So lately, I have been playing around with the economic calendrers on mutable different websites. From what I concluded, most (high impact) information does not change the market like I was expecting. Should I focus on technical analysis or should I only use fundamentals on events that I know a large profit(GDP,CPI, trade balance etc.)
Thanks,
Andrew
It is for me, more or less.
It depends what kind of trading you do.
If youâre (or âif you want to beâ, perhaps) the kind of trader who holds a trade open for a month, or a year, youâll need some kind of mastery over fundamentals, to do that.
I donât even hold positions open overnight, and Iâm not really interested in it. Economics isnât my subject. I like statistics and probability, so I do intraday trading.
Sure, Iâm careful not to trade at 1.30 on a Friday afternoon (UK time), once a month, when the US unemployment figures are published, but it takes only a minute to learn to do that. But apart from one or two things like that, I donât really want to know.
This is an extreme perspective on the subject, I freely admit, and not one that everyone here shares (to put it mildly.)
Not very âhigh impactâ, then, after all? 
It seems to me that it depends what sort of trading you want to do.
Or possibly, if you donât like fundamentals (as I donât) you can decide to do short, intraday trades trying to avoid fundamentals? Thatâs suitable for people who can sit in front of charts all day. I chose it partly [U]because[/U] I donât like or trust fundamentals.
So, I donât know anything about you and canât answer your question (it was a long post, to say that, wasnât it? :8: ) but - hereâs the point - [I]neither can anyone else[/I], realistically. However, donât let anyone tell you that you â[U]must[/U]â master fundamentals. I can tell you just from my own experience that that really [I]isnât[/I] so.
That sounds to me like news trading. Basically, youâre just trying to figure out what the marketâs going to do given a certain release. This sort of thing take A LOT of experience and LOADS of time tracking prices and news flow.
Fundamental analysis is about looking at value. Is a currency over/under-valued based on some kind of economic analysis? Thatâs the sort of thing that can only really be analyzed and traded in longer-term time frames. Iâd argue even longer than the 1-month holding period lexys talked about.
Now that is a VERY interesting question, Andrew! I fully agree with what Lexys and Rhodytrader say above especially concerning short-term trading. A countryâs economic situation does not (visibly) change in one day or even one week/month/year sometimes! And, indeed, a single event can cause major changes to a nationâs economic state and yet its actual impact cannot be seen for months after the event happens - I am, of course, currently referring to Brexit as an example. No one can now predict on fundamentals where the GBP will be in a yearâs time.
Additional problems occur when the currency is more than just a nationâs monetary unit. The USD, for example, may act as a safe haven in times of uncertainty just like gold, etc and its value is then extended beyond purely economic data.
A further problem is that forex concerns a pair of currencies and not just one. Therefore its movement is subject to the [I]relative [/I]performance of these two economies rather than just one set of data.
And an even further problem is that economic data releases are often even more historic than technical indicators and often subject to subsequent amendments.
An yet one more problem, the markets tend to focus on different issues at different times. Sometimes it may be employment levels but then sometimes retail spending is considered more relevant. Then it might be fears of inflation or deflation that concern the markets. And then, as at present, it is the operations by the various central banks that form the focus points. If all the various economists cannot agree on a common verdict concerning all these issues then how can an individual trader hope to out-perform them?
But I suggest you take a deeper look at what you are saying when you ask should you focus on technical analysis - what is technical analysis other than an analysis of what all other people are actually doing in the market rather than what people might be just thinking about fundamentals. In other words, your choice is to either (a) form a personal opinion on where the market might be going based on your own analysis of the available fundamental data or (b) analyse price movement as being the visible [I]net impact of the [U]collective [/U]opinions [/I]of [U]all [/U]the other people who are not only looking at the markets but also [I][U]actively participating[/U][/I] in them.
