This morning's Non-Farm Payroll number release is the most anticipated economic release of the month for Forex traders. The number comes out on the first Friday of every month at approximately 8:30AM EST.

Today, the number was substantially better than expected with an actual job loss of 20k compared to the anticipated loss of 75k. The unemployment rate pulled back to 5%, however, it's still the fourth straight month of job losses. The dollar loved this news, dropping the EUR/USD pair over 100 pips in less than 5 minutes.

This was a text book perfect set up for my channel trading FX system. The NFP release sometimes results in much more chop, whipsawing the system but today was close to perfection! Here is how I trade the NFP with channel system:

I use a 5-minute chart going back over the last 12 hours. I draw a horizontal upper channel line at the high formed in the 3 hours, 15 minutes before the announcement, and a lower line at the low of the last 3 hours; forming a channel.

I then place a limit buy order 3 pips above the upper line, in this case 1.5501.

A limit sell order is placed 3 pips below the lower line, today it was 1.5447. Price is bracketed in this manner to try to catch the anticipated move in whatever direction it breaks.

As you can see on the chart, this system caught nearly 100 pips prior to the EUR/USD falling back into a choppy trading pattern.

Remember, you're not always filled using this method, and there is a distinct potential of whipsaw. However, when it works, it works!

Dave Goodboy is Vice President of Marketing for a New York City based multi-strategy fund.