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  1. #1
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    Market fundamentals. Part 1

    Hi traders!

    Let's talk a bit about market fundamentals. If you want to survive and obtain ongoing success in trading, you'd better rely on fundamental principles that don't change not setups. There are bunch of setups over there, candlestick configurations and other stuff.
    But if you know principles, you will be more flexible and your success will be more solid


    What you can rely on trading markets?



    1. Imbalance creates trends, balance creates trading ranges


    Yes, exactly this sequence. Not "trend is your friend", but imbalance is your friend, because trend is an outcome, imbalance is a market condition that creates this outcome.

    "Trend-oriented" mindset often pushes traders seek for bad trade locations, when opportunity no longer exists.
    Imbalance is what you really need.

    Though trading is not a science, it has some unwritten laws beyond price action:

    First - big market participants create trends and rely on fundamental analysis. Biggest players don't rely on charts in decision making process.

    They have charts for just one thing - to know how crowd thinks and where majority will step in the markets. Big players need "hot spots" on the market (when many traders are in) to have liquidity. Their positions require liquidity and without liquidity they will be unable to accumulate enough volume for their positions.

    Imagine player with pip size equal to 100.000 USD or higher. Of course, he will need liquidity and will build his position long enough.

    That's why they monitor charts to know when traders will step in. But the reason they need to build a position is not techical analysis. Reason is fundamental analysis and analysis of real supply and demand.


    It's hard to spot "big player" but one thing will help you. Address yourself a question - who loses on the market? Who is caught in short or long positions? If you understand that long players are losing, you automatically know that bigger timeframe short player opposes them.
    Smart money players create imbalance and absorb volumes.

    Who provides liquidity, who consumes it? Like Warren Buffet said - if you find yourself near the poker table and don't know who loses money - it's you who loses it.


    2. Keep an eye on hot spots in the market


    What is a hot spot? They are: important extremums, round numbers, option barriers, in a nutshell - spots that traders are watching.
    If you know that volumes are there, big guys are also there.

    Every trend can be divided into several parts - young trend, mature trend and culmination.

    Young trend and culminational phase represent great imbalance but with one nuance - big players are building positions in young trend, and covering their positions during culmination.

    If you see "obvious" trend and see very hot market, be aware - avoid being a laggard.


    Later on I will apply some charts.

    See you and trade responsibly!

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  2. #11
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    Quote Originally Posted by amrmorasamir View Post
    How?I think that fundamental analysis is one of the best analyzes that can be relied upon in Forex beside a lot of ways other trading, but it is the foundation and I do achieve substantial profits by trading using this type of analysis and rely on the news in trading so I advise a lot of novice traders focus it
    Fundamental analysis is very important to succeed in Forex. Fundamental analysis along with technical analysis can help us to manage the risk and become profitable in Forex. Only technical analysis cannot help us to earn in Forex. It can be dangerous to use only one analysis in Forex.

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  3. #12
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    Quote Originally Posted by rajahentai View Post
    i have been trading using fundamental analysis and the results is amazing, still i'd like to adds some technical analysis into my knowledge, because i have seen so many good technical traders can spot a good level of market's price when they see something is coming. as what you have mentioned, they needs my fundamental analysis to determine which directions is the market will be moving to, and i need their technical analysis about where to set some TP and SL.
    I was talking about institutional players, they don't use techical analysis for placing a trade. But they monitor it to find "hot spots".
    I guess that their understanding of fundamental analysis differs from ours.

    They have research and analytical desks and it's not about analysing "economic indicators" and "news".

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  4. #13
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    Nowadays i believe, high impact news results moves the market a lot . Day before yesterday, market moved around 100 pip in eur usd and gbp usd each in just one hour. SO first of all it is better not to trade during news, but yes, experts always says to analyze market both technically as well as fundamentally too .

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  5. #14
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    Quote Originally Posted by raazsr1 View Post
    Actually i do not like Fundamental trading . The post is nice and much clear . Mostly the hot spot is much helpful . Because when a trader is in critical position and do not have any choice what to do then a fundamental trader can use hot spot . There are risk also. It seems complex to me .
    I like technical analysis as it is more simple .
    friend i like fundamental analysis because i observed that many times our technical analysis do not work but market move according to forex news and market move many pips.so i think for getting success we have to analysis the market in various ways.

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  6. #15
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    I thank you for this great post and the new camer to rapidly penetrate the market, or an existing business can be found in many of the posts, and also the second hot spot of the actual foreign currency accounts are extremely important to you and where you successful traders have no choice at this point is always to leave the trade where the risk related to trade and commerce decision want to put that right, and a series of stores that will help investment

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  7. #16
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    Well, experts says to always trade when you have done both type of analysis , that is, fundamental analysis as well as technical analysis too. In this way , firstly you will have high reward and nearly very low risk. And secondly you will have higher chance of winning because both analysis agrees. But this doesnt mean that you will win everytime. No one is sure whether he /she will win this trade or not.

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  8. #17
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    Market is always changing, you can see now average truth range is on a daily basis on eur/usd two times lower than before 2 or 3 years. Also correlation that we learned in fundamental research, correlation between currency pairs, and other financial underlying instruments are changed now. So what we learn before 2 years it is now of the table. So fundamentals are also the thing for updating.

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  9. #18
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    I Just focus on important fundamental news and concept because if i understand main Fundamental analysis then i can easily trade with trend. Interest rate, GDP and some others are main and important fundamental basic. I try to trade with these fundamental news so that i can understand economy of country. That's way We should not ignore Fundamental analysis. It tell clear picture of trend movement.

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  10. #19
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    Quote Originally Posted by Atif View Post
    I Just focus on important fundamental news and concept because if i understand main Fundamental analysis then i can easily trade with trend. Interest rate, GDP and some others are main and important fundamental basic. I try to trade with these fundamental news so that i can understand economy of country. That's way We should not ignore Fundamental analysis. It tell clear picture of trend movement.
    yeah, just focus to high impact news such as NFP, FOMC, and other high impact news because the price will be move for many pips in short time, then we dont need to trade for hours a day, we just need to follow the news and just trade at the news released only. so we can save our time when we use news only for trading

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  11. #20
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    In this respect, I would like to say that market fundamentals is not about the news or economic releases. It's about natural things for the market. Beginners should start with learning technical analysis, because this method is more convenient, and perhaps learn how to work with the economic calendar as a simple indicator for fundamental analysis. Forex took a lot of time to get master it as this is very tough an risky business.

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