Further to the fundamental vs technical trading “debate” thread I’d be interested to know of what kinds of systems and toolkits fundamental traders use.
I’m putting together a spreadsheet with each currency in the first column then adding columns for:
[ul]
[li]Interest rates
[/li][li]Unemployment
[/li][li]GDP
[/li][li]Bond Yields (government)
[/li][li]Avg relative strength vs all the other majors over the last week
[/li][li]Avg relative strength vs all the other majors over the last month
[/li][/ul]
I’m sure there is more to add (COT report) and I also want to develop a way to quickly get the data and analyse it to determine which currencies are getting stronger/weaker
For fundamental traders and traders who incorporate fundamentals into your plan – what data do you measure and how do you go about quickly getting that data and analysing it to determine strong/weak currencies?
I know enough about it to know that learning and working out all that stuff won’t get you anywhere further than simply looking at the deviation of the forecast to the actual and trading accordingly, e.g. you won’t find an equation that says something like if interest rate goes up by 1 point the USD will go down by x, psychology will come into it more than the actual numbers.
It’s more of a case of practice and getting a trading strategy for it.
If you’re thinking of long term trading with it, I still think that psychology will play a bigger part in it than the conclusion you may arrive at, and an earthquake here a storm there that you could never predict can affect the outcome.
40,000 short of the euro.
Unknown short of the euro in the OTC currency derivatives.
The Dollar has one of the largest, if not THE largest speculative net long positions on record.
That does not necessarily mean it is due to collapse but what it does mean is that if any important downside technical levels are violated, a massive wave, and I do mean massive, of long liquidation will take place.
This market is so lopsidedly imbalanced on the long side that the sheer weight of those stale longs could drop the Dollar several hundred points very quickly.
What else do you need to know?
The media & talking heads are trying hard to get this flavor-of-the-day to hit the wire and keep the beat drumming.
Tomorrow two central bank talking heads FED Bernanke & BOE King are jawboning again.
If something those two say comes down the wire the wrong way, tomorrow the market get’s spooked and all sorts of stops & orders get hit playing YoYo with the market.
Will that change the dollar long & euro short positions?
Yes!
If important downside technical levels are violated.
Is that likely to occur?
If the interests with the desire to go short USD & spook the USD longs have deep enough pockets, then yes it will.
Could it be tactical?
Yes!
Because weeks end, months end & quarter end are natural profit & position balancing periods for the big money bags and tactical plays are not uncommon with Q1 end as the real target.
Thanks for that, it really vindicates my strategy for me, although I find that side kind of interesting I don’t have to think about it when I’m trading.
I put up 4 pairs on my screen in this order - GBPUSD EURUSD EURGBP and USDCHF
I have 1 big fat 5 minute candle on each one, scaled to where my chart is labelled every ten pips at about half my screen, I only trade the GBPUSD I then sit and I wait, and I wait and then maybe wait some more, sometimes I’m done in 10 mins
To trade, the market conditions have to be ‘perfect’ the whole idea of the system is that you don’t trade until you know more or less for sure that you will win, it’s like if the market is going like 051, 059, 053, 048, 051, 048, 056 it’s no good, but if it’s going 051 052 054 055 057 it will continue to do so.
For a Sell
When the market starts moving and the USDCHF is going up pretty smooth and fast, the EURGBP is stable and pushing up the EURUSd is going south, the GBPUSD is also moving down you put a sell on, then when the move stops you click buy to close the order, and then that’s it.
I trade around 6 - 10 hours a week an hour at London open and NY Open, A typical week would be +3 +6 +8 +2 maybe, or even +2 +1 +3 +1 +7, very very very occasionally a +1 -3 +5 +3 +4 +3, trade that on high leverage and compound the profits, you don’t have to get stressed, you don’t have to analyse and it makes one heck of a good return. It has been known to get 18 PIPS or so now and again, I just take the rest of the week off.
It is, but you have to keep focused on it and believe in it, but the great thing is, it’s like riding a bike, once you’ve really learn it, it’s easy, with other strategies it’s never ending.