The first option is pretty much impossible for an individual and gives no information concerning even suitable entry and exit levels. The second option just requires a sound technical analysis model, sensible risk management and strategic parameters, and a good dose of discipline and patience.
Great answers by Lexys and Manxx, as always 
I would add that, after a year of dabbling with long-term positioning based on thematic trades, I can say that OVER A LONGER TIME-SPAN (i.e. months or years) those themes do play out and can be foreseen: this is not easy, and even the best global macro hedge-fund analysts could get it badly wrong.
Certainly, though, it flies in the face of popular wisdom that âtrading should be unbiasedâ: when you construct a theory based on your evidence, and form a bias over a medium-to-long term, the only way is to believe in it enough to trade it. Managing the possibility of a widening gap between your bias and what unfolds on the chart is what long-term investing is about: no stop-losses, just pursuing an idea in its complexity, applying it in diverse ways, hedging it, and nursing it through drawdowns if you must. It is not about being right, although trading a bias demands unshaken belief in yourself and your analysis, with no promise of returnâŚ
Then, I would say that if this is what kind of trader you want to be, you will find fundamental analysis anything but a waste of timeâŚhowever, global macro analysts are also keen mathematicians and back their theories on bigger themes with lots of technical observations⌠In the end, there is no getting away from those charts, which means that the popular dichotomy between âtechnicalâ and âfundamentalâ traders is actually a little far from the truthâŚ
You need to have a basic understanding of the fundamentals of the pair commodity or index that you are trading. Big news results set the tone and direction of price action and have the strength to reverse trends and keep them going for days and weeks. For me, once I have a âthemeâ or an idea of market sentiment, it makes it easier to find entries based on my bias. If you scalp the noise of the lower time frames then directional bias donât matter. If you trade the slow longer time frames then news is important. IMHO.
Thanks everyone!
This is my first post here. There are some really good people on this board
What you are referring to are the economic releases. When trading something like NFP - I donât usually get in before the announcement- if there is enough of a miss against expected- there will always be heavy momentum to carry a trade through for an hour or so.
Personally- I like to combine technicals (I use wycoff) with fundamentals. For instance where a pair is overbought- and some news appears which is bearish on the first pair and/or bullish on the second. It doesnât have to be an event- could be a news item. It catches the market by surprise and you get a huge movement.
For instance remember the last FOMC statement - that was essentially dovish (based on the previous figures that were coming through). Cable rallied up over a number of days due following that.
News items- can have an effect. In June I made a fortune - just trading off the Brexit polls. I remember Boris Johnson backing the Brexit campaign that moved that made Cable tank for about two weeks.
Always keep an eye on Reuters etcâŚbecause if they have an article or an interview with a central banker- it can really move the markets. However, it depends who says it.
I would also keep an eye on COT- particularly if it is heavily bearish or bullish by the commercials
Looking ahead - if Trump starts to close the gap with Clinton in the US polls the dollar will come off a lot.
Good luck
Good morning!!!
Good points, Sean, although personally I watch more the Non-Commercials (Leveraged Funds) on the C.O.T. report; here is why:
Fundementals mean nothing its all about maths the aussie cut rate most would of thought it would go down yes was a big swing but i bet on the buy and only went 20 perent of account means nothing
its all about correlation and maths of every single pair
i new that the stupid people would think would go down so i bet 20 percent of account on buy went massive 45 pips down then recovered there is your answer fundementals mean nothing. aussie cut rate and went up there is your answer thats cause the maths didnât say so
so many people would of lost so much money thinking the aussie rate cut going down
but i didnt, but i new that there would be a drop 45 pips it was so i accounted for it there is your proof fundemenatls mean nothing.
Its maths
the only time i have to worry about my maths is to count for volitility of stupidity
You got lucky thatâs all. Aud at the first rate cut tanked down big time. Mondays result was different and aud jpy went down then reversed due to yen weakness on a budget get release. You are always trading 2 currencies when you open a position. Youâre not only buying aud youâre selling jpy on that trade so itâs a good idea to know why moves happen.
