Fundemantal Analisys on Forex part1
Morning Guys,
It’s just few days away from Depa-Raya celebrations,so I take this opertunity to wish you all Selamat Hari Raya Maaf Zahir & Batin to Muslim and Happy Deepavali to all Hindus.
Today I want to cover on Fundemantal Analisys(FA) Topic.
FA been used for most trader as Leading indicator for trading.This also is one of few major elements that drives Market Trend.
To trade these factors you first need an economic calendar and a news source.
some calendars can be found at forexnews , Forexfactory, EventPak,and Dailyfx.
Try them all and compare data as concensus may vary amoung themnews sources can be found in various trading platforms like MGforex and coesfx.
Just open a demo account with them ( or a real one ) and use the news they offer in the platform.
The faster the news source, the better so i use a source from my partner who signed up with bloomberg,
this source is very fast and i am sure u would love it based on how we gonna trade.
The Strategystep
1. Review economic calendar and pic out the most important movers for the day.Forexfactory tells u this using color codes, if they are red, it means maximum potential volatility.
2. Identify the time of the trade you are going to makeThe calendar should show the time when the data will be released which is the time you will be trading.
3. Identify the previous and the concensus for the Economic data and look at the chart to tell how price would move if the data is better, worse, or just as expected.This is the only time you should use technicals in this strategy, just to tell how much.
4. Setup your trade plan. An example would be to Short the GBPUSD if:the US trade balance previous was -$65.0B and the Market expects (concesus ) -$67.0B and the actual came out to be -$62.0B. This is way, way off the concesus and is a thumbs upsurprise which is good for the dollar.
This plan would look like this in sumary:previous: -$65.0Bconcensus: -$67.0B
Long -> GBPUSD if US trade balance -$68.0B or less negative
Short -> trade balance is -$66.0 or more positive
This is how u should setup your trade plan. You must also be aware of conflicting reports like for example if a Industrial production and Manufactoring production values dont both mean a short or a long, then dont trade as the values conflict and the currency is ambiguous.
5. Trade that plan!!You will get into the trade EXACTLY when u see the figures come out, dont hesitate, or else u are screwed. Stay in only as long as the charts tell you or before a retracement is complete so that you dont loose your pips.I personally only stay in my trades for about 2 minutes max, AVG of 30 seconds
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KEY ECONOMIC REPORTS LIST FOR USA
with TYPE 1 being strongestTYPE
1- Non-Farm (This one is erratic but predictable)
- Trade figures- TIC Treasury International Capital
- Conference Board Consumer Confidence
- Current account
-Advance GDP
TYPE 2
- Personal Income and Outlays
- FOMC announcement
- Michigan final consumer sentiment
- NAPM Chicago
- Retail sales
- CPI
- Durable goods
- Philly fed survey
- Michigan Preliminary Consumer Sentiment
- FOMC Minutes
TYPE 3
- Industrial production
- ISM manufacturing
- ISM non-manufacturing
- Leading Indicators
- PPI Producer price index
- Weekly Initial claims
KEY ECONOMIC REPORTS FOR THE UK
TYPE 1
- CIPS Manufacturing PMI
- Industrial Production
- Housing figures
- Trade balance
- CPI
- BOE Quarterly Inflation report
- Retail sales
- Current account
- GDP
TYPE 2
- Nationwide house price index
- CIPS Services PMI
- Halifax House price Index
- MPC interest rate decision
- PPI- RICS housing price index
- MPC minutes
- GFK Consumer confidence
TYPE 3
- not advised
- Industrial production
- ISM manufacturing
- ISM non-manufacturing
- Leading Indicators
- PPI Producer price index
- Weekly Initial claims
KEY ECONOMIC REPORTS FOR CANADA
TYPE 1
- Monthly GDP
- Labour force survey
- Trade figures
- Retail sales
- BOC interest rate decisions
TYPE 2
- CPI
- Monthly survey of manufacturing
- Industrial capacity utilization rate
- Monetary policy report and update
TYPE 3- not advised
- Balance of Payments
- Business conditions survey manufacturing
Popularity: 17% [?]
October 21st, 2006 at 12:04 am
I tried FA, i found it is harder than TA. But if we can learn all the FA, i think we could trade better, with less fear. I still trying to find out the relation of each fundamental indicators, so that we could know we the market will go in longer term. Keep on going, we can make it.
Selamat Hari Raya. Maaf zahir & batin.
ps: Do you trade CAD? How is it? Hard or easy?
October 21st, 2006 at 12:21 pm
nice blog gmos … selamat hari raya aidilfitri
October 22nd, 2006 at 8:48 am
Yes Zali,
FA defenetely harder than TA,there is soo much elements in FA to consider before we can make a conclusion on which currency we were dealing with.
Anyway I rarely trade CAD,most of my trade was on GU & EU,others Major & Cross I just monitor them.
Thanks ammbiz,
yours also have alot of improvement.Wanna exchange link?
Slamat Hari Raya to all of you too.