With the correct approach, fundamental analysis can bear very good fruit, mainly you need to know how to analyse and evaluate the economic news.
Definitely not. For me it is the Foundation. Without it no where
Whether it is a waste of time or not depends on the kind of trader that you are. Fundamental analysis is very important to position traders. So if you are not, I would understand if you say itâs a waste of time. But the most important thing here is for you to determine the kind of Trader you are and the analysis that is important to you.
I agree! Depends upon the kind of trader you are. For me a combination of both technical and fundamental analysis worked well. I rely upon Technical analysis to see the short term trend and fundamental for the long term picture of my pair.
Everything is up for interpretation, there are very few if any hard facts in the world of trading.
What is good in some situations is the worst thing ever in others.
Fundamentals arenât exactly a waste of time, but no indication of trade direction should ever be taken as the 100% reason for movement.
Sometimes news comes out and the move only happens an hour later.
Does it mean the news was wrong? Does right/wrong even apply?
More questions, more uncertainty.
My opinion is that you must have a look on the economic indicators that are coming in the week, just to know if there is a big event that you have to avoid trading in these hours. Fundamental can help you to lose trades in a strong volatility period with spreads.
At least nobody will have any doubt which oneâs more important, after reading your post ⌠:rolleyes:
If you are trading long term then I donât think that you can say fundamental analysis is a waste of time. If anything it is essential the price will always move with the fundamentals in the long term
It is not so much a question of whether fundamental analysis is a waste of time - sure, we can assume price will move with the fundamentals. The real question is whether you or I or anyone else is actually [I]capable [/I]of analysing fundamentals, especially as the current condition of many factors is unknown (data releases are very lagging) and the impact of other factors almost impossible to determine.
For example:
Mr Trump is promising signficant tax reductions for companies - bullish for economy? and the dollar? when?
Mr Trump imposing protectionism - bearish for domestic prices and economy? and dollar? when?
Mr Trump says euro is undervalued relative to USD - bullish for economy? but for the dollar? when?
Fed is expected to raise rates in increments in line with economic growth? Will it happen? when?
And letâs not forget that the USD is only one side of the currency pair. If we consider the EURUSD then on top of the above dollar factors letâs add:
what is the impact of Brexit on Euro? when?
what is the impact of refugee problems of Euro?
what is the likely outcome of the coming French and German elections?
And then letâs remember that although price reflects fundamentals it is also well in advance of them since traders and investors alike both try to anticipate the future situation and not the present. So everyone is extrapolating based on latest, but historic, data; political statements; and central bank policies (amongst other things).
If one can digest and consistently compute a correct direction from all that then congratulations.
âŚon the other hand, if one assumes that all the information that is available is accounted for in the actions of market participants, and that the price reacts to the majority view of those participants, then surely it is more accurate to analyse price movement itself rather than the multitude of factors which, as a whole, are affecting the price.
I know I shouldnât say anything, I donât want to confuse new traders, but when it comes to fundamentals i have to put in my two cents worth. I have found in my experience that fundamentals play a big role in the currency markets. How do I know this, by reading the news and watching Bloomberg TV. I have noticed a direct correlation in the movement of the markets with fundamentals. Do you have to read, Yes! Do you have to put time in, Yes! Does it help in trading, Yes! For me anyway I find it useful. But that does not exclude technical analysis either. If you donât think fundamentals donât have an effect on the currency market just look at a lot of news sites, they now have a special section on What is Trump going to do next! I have found fundamentals get easier over time, the more you read the more you learn, the easier it is to understand. But for me technical stuff is important to. You can get a lot from the economic calendar, and just reading the headlines without the whole article can give a perspective on strength or weakness of a pair. But with Trump in his rhetoric has caused a lot of risk off for the dollar. Bond buying from other countries is down because of Trumps rhetoric, but there buying stocks! Not to give any financial or trading advice just my opinion.
Hello!
I know it is an old topic but I decided to join because Iâve always thought that Fundamental analysis shouldnât be undermined. From my experience trading, my personal opinion is that we should mainly rely on Technical analysis when it comes to FOREX but never to ignore the economic and political situation events when deciding to enter. I choose my positions very carefully relying on a tight risk management strategy and I think that in order to be successful you shouldnât think of fundamental as âa waste of timeâ. Actually, when trading stocks and CFDs I put even greater importance on the fundamental side. So in a brief conclusion, I strongly suggest using both technical and fundamental not categorizing it as âa waste of timeâ.
1 Like
Fundamental analysis is a powerful tool to understand market trend. Depending on your trading type and interest you can choose fundamental or technical analysis. It is more effective because it is updated and near to market trend. You have to get skill how to trade with fundamentals.
Its all in the charts. If fundamentals arenât moving price, theyâre no more help than any other information, like a weather forecast or traffic news or the latest fashion collection releaseâŚ
2 Likes
Well, Fundamental analysis doesnât mean only Economic Calendar based trading! Donât follow any data blindly, read the full news with details; try to understand the hidden meaning! Fundamental analysis is the most powerful one!
So then what, Peter?
After youâve trawled the global news, digested the central banksâ pronouncements and watched lots of webinars updating on the latest risk tolerance of USD investors, how does this affect your trades?
1 Like
I wouldnât say its a waste of time because fundamental analysis can squash technical/chart in a second so its always a good idea to keep an eye on it.
So for example you could have a perfect set up on the charts for oranges and then a hurricane comes
Yes, FA makes prices move on the larger scale.
But in practice, FA does not signal anything in advance. FA causes reversals, TA then illustrates them. Neither predicts.
Actually, TA has a slight edge because it doesnât just illustrate what effects past FA has had, it also shows the degree of confidence in price rising or falling that the big market players have. So if they start to pull money out of a given currency as they judge the probabilities of a FA-driven reversal, this is shown in price action (imperfectly). Meantime, FA has not changed.
1 Like