Hi there
I see there are lots of events that affects currencies, stocks, indicies.
How to do fundamental analysis in effective and trade on news? I see in economic calendars
on forexfactory.com investing.com, but should I use the logic that how most often
it was affected in a past it will be affected on the same way, if for example we see unemploiment claims in USA
it always affects USD, so how to react and start thinking profitable on news?
Thanks
Hi f5,
I have pioneered on these forums the idea of money flows and fundamentals.
First off, the only economic releases that matter are those concerned with the economy i.e. real growth.
these are GDP figures, interest rates, CPI (Inflationary measures), Manufacturing, Employment and housing. These have different weighting depending on the country, for example in the UK housing and CPI data are more important since the UK is reliant on the housing market for jobs and general wealth creation and being one of the most expensive countries to live, prices matter any movement in these will get institutions thinking. The US is usually manufacturing and employment, with a very strong labour force and manufacturing sector any movement in these are going to affect the currency long term.
Now on to money flowsâŚmost people donât understand that all institutional money is merely migrated from one place to the next to keep it working so for example, if you have 10m to invest with 50% in commodities and 50% in stocks then any slow down in commodities will mean you will move 20% more into stock that is doing well. So Oil is a commodity that usually in the absence of crisis will move inversely to the US Dollar, also Gold and Silver are the ultimate safe haven so will move inversely to the US Dollar and with Switzerland and the Euro dependent on Gold reserves any demand will see these currencies rise.
The commodity Dollars like the NZD, AUD are dependent on demand for base metals like Copper, Iron Ore, etc. In the case of the NZD soft commodities like milk and butter. It helps to keep an eye on Chinese demand for these commodities as increased Chinese demand would essentially see these currencies rise.
Stocks also tend to move inversely to currency however the major indices donât reflect the local economy as they comprise of largely foreign companies or multi nationals, so Indices like the S&P 500, NASDAQ, FTSE 250 and 350 may be better gauges. Bond yields also affect the currency markets. Rising yields suggest money flowing away from safe bonds to riskier areas like stocks and cash and falling yields the opposite but the artificial stimulus from the central banks has upset the bond markets considerably.
On to new⌠This is merely a market makers tool to create volatility most pros trade the upside on the expectation of good news and downside on bad news days before the actual event, so when the event occurs, there is largely profit taking causing price to move sharply as traders exit the trade and sell their holdings to more than willing buyers or retail news traders. So I canât really comment on news trading.
Large institutions are aware of this so tend to take long-term positions on these fundamentals. In my opinion fundamentals are best used as confirmation of market direction rather than as trade signals. None the less they can reveal the sentiment of the market.
Simple question, not so simple answer. First go to the fundamentalvile section on this site, and subscribe to whatever session or pairs you are trading. I donât use investing, calendar, but I do like forex factory
When youâre in the calendar look under detail on the right hand side and click on it. A screen will pop up telling you what it is and how it might effect the currency youâre looking at. You should also check Bloomberg here for more news. Currency & Forex Trading News - Bloomberg
Itâs not as cut and dry as that, but that will get you started. Good Luck
Gp
You will need to monitor the news very closely for a few months to determine what news will affect the market, and what news will not. Even though some news is marked as âhigh impactâ on the calendars of forexfactory or other websites, you will find that is not necessarily the case
Thereâs no easy way but to do the hard work and understand it for yourself. I canât give you the answer and tell when what to trade or what not to trade.
Good luck
Hello âf5mtadasâ (I often become very curious about user names: where does this come from? Do you trade the 5m time-frame?)!
Excellent answers have already given, chief among them Emeraldorcâs!!!
I would add that if you wanted a news calendar WITH A DIFFERENCE, e.mail the Chief Strategist at DailyFX.com,
John Kicklighter, at <[email protected]>, to receive his âManic Crisisâ weekly calendar, which instead of labelling
items as âlow, medium, and highâ in terms of perceived impact on price, actually looks at their impact on market risk-trends
overallâŚ
Happy trading!
John Kicklighter does do some great videos on fundamentals so that is a good place to learn fundamentals from as well.
Good luck trading!
Ah! Someone else who listens to John Kicklighter! Wonderful!
I am a daily consumer of his trading and strategy videos⌠although I am now trying to break free of
being too much under his spell and relying more on my own analysis, but the videos are definitely clearâŚ
His approach to almost every video is to start looking at the S&P500 index as a measure of broader risk trends, and then analyse FX positioning across major pairs/crosses in relation to said risk trends⌠He also regularly uses graphs showing VIX (volatility index) and the ATR indicator in a bid to establishing how close markets overall are getting to a major reversal, MEANING that the NYSE positioning at record high leverage and the over-done, expensive, multi-year bull run in the equities (e.g. S&P500), combined with historic lows in market volume and yields, are the perfect ingredients for FEAR⌠What he is watching out for is the âsparkâ that will light up the fear powder-room and move ALL ASSETS (equities, commodities, currencies, stocks) unilaterally into risk-aversion, into de-leveraging⌠a massive unwinding of over-exposed positions, as investors try to get out quicklyâŚFEAR moves the markets faster than greed, meaning that a huge move to the downside (as we saw in late 2008) can happen VERY QUICKLY, with devastating effects⌠This is what he debates regularly: when will this happen? How close are we getting? Can we see the signals before it happens?
So, in essence, this is the take that John Kicklighter gives on the FX market, that is, looking for the bigger picture of this âon the brink of risk aversionâ scenario, but also looking at shorter-term opportunities for the retail traderâŚ
I certainly recommend getting on his e.mailing list to have daily links to his videosâŚ
There you goâŚ
PS - I do not work for John Kicklighter! If only!
he he he, âmy user nameâ, interesting question - the user name because of my first business online, the company was called f5m-millionaires-club 
- it is related with MLM and stock investing, but I no longer working with them, I am trading for myself, my most liked trades are 15M or 30M.
I just emailed to the trader you recommended and will try to get maximum benefits from him free trading videos, thanks you a lot. âthe black holeâ in my tradings is that sometimes I am complete confused on resistence and support lines when news happens.
Hey f5m, thank you for that! I just knew there was some interesting story in that name!
I hope that trading for yourself is bearing its fruits to you, and if not, I hope that it will soonâŚ
Good luck with it all!
Enjoy BabyPips and all it has to offer!
Cheers
Hey mate, follow my regular session updates to get a good idea of how certain economic releases affect price action and which ones could make a potentially strong impact: Pipnoculars | Forex Blog: Daily Economic Commentary & FX Analysis Hope this helps!
I just subscribed. Definitely worth the follow. Thank you
Gp
Yep. Iâm in also.
I so love the fundamentals of it all.
that link was worth reading, thanks for sharing.
Bahahaha!!! Lol. Wow.