Hi everybody,
I am Jason from Singapore, I have a few question regarding fundamentals.
I have came across this article on the FXtrader magazine on my iPhone app on the latest issue, I quoted this;
“But when
I sit down at my computer, I’m
100% a technical trader. I don’t care
whether everybody else in the world
says that the European Central
Bank is going to raise interest rates.
If my charts are telling me that I
need to be long or short, that’s what
I’m going to do. I know several
fundamental analysis traders, I’m not
suggesting by any means that you can’t
be successul as a fundamental trader,
but what I can tell you is that every
fundamental trader that I know has
a team of people that do nothing all
day long but research. But if you’re
an individual trader, working from
home, not only do you [I][B]not[/B][/I] have
access to the information that you
need in order to make an intelligent
decision, but even if you did, you
couldn’t go through it all. There is
no possible way, in my opinion, for
a private trader who doesn’t have a
team of people, to make educated
decisions based on fundamentals.
So what we do is that we eliminate
all that subjectivity and we focus
exclusively on technical analysis.”
Jason Stapleton. 4TH position at Varengold trading challenge
Source: FXTraderMagazine
Google search: varengold trading challenge jason
I am very confused. I have read babypips school and I know that fundamental plays a huge part in FX trading. But the quote of the article above explains that fundamental needs a group of people doing research and it is not suitable for ‘‘small guy’’ retail trader like myself. Is there a right or wrong answer? or is it both right?
I need some advise from all the fundamentalist, Please enlighten me.
You will not find two traders that are the same. Personally I like to get a good feel for the fundamentals macro and micro, and then look for trading opportunities on the charts.
I would advise you to find a mix of what you are comfortable with as it is you that is going to doing the trading, trying to follow everybody else is not going to work.
I’ve just posted my thoughts on this matter on a similar thread so I’ll copy+paste:
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The answer lays in your trading style, actually.
the way I see it, you can use fundamentals in two ways:
Micro - have your own prediction according to your own studies to a specific report outcome.
The Micro approach is a bit tricky. Basicly, what you need to do, is have more accurate forecasts than the majority of analysts. this one - I usually stay out of, unless I’ve done some serious studying, or know something other don’t (never happend yet…) . The reason for that, is as you said yourself: the guys at wallstreet usually aren’t less educated and may have more resources than you and me. I don’t want to play “lets see who’s more accurate” with them, unless I’m certain.
Macro - Use what you know on the longer time frames.
This one is what I’m using most of the time. if you’ve read the reports, and noticed, for instance, a steady drop in unemployment rate, and a steady rise in the housing market and Core PPI (just an example), you can use this information to have a better idea of where price is going in the next, say, 6 months. Constant positive reports mean the currency is heading north. These are the real forces moving the market. Just trade higher TFs to benefit from it, without having to ‘guess’ if a single report is gonna make\break your day.
If reports have shown signs of market expansion on one currency, and market contraction on another (for quite some time), it’s HIGHLY LIKELY to see a continuation of the existing trend for the upcoming months.
Just stay vigilant. Keep reading them as they come, to make sure the reports still are, by the majority, headed in your way.
I think there are plenty of times when you need to be aware of things that are happening. In particular, when significant news events happen, or are about to happen, you’ll want to know that.
However, keep in mind that when you look at longer term charts you don’t discount price action caused by moves that were caused by news events – fundamental or otherwise.
Finally, a lot depends on your style, strategy and time frame. If you are accumulating yen based carry trades you’ll want to consider that high growth in China/Asia and rising interest rates in Australia are likely to lead to a recovery of AUDJPY over the long term. Similarly, if the US and Europe are clearly in recovery we’ll see commodity prices rise – also a supportive situation for AUDJPY over the long term.
Actually, I have a planning in mind already. I love mid swings and I consider these 2 trading habits fine with me- ‘‘Think like a fundamentalist, Trade like a technician’’, or, trading fully based on charts.
But the article did mention that reliable fundamental source and insights are hard to obtain. is it true?is there any more specific data I need to know other than those mention in Babypips?
Let’s say a fundamental news event causes a large spike in the price of a currency pair. Later, when doing technical analysis, we don’t generally skip such moves when performing analysis. Fundamental items are baked into the charts… we are using the results of fundamental issues all the time whether we know it or not.
However, I would certainly agree that the markets are far to volatile to just sit on a position because you have a long term expectation based on fundamental issues. You can easily go broke waiting for fundamental issues to slowly develop and exert the expected effects.
1-What u mean is that fundamental data( news, commodities,etc) causes a large price action on the corrosponding pair.
2-When I am doing a full analysis, I should include, not just the fundamental, but also technical analysis.
3-All the price movement are caused by fundamental data, no matter big or small. The chart itself is fully based on fundamental effect.
4- however, you find that the maket’s volatility is not suitable for long term funamental trader.
5- I will lose money easily and go broke if I were to trade long term based on fundamental.
Am I right? Sorry my English is bad, so I need to break down to really understand this. But I am doing my best to understand everything here.
Appreciate it, regards;)
can you move this thread to forex town? The traffic here is bad.
This thread is about whether should I include fundamentals in my trading plan:(
not fundamental issues.