OOPS - I think we’ve gone off topic, this is the furthest thing you will find from funnymental analysis.
The irony is another guy in another thread swears by fundamental analysis only and is convinced that everyone who doesn’t agree with him is wrong :rolleyes:
Who’s right?
When I think of fundamental analysis I’m not referring to news trading but telling which currencies are weak and which ones are strong
Back to topic though this isn’t another fundamental vs scalping thread, I’m just trying to find out from experienced and successful traders who do use fundamentals - how they use them.
I’ll tell you one of the fundamental analysis strategies I used, I wrote an indicator for MT4 that I entered all the news announcement into, I would base them as impact on GBPUSD depending on the deviation, I had green for very good for GBPUSD, yellow for good for GBP, white for no effect, then Pink representing bad for GBP, and then Red for very bad for GBP, heck it was colourful! These would then normally coincide with points of wave endings on elliot waves.
Also, yes also I had multi time frame Fibonacci analysis represented in four columns on the right of the chart, I couldn’t have more stuff on the chart itself, it was getting a bit eye watering, so this way I could get 4 Fibs charted and it wouldn’t clutter my screen, at one point I decided that it would be a good idea to use the rest of the right hand side of the chart to put a MT4 clone of the FX MoneyMap thing, which is just a neat way of showing a bunch of moving averages, just to make sure I had a good idea of the short term trend.
Was it any good?
Hell yes, I could sometimes predict what the News was going to be from it, well I thought I could, well at the time anyway.
What it really did do I think was that when the News was announced and it should make the market go down, it would go up say you would have a really good idea of where it would go to before it did go down, I think it was the Fibs that helped most with that.
You could also do things like, take profit at Fib points before the next News announcement, because you had a fair hunch that retail sales might be up in March or something.
What’s this do you think?
It hit the wires 60 minutes ago.
Fundamentals [B]or[/B] News?
[B]BoE Lowers U.K. Economic Outlook[/B]
(RTTNews) - Wednesday, the [B]Bank of England lowered U.K.’s economic outlook and forecast inflation to exceed 3% in January.[/B] In its latest quarterly Inflation Report, the central bank said the British economic growth is set to reach around 3.2% in the second quarter of next year, smaller than the previous estimate of 4%.
FED Bernanke testifies in a couple of hours.
What do you think that is?
I think I may be approaching this wrong by trying to systemise fundamentals into “if x condition >= 50 AND y condition <50 [currency] has Z strength” type system.
I’ve noticed that despite a lot of news the general technical directions seem to win out – even for the trades I have open for 4-5 days. Then again for the timeframes I’m using (1D charts and trades open for 2-5 days sometimes over the weekend) I can’t just trust what the charts say.
I’ll just keep muddling on and picking up a fundamental awareness as I go along.
It’s really tricky, there’s some stuff going on now, that may well have a profound impact, we are seeing the end of this liquidity support thing, printing money is what they don’t like to call it, unless economies are able to sustain a little growth without this, we could be back into some mad time, so what might move the market one way 50 PIPS one way now may well send it the other way with similar news in 6 months time, because of market psychology.
Liquidity seems to be a little tighter, I go on this by Oandas’ spread, every time that changes on the GBPUSD, I take note, from experience I find there has been some major stuff happening when the spread changes, don’t ask me why? I don’t know and don’t care, all I know is that it affect my strategy a little.
Yeah it is really tricky. What I’m struggling with at the moment is figuring out which of the majors but not the main ones are stronger than the other.
For example at the moment if I see a technical entry that is long GBP I’ll probably give it a miss, same if I see a short USD signal.
However if I see one for short NZD/CAD or long AUD/CHF I suppose I’m thinking it would be nice to crunch a few numbers to determine whether it’s a good idea or not even though the technical ducks are are lined up in a row.
I also wish I understood the JPY more in general. I have real trouble making sense out of that one
I want to learn about FOREX. I think in the longer run to be successful you have to be able to adapt to changing market conditions which is why I don’t want to rely on purely mechanical systems. I’m also genuinely interested in it and it’s not just a passing fad or GRQ
