Hi guys,
I have noticed that there is so much interest in trading news and other fundamentals analysis these days.I know of few traders around me who have resulted to trade only news.They have their calendars marked for time and date of the economics news.This brings me to my question.Have you tried fundamentals and analysis before? which gives better or more pips? How about the more risker?
Kindly share your view for the betterment of all.
Thank you,
Headmaster.
hmm. From what I have read and understood trading the news is considered news trading, not trading fundamentals. So that’s where you should first fix your understanding.
As for what gives more…news trading is really tough and especially in this climate news releases can be so unpredictable.
Best bet for a newbie is to learn technical analysis. Focus on support and resistance, channels, and candlestick patterns. After learning this, incorporate a few…and I mean FEW, indicators to help determine good entries and exits.
You are absolutely wrong.What is trading the news? What is fundamentals? It seems you dont know much about economics.lLt me help you out.Interest rate,GDP,Unemployments rates are economics data.They are where fundamentals analysis comes from.There is nothing like news trading.They dont announce whether you are fighting with your friends or wife or family member on economics.It is simply economic data which is fundamentals analysis.
If you are still unclear about this,i encourage you to download any free copy of Introductory Economics textbook (ECON101) ,print it out and start reading.
Enjoyyyyyyyyyyyyyy.
Headmaster.
I trade technical levels but you’d be a fool to think that the economic reports don’t set the stage for those technical levels to play out. I don’t see why anyone would even separate the two, we’re trading currencies here, we find and use every bit of a edge we can find!
I also believe you need both, it is important to remember charts can only tell you what happend it the past, technical indicators can only hint at what might happen in the short term future based on what happened in the past.
The economic news can tell you when the central banks are likely to change their interest rates, or if they are hinting they may be prepared to move large amounts of money to support their currency or if there is good or bad signs for the US economy all those things can make massive trend reversals happen very suddenly, charts alone cannot tell you everything
+3 on the thoughts of tech and fundamentals working together.
They go hand in hand.
Can’t have a technical retrace, without a fundamental drop or rise.
And the fundamentals will often center around technical levels.
Instead of trying to decide which one trumps the other, take the opportunities they both give.
There should be three options. Technical, fundamenta, and price action.
Price is always right.
Letz compare this with skiing (alpine). There are big mountains and smaller hills. You can ride just sort of one, but you will get farther if you know how to ride both.
The technical indicators are good to find a good entry and exit point, set the right SL/TP, etc. pp. The fundamental indicators are good to find the destination of a big trade and the surroundings all together. That’s how I see it.
Yep I agree with buckscoder.
I find technical is also very very strong with short-term trading and fundamentals are strong with long term trading as well. It’s interesting to watch the two ideas when they collide - say fundamental is sending the price south but technical the price is bouncing off a bottom bollinger band and heading north. The price tries and tries to go north but the fundamentals create strong resistance and keep the upward movements very shallow.
BOTH fundamental and technical are essential to trading in my book. 
Here is my take on things. Fundamentals are what drive market sentiment. However if you were to trade purely off of fundamentals you would have no way to time your entrys. Because even if you are gifted in knowing one currency’s strength verses another’s weakness it will still boil down to what does the market feel and at what point they feel it because the market is always right. We have all seen where a news release was positive for a currency but yet the currency declines. Why is that? Well that is a good question, it is because we have a constant expectation of value and even if a report was positve we may have expected to be stronger or better or there may be factors we were simply unaware of.
So at the end of the day I am certain that technical analysis (for me price action/supply and demand) will win out simply because we are able to trade what we see and time our entries and exits. It would be very wise to keep in mind the news releases because even the best technical setup can move unexpectedly at a news release.
Keep in mind one thing…[B]The market is always right[/B]
What I’m really looking at when I see a chart is supply/demand dynamics recorded over time. Now what I believe is that there are flows of supply and demand created by technical and fundamental interests, and by studying price I can map out where supply and demand flows will start to over-run the other and then take a trade based on that.
Fundamentals give me some huge clues which help me get a very basic picture of the supply/demand flows. For instance, with the AUD paying a premium interest rate I expect there to be ever-present the demand to hold AUD for that premium. BUT that does not mean that supply cannot override demand, and so without the technical picture superimposed on that fundamental template, I would not be able to make high potential/low risk entries and would’t be able to profit from that fundamental bias! 