To call it stupid is stupid. Price moves in a direction for a reason.
GOt lucky look at my aud usd thread no loss, predicted stocks down no luck about it up today but on the day was down no luck about it fundementals mean nothing i have no loss thread
lucky would be 25 percent not 95 percent
If i was wrong would of blown a whole lot of money for me prediction of 45 pips i come close, but she went up just as i thought. and you canât say i didnt even though i didnt post it my aud usd thread is the proof of my record, the questions are do fundemenatls mean anything mean nothing.
the aud usd will rise in the month as will the aud usd and usa stocks will plummet even though big gain
I am sure that some people are pretty successful in their trading while basing their trades on fundamental analysis. Iâm not. I prefer technical analysis all the way.
Yes like as yesterday after NFP news has been released then suddenly making eurusd, usdjpy and almost pair that has usd element, move strongly only few hours movement, I am hear some trader share good proof profit from news traping
Fundamental analysis is [I]not [/I]the same thing as news trading. It is [I]not [/I]about taking a speculative position on the outcome of one specific event. It is about forming a broad view on the longer term flow of real funds into and out of various currencies based on an analysis of on-going data concerning industrial and commercial progress in various countries as well as the global movement of huge investment funds, which can be based on a multitude of factors.
It is worthwhile for traders to remember that there is also a world where real money is moving. If an economy is doing well then it means that companies are selling their products well both domestically and abroad. Often these trades are priced in USD even though the US is not even one of the trade partners involved. Whenever commercial business is performed in foreign currencies there are forex transactions involved. And these are often repeated when company receivables are domiciled back into domestic currency. The more commercial activity there is then the more currency transactions take place. And when this commercial activity grows more in one currency region than another then there is a net flow of currency demand into that region and so on.
Investment and pension funds move huge sums globally and gradually. They are influenced by interest rate differentials, currency movements, changing geo-political risk factors, changes in industrial trends and company growth perceptions and many other considerations including environmental concerns and even ethical, religious and moral factors.
The actions of private, retail speculators is an entirely different layer on top of this underlying, constantly rolling, ocean of wealth. And the objectives of this speculative layer of traders is usually far from benefitting from following the relative changes in the long-term trends in economic cycles between different economic and currency regions. Their objective is to make money and to make as much of it as possible, as quickly as possible, but within a structured risk management model.
For this reason, it does not seem to make any sense for a retail trader to try and formulate speculative trades, whose only purpose is to optimise profits, on an individual fundamental analysis, where even all the information available cannot even be included in that analysis. On the other hand, by watching the price itself, one is actually watching the end result of both everyone elseâs fundamental analysis [I]and [/I]the pressures arising from the actual movement in funds in the real commercial markets.
Naturally, short term charts do not reflect this activity directly. They are greatly swung by the vast mass of technically-based speculative positioning that is constantly being triggered as the price moves up and down. If one thinks of all the MAâs, all the fibs, all the S/Rs, all the oscillator signals etc etc etc in each and every time frame from single ticks to 1 hour and then add to that all the various stoploss and target level policies of all the active traders and automated programs constantly watching the markets then there is surely a reason at every single tick for someone somewhere to buy or sell at that level.
Therefore short-term trading is really nothing more than a computer game where you try to guess whether to jump or duck with the next short move. When you are right you make pips, when you are wrong you lose them. It has absolutely nothing to do with âFundamentalsâ
If one trades on daily charts then one is closer to identifying longer lasting trends based on more substantial real factors and the movement of real funds. But even daily charts do not move smoothly and include up days and down days within any move. So, once again, we can benefit by technical analysis to help eliminate the ânoiseâ and âclutterâ in movement and identify the core direction within it. Technical analysis can help identify whether a particular move, or set of moves, is significant regarding a possible change in direction or not.
Just some ramble on a Saturday eveningâŚ