While not always perfectly aligned, the ADP report can shape market expectations for the upcoming NFP release, influencing trading decisions.

Why ADP Employment Change May Lack Significance

  1. Predictive Inaccuracy: The correlation between the ADP report and the NFP can vary, leading to instances where the ADP report does not accurately predict the NFP results.
  2. Private Sector Focus: The ADP report only covers private sector employment and excludes government jobs, which can sometimes lead to discrepancies compared to the NFP, which includes both private and public sector employment.
  3. Market Expectations: Traders may sometimes discount the ADP report if it consistently shows less predictive value, focusing instead on other leading indicators or the NFP itself.

Trading Strategy for ADP Employment Change

Step 1: Analyze Federal Reserve Priorities

Understanding the current focus of the Federal Reserve is crucial. If the Fed is closely monitoring employment data, the ADP report will have a heightened impact on market volatility. Use our Professional Economic Calendar, which includes a fundamental guide, to stay updated on the Fed’s priorities.

Step 2: Use High-Low Expectation Forecasts

Professional traders use high-low forecasts to gauge market expectations accurately. Here’s a more detailed look at why these forecasts are essential:

Understanding High-Low Forecasts

Economic forecasts are based on surveys from credible institutions, providing their best estimates on upcoming data points. Professional economic calendars include both high and low estimates, showing the full range of expectations. Trading opportunities arise when data releases fall outside these estimates, causing significant market reactions.

Step 3: Choosing the Most Volatile Instrument to Trade

Using insights from institutional reports, traders can select the most responsive currency pairs or assets. For example, if the EUR/USD is particularly sensitive to economic data and the ADP report shows a significant deviation, this pair could be an ideal target for trading.

Trade Execution Steps

Confirm Fed Focus

Ensure the Federal Reserve is currently emphasizing employment data. If employment is a primary focus, the ADP report is more likely to move the market. Remember, if the central bank is focused on the data point, it’s because they are using that data point to make a decision on rates. 

This is the reason data points are focused on cause volatility. In addition, sometimes the central bank is focused on a data point inside a data point. For example, the Federal Reserve has often called out average hourly earnings as the key metric they look for inside the Non-Farm Payroll report.

Check Forecast Ranges

Review high and low forecast expectations before the data release. Plan to trade only if the actual data significantly exceeds the high estimate or falls below the low estimate, ensuring a response to genuinely surprising data.

Monitor Revisions

Check for conflicting revisions in the data, as these can alter the initial market reaction. Ensure the primary release and any revisions align to support your trade.

Enter Trade Promptly

Once you confirm the deviation, act quickly to enter your trade within the first 30 seconds. Speed is crucial, as market reactions to significant data surprises occur rapidly.

Set Stop and Take Profit

Managing the Trade

After the Initial Run

Look for a shallow pullback around a 23% Fibonacci retracement or near support/resistance levels. This initial pullback can provide an opportunity to enter the trade again after taking a few points off the table after your first entry.

After the Initial Run

Move your stop-loss to break even as soon as possible to protect your gains. The stronger the release, the shallower the pullback. If the market doesn’t buy off your support/resistance level and continue to the highs of the one-minute candle, consider reassessing the trade.

After the Initial Run

If your initial position is stopped out at break even, consider reentering at deeper retracements, such as the 38% or 50% Fibonacci levels. Use nearby support and resistance levels to guide your reentry points.


While the ADP Employment Change report may not always lead to significant market movements, understanding its nuances and using a professional trading strategy can help you capitalize on unexpected deviations. If you don’t have the tools mentioned above, try out our Professional Economic Calendar Package and use institutional tools to level the playing field.

By following these steps, you’ll be well-prepared to trade the ADP report effectively, leveraging the same strategies that professional traders use to profit from this economic data release.

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