Learn forex fundamental trading strategy

Posted: Cat_N Date: 05.07.2017

Fundamental analysis is the study of how global economic news and other news events affect financial markets. So, essentially, it all boils down to supply and demand; a country with a strong and growing economy will experience stronger demand for their currency, which will work to lessen supply and drive up the value of the currency. For example, if the Australian economy is gaining strength, the Australian dollar will increase in value relative to other currencies.

Higher interest rates are attractive to foreign investors and as a result they will need to buy Aussie dollars in order to invest in Australia, this of course will drive up the demand and price of the currency and lessen the supply of it. Gross Domestic Product GDP. The GDP report is one of the most important of all economic indicators. It is the biggest measure of the overall state of the economy. The GDP number is released at 8: The GDP is the aggregate total monetary value of all the goods and services produced by the entire economy during the quarter being measured; this does not include international activity however.

The growth rate of GDP is the important number to look for. Trade balance is a measure of the difference between imports and exports of tangible goods and services. Consumer Price Index CPI.

The CPI report is the most widely used measure of inflation. This report is released at 8: CPI measures the change in the cost of a bundle of consumer goods and services from month to month. The Producer Price Index PPI Along with the CPI, the PPI is one of the two most important measures of inflation.

The producer price index measures the price of goods at the wholesale level. So to contrast with CPI, the PPI measures how much producers are receiving for the goods while CPI measures the cost paid by consumers for goods. The most important employment announcement occurs on the first Friday of every month at 8: This announcement includes the unemployment rate; which is the percentage of the work force that is unemployed, the number of new jobs created, the average hours worked per week, and average hourly earnings.

This report often results in significant market movement. The durable goods orders report gives a measurement of how much people are spending on longer-term purchases, these are defined as products that are expected to last more than three years. The report is released at 8: Retail Sales Index The Retail Sales Index measures goods sold within the retail industry, from large chains to smaller local stores, it takes a sampling of a set of retail stores across the country.

The Retail Sales Index is released at 8: This report is often revised fairly significantly after the final numbers come out. Housing data includes the number of new homes that a country began building that month as well as existing home sales.

Existing home sales are a good measure of economic strength of a country as well; low existing home sales and low new home starts are typically a sign of a sluggish or weak economy. Interest rates are the main driver in Forex markets; all of the above mentioned economic indicators are closely watched by the Federal Open Market Committee in order to gauge the overall health of the economy.

The Fed can use the tools at its disposable to lower, raise, or leave interest rates unchanged, depending on the evidence it has gathered on the health of the economy. So while interest rates are the main driver of Forex price action, all of the above economic indicators are also very important.

Technical analysis and Fundamental analysis are the two main schools of thought in trading and investing in financial markets. Technical analysts look at the price movement of a market and use this information to make predictions about its future price direction.

Fundamental analysts look at economic news, also known as fundamentals.

Big Picture Forex Trading - A Long Term Strategy

Now, since nearly any global news event can have an impact on world financial markets, technically any news event can be economic news. This is an important point that I want to make which many fundamental analysts seem to ignore…. One of the main reasons why I and all of my members prefer to trade primarily with technical analysis is because there are literally millions of different variables in the world that can affect financial markets at any one time.

Thus, since I and many others believe that all of these world events are factored into price and readily visible by analyzing it, there is simply no reason to try and follow all the economic news events that occur each day, in order to trade the markets. One of the main arguments that I have read that fundamental analysts have against technical analysts is that past price data cannot predict or help predict future price movement, and instead you must use future or impending news fundamentals to predict the price movement of a market.

So, I thought it would be a good idea to give my response to these two arguments against technical analysis:. I would also like to ask them how myself and many other price action traders can successfully trade the markets by learning to trade off of a handful of simple yet powerfully predictive price action signals:. Looking at the daily spot Gold chart above, we can clearly see that support and resistance levels are important to watch.

