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Thread: Basic trading knowledge that every trader needs (fundamental)

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    Basic trading knowledge that every trader needs (fundamental)

    Have you guys ever know what kind of basic knowledge you needed when you trade forex? There are technical traders, fundamental traders and stochastic traders as well. Depend on the condition, all of this will have their own strength point. But as for me, i'm using news for trading and that is fundamental trader.

    First of all, fundamental trading is considered expert only because you need a lot of things to be learnt in here in order to make the money. But personally i can teach the basic in my thread.
    Most data in economic calender are important actually. But there are some data that will be much more important than any other.

    Those data are:
    1. GDP (This is the data that will show a country's growth; if this data is negative then that means it has entered a recession. Usually if the data negative then the currency will fall down. But as for positive ones means they have some growth. But it won't ensure the upside movement as well since we need to watch the actual data vs the forecast as well. If actual>forecast then it will be bullish.)
    2. Interest Rate (This is the data that will show a country's deposit and lending rate. A good data means if you want to save some money in a country's bank then you will get much more money in return, thus this is very bullish if the rate did increase. If you're getting confused as for why then it's because as long many people are saving in a bank then the reserve will increase. And many will start demanding for that currency and money will flood into the bank. But if the rate was reduced then the opposite will happen, money will flow out from the bank and the currency will weaken) so this means this data is pretty interesting to be traded but but sometimes we need to watch expectations as well. If some investors expect the rate to be cut but it actually didn't then it will be bullish.
    3. CPI (This is the data for the raise in price for goods. If this data actually increased then it's very good and it's a sign that an economy is improving. A better data in here means a country will have more chance to raise interest rate so this data is like an indicator to interest rate. Higher data always bullish.)
    4. NFP (most country are using employment change but there are some country that uses Non Farm Pay Roll as for this; NFP is new jobs created out from farming jobs. Usually this is to check the country's growth in each month. A better than expected data will always make the currency bullish as well for the opposite. But if you want to trade the long term, we need to watch the historical data as well. As for the US's NFP in every friday at each new month, as long the data is above 200k then it's a good sign for long term investment, but as short term one, we will need to trade watching the actual vs forecast)

    Here i have covered some data new beginners need to watch. If you have several question regarding this i would like to answer, thanks!

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    Registered user Silhouette's Avatar
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    Quote Originally Posted by touqir View Post
    fundamental trading is bad in all ways, if we trade with small amount then in news time with low lot also we can lose all, news make market volatile just so some people like it they think they can earn big in some time but in reality we can not, we will just lose because no one know how market works, no one know news works on market so there is no way or tool to understand news, so this is wrong way of trade
    Look at the bright side, every strategies and type of analysis has different traders who like to use them while some others are don't use the same thing. Such differences should give traders the knowledge and courage to keep learning and carry on with practice no matter what happen. Fundamental isn't suitable for everyone, but I'm not going to say it's useless because I trade with news couple times.

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    Registered user layigold's Avatar
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    If your indices to analyze the market are economic news, there is need for proper acquisition of the knowledge of fundamental analysis in trading .What a fundamental analysis needs to learn is more than GDP, interest rate, CPI and NFP mentioned in this thread, in fact , the learning of fundamental analysis should be very sound and deeper. You need to understand when the head of apex bank sounds hawkish or dovish because their feelings , perceptions of the market and actions do have serious effect on the price.

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    some of the fundamental we can see in the market is the news analyzing , i see that the trader who is able to find its way in the news analyzing can make good gains of the market in different times , also the best strategy is to mix more than one technique in the trading at the same time , for many strategies which depend on one way may fimd many weak points in it by the time

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    Quote Originally Posted by Abu George View Post
    some of the fundamental we can see in the market is the news analyzing , i see that the trader who is able to find its way in the news analyzing can make good gains of the market in different times , also the best strategy is to mix more than one technique in the trading at the same time , for many strategies which depend on one way may fimd many weak points in it by the time
    analyzing news isn't enough to complete a fundamental analysis. it's far complicated to describe through words and i know it's difficult for technical traders to understand what i'm about to say here. in fundamental analysis i'm doing now for years, i study about one or two important news first and practiced with them many times with many releases to understand their characteristics first. then i'm concluding things and try to use different strategies to help me get the same result. took me years just to understand about 4 or 5 news now.

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    Quote Originally Posted by Sascha View Post
    analyzing news isn't enough to complete a fundamental analysis. it's far complicated to describe through words and i know it's difficult for technical traders to understand what i'm about to say here. in fundamental analysis i'm doing now for years, i study about one or two important news first and practiced with them many times with many releases to understand their characteristics first. then i'm concluding things and try to use different strategies to help me get the same result. took me years just to understand about 4 or 5 news now.
    When we take decisions based on strong analysis we have more chances to win and also there is the stop loss that should be used. A much simpler way to trade news is to anticipate the figures and how much they differ from market expectations but these also needs some strong experience. Skills in reading the chart patterns can help us to grap opportunities with market trends and swings, but again it cannot help us much with news.

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    Registered user Silhouette's Avatar
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    Quote Originally Posted by MIGHTYRAMESH View Post
    When we take decisions based on strong analysis we have more chances to win and also there is the stop loss that should be used. A much simpler way to trade news is to anticipate the figures and how much they differ from market expectations but these also needs some strong experience. Skills in reading the chart patterns can help us to grap opportunities with market trends and swings, but again it cannot help us much with news.
    It's never enough to trade with news to combine many technical analysis to help because news has different role in market which only impact the price in short term. The rest movements in trend are made by technical traders who follow market patterns after news has finished its effect. I also do this trade and participate to market after the volatility is reduced.

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    Quote Originally Posted by Silhouette View Post
    It's never enough to trade with news to combine many technical analysis to help because news has different role in market which only impact the price in short term. The rest movements in trend are made by technical traders who follow market patterns after news has finished its effect. I also do this trade and participate to market after the volatility is reduced.
    News need different set of skills other than being able to read the charts and pinpoint strong support and resistance zones. With fundamental analysis we are empowered to earn duing the news releases which if attempted otherwise can bring severe losses. Fundamental and technicals analysis are two approaches to study the market and both are equally effective depending on the knowledge of the trader.

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    well according to my experience most important data for USD is NFP data because in this data US government give the job for the next month where all the economy of american is based so id the NFP is negative means usd will remain week and if it will be positive so GDP and all the other is likely to be positive because of NFP.

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    Quote Originally Posted by Abhishekwala View Post
    News need different set of skills other than being able to read the charts and pinpoint strong support and resistance zones. With fundamental analysis we are empowered to earn duing the news releases which if attempted otherwise can bring severe losses. Fundamental and technicals analysis are two approaches to study the market and both are equally effective depending on the knowledge of the trader.
    news can't be described with words because it'll only create another theories which could go wrong or right. we got to keep everything inside to ourself with our own understanding because discussing news to other traders could destroy our confidence with our fundamental analysis. it's good to share something to others but personally i think that fundamental analysis is better to keep for trader's own trading.

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