buy the rumour, sell the fact, seriously I don’t believe you can trade on fundamentals alone, you need some technical data as well, I always read the news and look at the week ahead, use Forex Factory, Investing.Com, and even babypips itself, use the calendars to look ahead to events coming up that week.
But this is my guide to try and avoid and pitfalls on currencies and may dissuade me from that currency pair, especially if it’s someone making a statement, simply because one word taken out of context can skew the market.
But really you should have a strategy and trading plan in place, and as I say use a technical indicator such as a simple moving average and crossovers, say SMA 21 and 6 SMA.
Hope this helps.
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I am still a newbie to Forex, but in progressing my first trading plan based on London Breakout Strategy, I intend to specifically avoid times where economic data releases affecting the pairs in scope occur. So economic data releases will most often be a trading no-no for this particular strategy. Most of the training I have picked up in the past warn against trading economic news until very experienced, and even then to trade the reaction or reversion to normal of economic news rather than the news itself. Not for me right now.
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The idea of trading an economic data release (which isn’t having much effect at the moment) is to choose a medium to high impact news releases (at the moment the weekly US Initial Jobless Claims is biggest impact).
Once you find the event you want to trade around check each of that currencies crosses. (With the US jobless claims - All the US pairs may experience aggressive moves) and find the best for a buy and the best for sell (against the USD). That is the best to buy is moving against the USD and close to resistance. The best to sell would be moving in favour of the USD and near support. Use One Cancels The Other (OCO) orders to place buy above resistance on the best pair to buy and sell below the support. If the news is aggressive it should trigger stop loss orders where you are entering the market and give the price a good kick in your favour. As a rough guide 25 pip stop loss and 75 pip take profit could be used.
Fundamentals don’t work. You’ll be led down a deep rabbit hole if you take that route. News trading is also not recommended. If you’re a scalper or a day trader then stay out of the markets on big news days.
Trade the charts using technical analysis of your choosing. The charts contain everything you need to be profitable and news and fundamentals are already baked into them. Ignore fundamentals if you want to remain sane and profitable. 
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I respect your point @QuadPip but permit me to add this:
A profitable fundamental trader also says technical is BS. He invented a strategy called the one minute strategy and he was able to be a little innovative around that strategy. He combined the strategy with a stopwatch that tells him the exact seconds to place an order. He trades six backtested events. His unique selling points was the way he was able to design his fundamental strategy in a systematic way that makes him money. In as much as I’m a full time technical trader, I respect fundamental traders that knows what they are doing.
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I posted a live commentary on Euro news this past week - long story short - the EU27 leaders began a meet that was to finish lat Friday - purpose to agree a fix, over the next 30 years, to the economic damage to EU caused by covid.
Some weeks ago France and Germany mooted the idea of a fund - immediately the market took note and the Euro climbed - these 2 are the powerhouse of EU so carried some weight.
Long story short, they were still talking Sat, and then incredibly still at it on Sunday.
By that time the writing was on the wall, no agreement and they would have departed long since.
So on Monday morning the market started to buy Euro - and there was lots of time - the notion that this was all priced in is silly - see my comments as the week passed.
Edit; moral of the story - fundamentals is not some secret sauce - most often it’s just plain common sense.
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Given the ZIRP/NIRP actions by central banks along with the disinflationary/deflationary environment, it’s difficult nowadays to see much influence from fundamentals aside from actions from central banks.
And while central banks like to throw out new acronyms, it all boils down to a couple of things that they want…to weaken USD and crush currency volatility.
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Whom are you referring to? I’d like to learn more about this.
I’ve never come across a profitable fundamental only trader. That’s not to say there isn’t one. There are outliers in every field.
If we’re talking any market, a really recent example is Jim Chanos. He made $100 million by shorting Wirecard.
Yeah I know what works for me technically and created a strategy around that and still testing it but I’ve just realised that something was missing in that and that was including fundamentals and sentiment but sometimes I’m not sure how to put it all together. And also I don’t pair strong and weak currencies together so I guess I’m kinda just asking how you really know which currencies could be weaker or stronger especially these days…
Everyone’s different I guess. I’m a very inquisitive person and NEED to know why things move the way they do, so for me I think it’s important as well… Just need to find a way to put it all together
I’m talking only about the forex market. Applying fundamentals to stocks is very different to applying fundamentals to fx.