Well, anyone who has traded for any length of time knows that markets often and usually react opposite to what an impending news event implies. Are there times when the market moves in the direction implied by a news event?

How to Combine Technical and Fundamental Analysis

Yes, absolutely, but is it something you can build a trading strategy and trading plan around? The reason is that markets operate on expectations of the future. So, if the actual number is , even, the market will probably move lower, instead of higher…since there were not MORE added jobs than expected. So, while , new jobs might be a good number, the fact that the actual report did not exceed expectations is bad for traders and investors can you see how this junk gets confusing now?

Part 5: What is Fundamental Analysis? » Learn To Trade

I almost confused myself writing this…. AND NOW FOR MY FINAL POINT: Since all of the preceding expectations of a news release have already been carried out and are visible on the price chart, why not just analyze and learn to trade off the price action on the price chart??

What a novel idea! You see, even after the news is released we can still use technical analysis to trade the price movement, so really technical analysis is the clearest, most practical, and most useful way to analyze and trade the markets.

But, what I am saying is that it should be viewed and used as a compliment to technical analysis and it should be used sparingly, when in doubt consult the charts and read the price action, only use Fundamentals to support your Technical view or out of pure curiosity, never rely solely on Fundamentals to predict or trade the markets. Jump To Next Chapter — Part 6: What is Price Action Trading Analysis? Introduction — What Is Forex Trading?

What is Professional Forex Trading? What is Fundamental Analysis? Introduction to Forex Charting. What Is A Forex Trading Strategy? Common Forex trading mistakes and traps. What is Technical Analysis. How to Make a Forex Trading Plan. The Psychology of Forex Trading. Professional Price Action Forex Trading Strategies. Any Advice or information on this website is General Advice Only - It does not take into account your personal circumstances, please do not trade or invest based solely on this information.

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You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose.

learn forex fundamental trading strategy

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Forex, Futures, and Options trading has large potential rewards, but also large potential risks. The high degree of leverage can work against you as well as for you. You must be aware of the risks of investing in forex, futures, and options and be willing to accept them in order to trade in these markets. Forex trading involves substantial risk of loss and is not suitable for all investors.

Forex Tutorial: Fundamental Analysis & Fundamentals Trading Strategies

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learn forex fundamental trading strategy

Gross Domestic Product GDP The GDP report is one of the most important of all economic indicators. Trade Balance Trade balance is a measure of the difference between imports and exports of tangible goods and services. Consumer Price Index CPI The CPI report is the most widely used measure of inflation. Employment Indicators The most important employment announcement occurs on the first Friday of every month at 8: Durable Goods Orders The durable goods orders report gives a measurement of how much people are spending on longer-term purchases, these are defined as products that are expected to last more than three years.

Housing Data Housing data includes the number of new homes that a country began building that month as well as existing home sales. Interest Rates Interest rates are the main driver in Forex markets; all of the above mentioned economic indicators are closely watched by the Federal Open Market Committee in order to gauge the overall health of the economy. Fundamental Analysis Technical analysis and Fundamental analysis are the two main schools of thought in trading and investing in financial markets.

This is an important point that I want to make which many fundamental analysts seem to ignore… One of the main reasons why I and all of my members prefer to trade primarily with technical analysis is because there are literally millions of different variables in the world that can affect financial markets at any one time.

learn forex fundamental trading strategy

So, I thought it would be a good idea to give my response to these two arguments against technical analysis: I would also like to ask them how myself and many other price action traders can successfully trade the markets by learning to trade off of a handful of simple yet powerfully predictive price action signals: Jump Back To Start — Forex Trading University Syllabus Of All Chapters Part 1: Forex Trading Terminology Part 3: Introduction to Forex Charting Part 8: Common Forex trading mistakes and traps Part What is Technical Analysis Part How to Make a Forex Trading Plan Part The Psychology of Forex Trading Part What Is Forex Trading?

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