Understand the fundamentals

Hello everyone!

I’d like to know how to interpret the importance of different fundamentals news. For example, which news is more important, therefore giving more impacts to Forex markets.

Also, are there any period in a year without too much new releases, so that I can straddle trade consolidation boxes with relatively more assurance in mind that there won’t be a bulldozer news screwing me up?



hi wllen1,

Lot of ways to judge true high impact news. But i have my own way to judge high impact one. And maybe u can reconsider my system when judging high impact one or not. See here my news release system:

As far as i know, Dec till mid jan is the worst trade for news release.
And the best volatility held on Feb till April. We can learn more on MeiHua post here:

Happy pips mate :slight_smile:

Well, there is not an easy answer for that. From my perception all economic theory is just BS. Growth, sppending, credits easing, we are told that stuff is good. I think different, when you see an up trend and all fundamentals are green and everybody is happy i dig deeper and for example the growth indicator has shown thre consecutive positive periods, most people sees it as a woo hoo!!! But if you look closer and let’s say the data was +4.2, +4.1, +4.0 that is three positives in a row but I see it as a slowing down that most people are not aware off and I wait for the precise moment to take the opposite position.

You wont be screwed up if you dont follow the trends. Slowing down that most people are not aware off and lets wait for the right time to take the opposite position.

No doubt, fundamental analysis is very important, and like you said it is not all news that have impart on currency value. Well, I think you should learn how to use indicators very well because that will give you more confidence when trading. Every indicator helps in particular condition.

I am afraid it does not work like that. There is no news even that is a holy grail of forex. Each economic news release will move markets and it depends on how big the surprise/disappointment is. You should be aware of every economic news release that comes out and monitor your trades accordingly.


I have been extremely attracted to fundamentals lately so let me give my take.

There are two ways to trade economic reports:

    ECONOMIC REPORTS are OK to trade on the short term, for intraday trading, but it´s slightly risky because sometimes the market goes the opposite direction than you would expect. Many of us have grown to think of economic reports as volatility injections.

    The most useful way to use the economic reports In My Opinion is to draw a mental picture of an economy and then look to the Central Bank.

When an Economic Report comes in better than expected, you would expect the country´s currency will rise. However, we know that the Long-Term Market Movers are Interest Rates, not Economic Reports.

So the end result may be a better than expected report (Like the NFP Report last Friday) to which the FED will hint respond as either dovish or hawkish, and it is from THERE that you make your predictions.

:X I hope I didn´t just confuse you more.

You are on the right path. Fundamentals are the key to taking forex from a frustrating hobby to a fulfilling career… Only thing I would add is that the long term fundamental bias is not just limited to interest rates but also monetary easing in the form of treasury buying programs or other forms of monetary instrument purchases… These have a huge impact on currency value… Take a look at BOJ and BOE programs and what they have done to their currencies recently.

Ultimately the strongest moving force behind the currency market is central bank policy… Keep an eye on central bank statements and speeches from the key central bank figures… The GDP, CPI, employment figures are used as a way to predict what the central banks policy will be…

For instance this last NFP… Much better then expected… And the Federal Reserve has already stated that they are waiting to end the current quantitative easing once employment improves… So since the NFP showed improvement, that raises expectations that QE may end earlier then expected which in turn is dollar positive…

A strong NFP doesn’t always mean a positive usd response though, it just depends on the response the central bank will make if any… We are now in a period where US employment number will have a significant impact on the USD (more so then usual) as its a barometer of when the Feds end QE, which has been a major component of a weakened dollar throughout the last 6 months.

For now, until the Feds set a definitive date of ending QE, positive us employment data will boost the USD.

A simple way to identify high impact news is to look at economic calender. I use forexfactory.com economic calender and filter out the high-impact news.

But do note that high impact does not necessarily mean it will move the market. It is all about the difference between the forecast figures vs the actual number released. If the difference is significant, then it might move the market as it was not expecting the figures released. If the actual number turns out to be same or very close to the forecast figures, then the market might not move at all.

Another point to note is that the currency price need not necessarily move in the expected direction. For example, let’s say the GDP for Australia is better than forecast (AUD positive news), logically we should expect AUDUSD to rise in price. But if you have been trading the market long enough, that might not happen.

The market will move whichever way it wants. As traders, we must be nimble enough to recognise the changes and trade with the flow of the market, not against it.

I think every traders need to learn the basics of fundamental trading. You must learn how to analyze events calender and you must be able to recognize changes. Also, focus on high impact news, but be cautious because not all ca move the market. “If the news are better than the forecast, it is better to buy. If the news are worse, it is better to sell”.

It can be the market trend, fall in currency, poor sales and so on. The happenings at the present time can affect the market greatly.