I’ve studied the school of pips from top to bottom, and have stuck with learning technical analysis for some time. But i’d also like to know the fundamental side of things, so i’m aware of when an event could effect my trading.
I’ve checked out the news sites which the school recommended, but whenever I go to these sites, and read the latest news. It just seems like absolute gobbledee gook to me! I have no understanding of what any of it means, how it could effect my currency pair etc.
Even when i read Pipdiddys fabulous write ups in the Fundamental-ville section of the forums, i’m thinking to myself. ‘Wot on earth is he talking about’ … ha’
Is there anywhere online, or books etc that would help me learn fundamentals alot clearer?!
Yeh i hear that from people. But then others say you should have some kind of understanding of it. Because you could have all the technical knowledge, but if you ignore a big news report, then all of that technical analysis could turn on you?!
News announcements are sometimes very volatile, but actually most of the time nothing happens, your spread is likely to increase which can stop you out, other than that the fundamental knowledge you need you will pick up as you go along.
You can just use the news events calendars to stay out of the way of certain news events if you’re not sure how it might affect your trade. I don’t think it’s absolutely necessary to have a solid grasp of fundamentals - there’s some successful people around here who don’t bother with it much it seems. Having said that there’s some institutional traders here who clearly do take these kind of things into account so having the knowledge is not redundant once you know how to apply it to your trading method and objectives. It’s absolutely not a waste of time if you have the interest to learn it. Just go with what works for you.
Fundamentals for the forex market are basically macroeconomic factors, so any book on that subject will at least get you started in the right direction.
The trouble is, news is often unpredictable, and the impact of news is often unpredictable. There is an awful lot of news out there, and many variables within it, so an awful lot to ‘master’, with no guarantee that even a good knowledge across the board (even if such a thing were possible) will lead to an ability to predict the impact on Forex on a trade by trade basis. For example, it is not enough to get that news item A will cause currency pair B to fall, as the fall might be preempted by a 50 pip spike, or the drop might happen hours later, etc. I am consistent at Forex trading, and - other than a general grasp of foreign affairs (and that is because I am interested rather than that I wanted to assist my trading performance) my understanding of the news is basically limited to ‘there is a big announcement coming up, I will stay out of the market for that hour or two to avoid the volatility that is likely to come with it’.
Thanks Simon, that makes sense. I guess i just feel a bit blind when i’m looking at the news reports etc, and it makes me feel like i should maybe learn some of it to help my overall knowledge of Forex.
Maybe i should just stick with the Technical analysis, if Fundamentals dont play too much of a big part in things afterall.
Fundamentals don’t play much of a detailed part for me, but you will get shades of opinion on here. For instance, I don’t trade the Non-Farm Payroll day at all - it is always a Friday, I don’t find Fridays great, anyway, so I would rather not put myself in front of such potential volatility - but there are other traders who deliberately place trades around major news announcements. So I was just giving you my take, I expect that your own preference will emerge over time. But if it were me then yes, Technicals is where I would start. At the end of the day the more predictable the risk, the greater the probability of a trade playing out. For me, that means start with Technical over Fundamental, but keep an eye on where the Fundamental volatility is likely to be. But that’s just me!
For the most part, I have no clue what the news means and I don’t try to guess how it will affect the trading either. Seems like the two most common outcomes from hot news are: 1) crazy wild movement or 2) nothing much. Since I don’t know which outcome it will be, my goal is to just avoid trading for a few minutes before and after the news release.
I like the Forex Factory calendar and the news releases I try to be aware of are the Red, Orange or White ones. Everything else is just pfffffttt.
There needs to be a differentiation between “news” and “fundamentals”. The former contributes to the latter, but is not the same thing. Knowing whether the market is looking for a strong or weak CPI figure is not the same as having a fundamental view of where inflation is going. The timeframes are totally different as well. Fundamental elements necessarily impact the longer-term market action.
I agree with you to a point, of course, but from my point of view, for my trading, news/fundamentals are really aspects of the same area; as far as my trading is concerned, any distinction is a pretty subtle one - one informs the other to such a close degree that I, personally, don’t see the point in separating them. So I see them, from a trading point of view, as two aspects of the same thing, rather than simply not being the same thing. So I lumped them together for my answer, and stand by that.
I agree entirely - there are a lot of books I would read before getting bogged down in that level of detail on that sort of subject. At the end of the day, Forex trading just doesn’t have to be that complicated! So I would recommend further study in this area if it is of interest, but I don’t see the need if one simply wants to trade Forex. We are just looking at probabilities, at the end of the day, and even on the higher timeframes there is a limit to the benefit to be gained from extensive reading on macroeconomics, or monetary & fiscal policy. I am not saying that it is wholly irrelevant, or knocking those suggesting it, I just don’t see it as a key area for a newer trader to worry about. And once one is no longer a newer trader, and has some consistency, I would probably be inclined not to mess with something that is working!
The market makers react to the will of the market. They don’t dictate it. There’s too much competition and too much pricing information out there to allow it these days.
I’d say it depends on your timeframe. If you’re a day trader, then the fundamentals aren’t going to matter much. If you’re a position trader, though, you may find them valuable for defining trends.
any experienced trader will pick this up over time as is very necessary for an overall outlook.
Either get a trading related economics book, subscribe to some financial blogs, look up the news report on google, or Trading for dummies actually has some very useful sections on news (find it on the net on pdf if you don’t want to buy).
The fundamental side of things is wrapped up in one word…Imbalance.
For the near future…More Imbalance.
The underlying current of FOREX is an ugly devaluation contest between Yen, Pound, Euro and US Dollar translated in day to day volatility. That’s the (net) effect on your trading.
I have no understanding of what any of it means, how it could effect my currency pair etc.
As a retail trader it pays to learn and to understand how the market fades a piece of important news instead of reading books and listen to analyst opinion and market commentary.
You do this by paying close attention to your (currency pair of choice) charts BEFORE and AFTER important news. It will tell you everything you need to know. Take notes.
Write your own market commentary from your own observations. After some time you will know everything that matters.
