Above questions may seem cliched and simple. However, we deliberately cast because frankly the world of fundamental analysis forex often get portions that are not as they should by beginner traders.
Then why is there some traders consider fundamental analysis just a basket of rubbish while others think the contrary, the fundamental news is just in the trade?
Most novice traders consider fundamental analysis is not a proper instrument of analysis studied because of its "only" news and inexact as technical analysis. Contrary to these opinions, there are some traders who use fundamental analysis in day trading but do not put it in proportion, so often a failure in the study analysis in the forex or even their real trading.
This article is not intended to patronize, or even try to change your trading style. This article aims only to enrich your knowledge Whether you are a newbie in the world of forex, trader beginner, or even a seasoned trader.
This time we will try to explore the questions above, especially the advantages and disadvantages of fundamental analysis. Why fundamental analysis is needed? If necessary, how far should the fundamental instruments used in trading? What size?
Now a question like this is what we will discuss together. Once again, it is impossible to explain the fundamental analysis in only one article alone. Especially if they have to change the way a person trading. One thing is expected of this article is to enrich your knowledge in the trade and prepare a trader beginner (rookie trader) in starting a real trading
That Most Important of Fundamental Analysis is a: mover PRICE!
The first time I learned analysis in the forex trading world, I am very interested in the views up and down movement of the graph shown in the candlestick. That's why I started studying in a comprehensive technical analysis tends to honor and even have enough with technical analysis.
I met with the moving averages. I was fascinated with how to predict trends in a currency movements. Then I began to learn of other technical indicators. Well, I feel quite at that time. Then I started in a trading (fortunately not in real trading!). And what happened was that I experienced massive losses.
Of course I was not upset by what happened with my account. Yes, of course, because it is a demo account. However, it undermined my confidence in what I had learned at that time (maybe some of the brothers had also experienced the same thing).
In my head came a simple question: Why is my technical analysis is not accurate? Well, I have been using Moving Average properly. I've also added some other indicators that I know when it includes an indicator to determine the condition of saturated and unsaturated buy sell like RSI or Stochastic Oscillator. But despite all my technical indicators have shown the same direction, why it is happening on the contrary the price?
Darisanalah I find out the cause of the price could move against the technical condition that occurs at that time. And, I found the answer lies in the so-called: economic events. The simple language is the news. Yes, the news. Although at the time, all the technical indicators show the graph moving up, what happens is that prices continue to move down instead continue what has happened. And it was caused by news of the country concerned.
This is what you need to know. Perhaps many know but few are aware. News is the driver in a money market. That's why there are fundamental analysis!
Even if the results of technical analysis statistics showing price rises should be reviewed from a variety of indicators exist, but if there is news that it refers to the price moves down, no one could deny the party. These even caused traders to view the same: a fundamental news (whether the survey results, whether it is monetary policy, or merely an issue) to determine whether the country concerned eknomi healthy or not.
My friend even a simple conclusion: stronger fundamentals than technical. A statement is indisputable (although if you are a fundamentalist extreme, you also need to know that the faster technical and objective).
That is why fundamental analysis is important for a trader. You can not make a big sell-scale simply because of graphics and analysis tools come down but the trend shows that while those countries are raising interest rates and currencies are in a state opponent weak!
Remember, the graph remains a graph! Most indicators used previous data to predict the direction of the front. In many circumstances, this applies. But not if a big news came on the market. The news like Non Farm Payroll, Interest Decission or CPI Food excl too dangerous for you miss if you're trading with limited funds and rely solely on technical analysis instruments.
So, put this in your references: News is the driver of prices.
Currently Done!
Well if you already understand it, maybe now you are interested to learn about fundamental analysis, especially with a variety of economic indicators available. A simple little quiz, if you know what's Consumer Price Index, Interest Rate and the Purchasing Manager's Index?
Hmm ... if not, it's time you started reading articles on this website fundamentals.
So here it is up to? At the beginning of the article I alluded to earlier is that some traders believe just the opposite. They looked at each other because the economic news is the price-forming, it is sufficient that it can be monitored and technical forgotten.
A fatal mistake for a day trader.
True, the economic news is the price-forming tendency. And you can analyze the true story that will appear and then predict how the market reacts to the news.