He is popularly known as DJ Coach, the 3rd Forex Millionaire in South Africa after Sandile Shezi (Technical trader) and Ref Wayne (Fundamental trader). He put the basic of his strategy on the internet but hides the critical factor that completes it and makes it what it is. The most profitable fundamental and technical strategy and even holy grail isn’t in the internet, they are trade secret that would be taken to the grave.
I checked out a few of DJ’s videos. I can get into a lengthy discussion on this guy but here’s the bottom line.
His strategy is pretty simple. He hedges using 2 accounts. One account is in his name and the other is in someone else’s name. The key is to blow one account as quickly as possible in order to make a profit in the other. He funds both accounts equally because he doesn’t know whether the market will rise or fall after a news event.
He’s not using fundamentals at all to predict the market. He’s using the volatility at news events with the above strategy, which BTW, he admits is against regulations in his country. So, I wouldn’t consider this guy to be a fundamental trader.
Also, he says that not all events will produce results, which means that you stand to lose more than just half your funds and hope you don’t blow your money before finally making a net profit. This could also go very wrong if one account gets blown and subsequently price retraces creating a loss in the other account. Very risky stuff!
I also find it to be very suspicious that he’s talking about his strategy publicly. Brokers can refuse to open accounts for him and they will have a valid reason for their refusal. They can also monitor accounts and easily figure out who the other account holders are for the second accounts and refuse to open any more account for them too. I suspect that this guy, DJ, is in cahoots with the brokers.
Anyway, I’ve spent too much time on this and my opinion that fundamentals don’t work has not changed. I see a lot of members here on BP who claim that fundamentals work and are an essential part of trading but nobody has shown us a strategy based on fundamentals. Why do you think that is?
But, do whatever blows your hair back. If you’ve figured it out and if it works for you then go for it. Whatever your strategy, if you’re making money then that’s all that counts.
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How can you start by saying.
Fundamentals don’t work.
Next you said.
News trading is not recommended.
Q. Who (other than you) doesn’t recommend news trading? And can you really trust such an ignorant person is an expert to learn forex from?
Truth. News trading works! Why? Because professional traders focus on news and they trade the biggest positions sizes and make the market.
You also say.
If you are a scalper stay out of the market on big news days.
To me this is where you admit your ignorance and notice that the market can generate large highly profitable very predictable timely moves. But you just choose to ignore learning how the market behaves.
Then you concluded.
News and fundamentals are already factored into the price.
Q. How can it be factored in if we constantly get large price movements upon news and economic data releases?
In future please don’t try and offer advise to people who want to learn about things you can’t be bothered learning yourself
I wouldn’t even say that news trading is fundamentals at all. It’s a short term sentiment play nothing more.
For fundamentals were talking interest rate differentials, big Mac index, trade flows etc
These are only tradeble over the medium to long term.
News events are really just whether or how much it shocks consensus or not - nothing really fundamental about that.
Fundamentals change prices. News is a new piece of the fundamental jigsaw. Without fundamental differences between 2 currencies and their respective economies, there would be no price changes.
However, it is not possible to read the fundamentals as they stand today with respect to 2 currencies and predict how soon or how far or how fast their exchange rate will rise, nor whether it will experience serious dips before or during its rise, nor when the rise will end, nor what will happen when the rise is finished.
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I get what you are thinking, but I disagree. The definition of Macroeconomic Fundamentals when applied to forex combines Central Banks, Macroeconomic Data and Geopolitical News.
You can hardly call it sentiment trading when prior to big impact data trading volume decreases substantially because almost all professional hedge fund traders and bank traders are required to be square leading up to the news release.
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And I get what your saying but your talking short term prop traders I guess - any investor be it bank, hedge fund or the great George Soros himself isn’t going to sell out all his positions because of one measly NFP release.
Data releases of course are fundamental but on their own are pretty pointless to the big picture
When beginners talk of incorporating funnymentals into their trading, and in the next breath talk about trading off ten minute charts I get quite confused.
Fundamentals by nature happen over the medium to long term not the ultra short term
Now if as a short term trader you chose to buy currency yielding a high interest rate and sell one with a low interest rate that has a fundamental element to it
Most of the time the high yielding currency will be trending upwards so taking the long side regardless of time frame would be the better option.
Trading data releases I see as similar as trading earnings - only earnings do have more of an effect on a company’s growth prospects
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