Forex Fundamental Analysis
What Is Forex Fundamental Analysis?
Fundamental Analysis in Forex is a type of market analysis based on economic reports and political events that influence the forex market. The economic reports are usually found on brokers website under the heading economic calendar. The political events are usually unpredictable, because politicians can make statements anytime, or a political events can happen all of a sudden. So you definitely should incorporate this into your trading. I am a technical analysis trader. I love the technicals, while keeping an eye on the fundamentals. For the fundamental analyst, these events are usually a big deal. Lets look at some of the forex news releases that affects that market.
Forex Fundamental Analysis : Fundamental Reports
Which are some of the economic reports that move the market?
There are many fundamental reports that move the forex market everyday. See economic calendar for a complete list of fundamental reports that affect the market one way or another.. Some are have very high effect on the market while others have little or no effect. Which of these fundamental reports does have a high probability of moving the market? Below I have a list of the reports which does affect the market significantly. Keep an eye on these reports even when you only trade based on technical analysis.
- Gross Domestic Product
- Central Bank Rate Decision
- Central Bank Statement
- Unemployment Rate
- PMI Manufacturing
- Inflation Report
- ISM Manufacturing
- ISM Non-Manufacturing
- Bank of England Asset Purchase Target
- University of Michigan Confidence
- Advance Retail Sales
- Consumer Price Index
- Jobless Claim Change
- Retail Sales
Forex Fundamental Analysis : Forex News
There are many things that affect the forex market on a daily basis. You can see the live forex news here. However, in my daily planning, I would check the economic calendar to know when some of the major economic data will be release.
Forex fundamental analysis can be really confusing sometimes. And example: A few weeks ago the accomodative Fed policy would have given any trader the assurance of not owning the dollar, however, the Eurozone debt crisis just escalated, so there is also no reason now to own the Euro. As a fundamentalist what do you do? There is no good reason to own the dollar, there is no good reason to own the Euro. In this case, I would just focus on what I see on my chart and don't bother with the fundamentals.
When you take a look at the economic calendar, lookout for these fundamental reports. They do move the market based on whether they are released in line with forcast or not. They will move the forex market in both directions. So look out for these reports. If you don't want to trade the news like myself, then make sure you are out of the market before the release of any of the above reports. However, if you enjoy rush of adrenaline and manage your trades with care, you can play this news releases as well.
Sometimes just for the fun of it, I will enter a trade with a 1 micro lot without any stop loss of 200 pips, that is a loss of $20 if it ever get there and a target of 200 pips if it ever get there. I just watch the action and laugh my head off. Its fun, try it sometimes.
Important tip: On a serious note, during your normal trading session, never take a well calculated trade without an initial stop loss.
Conclusion: Forex Fundamental Analysis
Forex fundamental analysis is very important. However, you don't have to follow the news to be a successful trader. Keep an eye on the news releases, so as to avoid unnecessary losses. Keep away from the market before the news release and come back about an hour later. If you chose to trade the news, then I highly recommend
Now that you know how to identify simple entry points on your forex charts and how to manage your trades, its time to move forward and learn how to exit your trades like a pro. From forex money management that is trade management, you can now continue to Forex Exit Strategy
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