But unfortunately not that simple.
Talk about economic news and how the market reacts to the news is not talking about right and wrong or talk about the logic that should happen.
It is about market psychology. The psychology of millions of people in this world. All you need to understand is that the market does not care about economics books you read or trends so far. For example: An increase in interest rates. In a history lesson and we learned so far, if interest rates increase a country so quickly it caused the country's currency will strengthen concerned (about why this is so, you can open an article about the interest rates on this website).
But is it always so? The answer is no! No need to explain at length, a few months ago (around July 2006) the Fed raised U.S. interest rates by 25 bp, to know what happened? Instead the U.S. dollar weakened! Most beginners do not understand why it happened. At first I was not. But it is happening is the market reacting immune to rising interest rates this time is because it has given the Fed signals a few days earlier and the increase has occurred several times. But who would suspect that when the news has not appeared?
Well this is where the point of balance occurs. It triggers a fundamental indicator of price movement. Still, prices are formed in the hands of buyers and sellers. What is needed is to know the reaction of the majority of buyers and sellers on the news that appears. It could be argued this is often biased because it was not easy. Millions party in foreign currency exchange and predict the majority of them is not an easy job.
That is why the day traders often make the fundamental news is not as critical decision Buy / Sell them but more as a reference of what will happen to the price. They use technical analysis in taking a position because it is inexact to be more clear.
Well till here might have emerged a discourse within yourself. About which one is better, I think no one is better between technical and fundamental. But I want to emphasize here is that they can not stand alone and should be used to cover the weaknesses of one another.
Conclusion:
Pros fundamental analysis:
Price mover
Simple, you just may find out whether the rise, fall or remain. Unlike the technical studies necessary to use numbers.
Disadvantages:
Often subjective due to market psychology
Unable to answer the needs exactly. Remember that the basis of fundamental analysis is not mathematics, but economics and market psychology.
Up here you can conclude that the fundamental need. Also need to be technical. So, do not repeat my mistake once the view that Fundamental analysis is a basket of rubbish useless. Those who view this usually consists of two groups: the first group are those who have capital, so they can hold large price movements caused by the emergence of news or second class to those who are too naive in the trade.
Then why is there some traders consider fundamental analysis just a basket of rubbish while others think the contrary, the fundamental news is just in the trade?
Most novice traders consider fundamental analysis is not a proper instrument of analysis studied because of its "only" news and inexact as technical analysis. Contrary to these opinions, there are some traders who use fundamental analysis in day trading but do not put it in proportion, so often a failure in the study analysis in the forex or even their real trading.
This article is not intended to patronize, or even try to change your trading style. This article aims only to enrich your knowledge Whether you are a newbie in the world of forex, trader beginner, or even a seasoned trader.
This time we will try to explore the questions above, especially the advantages and disadvantages of fundamental analysis. Why fundamental analysis is needed? If necessary, how far should the fundamental instruments used in trading? What size?
Now a question like this is what we will discuss together. Once again, it is impossible to explain the fundamental analysis in only one article alone. Especially if they have to change the way a person trading. One thing is expected of this article is to enrich your knowledge in the trade and prepare a trader beginner (rookie trader) in starting a real trading
That Most Important of Fundamental Analysis is a: mover PRICE!
The first time I learned analysis in the forex trading world, I am very interested in the views up and down movement of the graph shown in the candlestick. That's why I started studying in a comprehensive technical analysis tends to honor and even have enough with technical analysis.
I met with the moving averages. I was fascinated with how to predict trends in a currency movements. Then I began to learn of other technical indicators. Well, I feel quite at that time. Then I started in a trading (fortunately not in real trading!). And what happened was that I experienced massive losses.
Of course I was not upset by what happened with my account. Yes, of course, because it is a demo account. However, it undermined my confidence in what I had learned at that time (maybe some of the brothers had also experienced the same thing).
In my head came a simple question: Why is my technical analysis is not accurate? Well, I have been using Moving Average properly. I've also added some other indicators that I know when it includes an indicator to determine the condition of saturated and unsaturated buy sell like RSI or Stochastic Oscillator. But despite all my technical indicators have shown the same direction, why it is happening on the contrary the price?