Here’s the challenge I have with fundamental analysis:
The one way I think its possible to heavily profit off of fundamentals is if the general consensus is wrong. That’s when everyone runs for the exits and the price makes a big move.
Outside of that, what do you do, take economic statistics and apply various economic models to them to see which pundit is right or wrong? You’d have to be an economist to do that.
Furthermore, how do you base your trading decisions fundamentally? GDP is up, but PPP is imbalanced, so what do you do? How do you know what the most likely market reaction is going to be? PPP tends to have a lesser effect than GDP, so should you even bother looking at it?
Personally, I would love it if someone told me how to properly apply a fundamental model to trading, which allows a retail trader to have an edge. I’m not saying this sarcastically, I just haven’t figured out how this is quite done yet.
- There are always two sides to every fundamental story.
The media & talking heads are trying hard to give you that impression & to get you to focus on.
Present flavor-of-the-day (event driver) working its way through the pipes & trying to throw you off synch with money flow.
Will this and that continue?
Who gives a sh*t.
It’s not going to change market rhythm & the make-up or the heartbeat of the price action.
That will continue to go about its business regardless.
All what we [traders] are concerned with is how [U]fast & how aggressively we can milk the situation & grab our piece of the action[/U] before the next flavor-of-the-day (event driver) hits the wires & smiles at us trying to throw us off.
Personally, I would love it if someone told me how to properly apply a fundamental model to trading, which allows a retail trader to have an edge.
You want to get in synch with money flows.
Start focusing on that element.
The only event that can instantly and concretely change the value of a currency is an interest rate change for that currency. That makes the currency more valuable to hold. Most economic events are looked at in that context, meaning how will this be perceived by the central banks in charge of moving interest rates?
The rest is just changes in the psychology of the market participants. A fundamental bias cannot be used to enter a trade alone! It’s more of a directional bias, and each economic report that is released is used as evidence to reinforce or undermine that bias.
If you want a modern example of that, look at the AUD. Everyone was expecting a hike to 4.00% but instead they left it at 3.75%
This caused an immediate sell-off, but more importantly, price has not risen above the level it was at before the interest rate announcement. It got close, but was then sold-off, broke a huge support level at .8800 and is still pretty much wallowing in its own misery as we speak, struggling to find some kind of support. A surprise like that is huge because it shakes the confidence of the AUD bulls, their fundamental bias is gettin shook, and in the confusion they are exiting, the bears are starting to take over.
Personally, I would love it if someone told me how to properly apply a fundamental model to trading, which allows a retail trader to have an edge. I’m not saying this sarcastically, I just haven’t figured out how this is quite done yet.
I’d love to build an accurate picture of this as well. ideally a spreadsheet with rows of currencies and colums for things like interest rates, bond yields, GDP, PPI, unemployment data, call/puts etc. Then be able to assess he strength/weakness of a cutrrency on these figures.
I think the importance of fundamental and technical data depends on your own trading style and time frame. If you’re scalping the 10 minute charts for 10-15 pips here and there then you might not need to follow fundamentals as much as someone swing trading the daily/4H charts for trades that will be open for 2-5 days.
Let’s not compare apples with oranges here folks!
Well said, i guess you are background in economics.:D:D:D
Right.But you will agree with me that there are some folks that trade on fundamentals.These folks claim that technical analysis is inherently flawed(lagging indicators,whipsaw fakeout).And these guys are really making money as well.Just two or three trades a week,they are done.What is your take on that?
But you will agree with me that price action is a function of fundamental.We only use technical analysis to derive it.Take for example,if the unemployment rate in US is high that signals that the US economy is not sound,it directly affect USD.So,it is bound to affect and pair of current you trade with USD.Now,where, in the world, is any indicator gonna show you that one?
I stand to be correct.
Well said.I have nothing to add or subtract from your comment.Good job.
Ok.But i m convinced that it is possible to trade and make profit without any knowledge of technical analysis while it may be hard to trade completely over a long period of time if you completely ignore the fundamentals analysis.I stand to be corrected.