Fundamental Analysis: The Three Main Ways To Forex News Trading One of the many skills essential in your Forex trading strategy is the ability to analyze. There are two main types of Forex analysis which are fundamental analysis and technical analysis. I will show you the different types of fundamental analysis trading and hopefully you will learn how to apply it in your Forex trading strategy. If you are strictly a technical trader, you will benefit and possibly increase your profitability by means beyond your current methods. In short, Fundamental analysis relies on the news reports: political and economic factors. Traders that use fundamental analysis will monitor the various news sources: TV, radio, and news feeds on the internet; in order to learn about the political and economic factors that can move the currency prices. For example, if the US Non-Farm payroll report is good, it will cause the US dollar to move up. If the number is disappointing, then the US dollar will drop against other currencies. Every major news release has a forecast or consensus figure determined by economists prior to the news release. If the actual release number is different from the forecast or expected figure, the market is surprised and will react to the release immediately. The bigger the surprise, or deviation, it will produce bigger reaction. For example, if the upcoming US ISM Non-Manufacturing PMI has a forecast number of 54.5, and our standard deviation is 3.0. Fundamental Analysis: The Three Main Ways To Forex News Trading
Fundamental Analysis: The Three Main Ways To Forex News Trading
The actual release comes out as 50.5. Since the actual deviation is 4.0, you would enter a short trade on USD/JPY, USD/CAD, or USD/CHF or a long trade on GBP/USD, AUD/USD, EUR/USD. We base our entry on market sentiment and technical trend of the currency pair. There are three main ways to trade the fundamental analysis: Spike trading, Retracement trading, and Pre News trading. Trading the spike is the most popular method to trade the fundamental analysis, and is the best known. Most Forex traders often associate spike trading with fundamental analysis trading. To trade the spike, basically we wait for the news release to come out. Based on the actual release number we will enter the market immediately if our expected deviation is hit. Fundamental Analysis: The Three Main Ways To Forex News Trading
Fundamental Analysis: The Three Main Ways To Forex News Trading This type of trading requires that you have access to the news release immediately when it is released, have a fast reaction to enter a trade, and have a good broker that allows news trading. after its release. To trade the retracement, we wait for the news release to come out, we wait for the initial spike, and then we will wait for the market to retrace back within 10 to 15 pips of the pre-release price. Sometimes when we have a huge deviation, we can enter the market at 20 pips from the pre-release level, but it would be based on your own discretion. Market will usually retrace within the first 5 to 30 minutes, if a retracement is to take place.
Fundamental Analysis: The Three Main Ways To Forex News Trading
Fundamental Analysis: The Three Main Ways To Forex News Trading
This trading method is particularly easier to enter into a trade, because we avoid the initial volatility of the initial news release, and most Forex brokers allow this type of news trading. rates. Pre News trading, this method of fundamental analysis trading is probably the most advanced and the most difficult to analyze. Basically, we base our entry on market sentiment and technical trend of the currency pair and we enter the market five minutes before the actual news release. You should always enter in the direction of the current trend and only use this trading method with news releases that won’t change the market trend. For example, you shouldn’t use this method for the US Non-Farm Payroll, GDP, and CPI; but we can pre-news trade the Retail Sales, Trade balances, and PMI reports. Fundamental Analysis: The Three Main Ways To Forex News Trading