Darisanalah I find out the cause of the price could move against the technical condition that occurs at that time. And, I found the answer lies in the so-called: economic events. The simple language is the news. Yes, the news. Although at the time, all the technical indicators show the graph moving up, what happens is that prices continue to move down instead continue what has happened. And it was caused by news of the country concerned.
This is what you need to know. Perhaps many know but few are aware. News is the driver in a money market. That's why there are fundamental analysis!
Even if the results of technical analysis statistics showing price rises should be reviewed from a variety of indicators exist, but if there is news that it refers to the price moves down, no one could deny the party. These even caused traders to view the same: a fundamental news (whether the survey results, whether it is monetary policy, or merely an issue) to determine whether the country concerned eknomi healthy or not.
My friend even a simple conclusion: stronger fundamentals than technical. A statement is indisputable (although if you are a fundamentalist extreme, you also need to know that the faster technical and objective).
That is why fundamental analysis is important for a trader. You can not make a big sell-scale simply because of graphics and analysis tools come down but the trend shows that while those countries are raising interest rates and currencies are in a state opponent weak!
Remember, the graph remains a graph! Most indicators used previous data to predict the direction of the front. In many circumstances, this applies. But not if a big news came on the market. The news like Non Farm Payroll, Interest Decission or CPI Food excl too dangerous for you miss if you're trading with limited funds and rely solely on technical analysis instruments.
So, put this in your references: News is the driver of prices.
Currently Done!
Well if you already understand it, maybe now you are interested to learn about fundamental analysis, especially with a variety of economic indicators available. A simple little quiz, if you know what's Consumer Price Index, Interest Rate and the Purchasing Manager's Index?
Hmm ... if not, it's time you started reading articles on this website fundamentals.
So here it is up to? At the beginning of the article I alluded to earlier is that some traders believe just the opposite. They looked at each other because the economic news is the price-forming, it is sufficient that it can be monitored and technical forgotten.
A fatal mistake for a day trader.
True, the economic news is the price-forming tendency. And you can analyze the true story that will appear and then predict how the market reacts to the news.
But unfortunately not that simple.
Talk about economic news and how the market reacts to the news is not talking about right and wrong or talk about the logic that should happen.
It is about market psychology. The psychology of millions of people in this world. All you need to understand is that the market does not care about economics books you read or trends so far. For example: An increase in interest rates. In a history lesson and we learned so far, if interest rates increase a country so quickly it caused the country's currency will strengthen concerned (about why this is so, you can open an article about the interest rates on this website).
But is it always so? The answer is no! No need to explain at length, a few months ago (around July 2006) the Fed raised U.S. interest rates by 25 bp, to know what happened? Instead the U.S. dollar weakened! Most beginners do not understand why it happened. At first I was not. But it is happening is the market reacting immune to rising interest rates this time is because it has given the Fed signals a few days earlier and the increase has occurred several times. But who would suspect that when the news has not appeared?
Well this is where the point of balance occurs. It triggers a fundamental indicator of price movement. Still, prices are formed in the hands of buyers and sellers. What is needed is to know the reaction of the majority of buyers and sellers on the news that appears. It could be argued this is often biased because it was not easy. Millions party in foreign currency exchange and predict the majority of them is not an easy job.
That is why the day traders often make the fundamental news is not as critical decision Buy / Sell them but more as a reference of what will happen to the price. They use technical analysis in taking a position because it is inexact to be more clear.
Well till here might have emerged a discourse within yourself. About which one is better, I think no one is better between technical and fundamental. But I want to emphasize here is that they can not stand alone and should be used to cover the weaknesses of one another.
Conclusion:
Pros fundamental analysis:
Price mover
Simple, you just may find out whether the rise, fall or remain. Unlike the technical studies necessary to use numbers.
Disadvantages:
Often subjective due to market psychology
Unable to answer the needs exactly. Remember that the basis of fundamental analysis is not mathematics, but economics and market psychology.
Up here you can conclude that the fundamental need. Also need to be technical. So, do not repeat my mistake once the view that Fundamental analysis is a basket of rubbish useless. Those who view this usually consists of two groups: the first group are those who have capital, so they can hold large price movements caused by the emergence of news or second class to those who are too naive in the trade.
