“Forex Fundamental Analysis is a key part of Forex trading”.
Ummm, no it’s not.
In fact, it gets in your way, eats up your time, and makes you lose more than you should.
You disagree? Read up.
“Forex Fundamental Analysis” Is A Big Phrase
“Fundamental Analysis” encompasses a lot of things. If you want to get super nerdy with it, this page from Investopedia is for you.
For the rest of us, just know these three main parts of Forex fundamental analysis:
- Economic Landscape
- Politics
- Economic Indicators/Events
It’s a lot to monitor, too much really. In the end, you’re no better informed to make a profitable trade than you were before you started paying attention to any of it.
It can be fun. It can make you sound smart when talking to others.
But it ends there.
“Spare some change, and I can tell you all about inflationary concerns for the Canadian Dollar”
Let’s see who is responsible for tricking into believing all of this actually makes us better traders. Then we can further break down what these three parts are all about.
But First…
We need to see which side you are on. Are you a Forex investor or a Forex trader? This is important going forward. Here’s the difference.
Investor – Has plenty of money. Makes very long-term investments into a particular currency pair (6 months to several years). Does this based on what they or their advisor sees happening in the future based on what they see on these financial networks.
Trader – May have a good amount of money, may not. Gets in the market, and gets out. Typically doesn’t stay in one trade over a few weeks unless the trade is amazing. Doesn’t have time for this whole “what may or may not happen based on what this one guy said today” nonsense.
If you’re an investor, you’re at the wrong site. You’re better off here…
“Bloomberg — News that leads to almost nothing ever.”
If you’re a trader, you’re in the right place. Boy are you ever.
Repeat Offenders
Financial news outlets are a multi-billion dollar industry. And they, in my mind, are mostly just there for entertainment.
I like Bloomberg, don’t get me wrong. Their tech stuff is great. But I’m not motivated to ever watch it, because it’s not making me better in any way.
It’s a lot of stories about things that already happened. You don’t need to tell me the results of an economic event or where the price of the GBP/USD went today.
I’m a Forex trader. I have a chart, a calendar, and two eyes. I already know.
But keep droning on about these people in high finance. I’m sure somebody wants to hear about it.
That somebody is just never me. And I hope it’s not you, at least not anymore.
Just because these people have $2000 suits and can speak really well about what they do for a living (who can’t) doesn’t mean they can help you win at Forex trading.
You are wasting your precious time. Move on.
Forex Twitter/Forex Websites
I said it in the video, this is a golden business opportunity I’m about to give you, just like when I told you how to sell indicators or sell Forex robots.
You can simply be an aggregator of news events. Make a Twitter account, and tweet every time news comes out on anything Forex-related, no matter how insignificant.
Get a bunch of followers, start a website, and advertise on it.
There are, and I can’t believe it myself but there is, oceans of people who are super interested in this shit. People who really do think it’s making them a better trader.
Screw money management, screw trade entries, just be a new consumer, and you’re in the clear!!
These people are everywhere. And you can profit off them!
What ForexLive makes off of these people every month.
These websites and Twitter handles are glorious wastes of your time. Stop worrying about looking cool and informed. Delete these from your day for good. Your trading, by default, will get better.
So let’s dive into the 3 main parts of Fundamental Analysis now, because unfortunately we cannot avoid all of it all the time, so we need to be aware.
“Economic Landscape”? No Thanks
I will say, there are times you need to be aware of the economic landscape of a particular county’s currency.
But it’s rare. More rare than you think.
The times I’m talking about are things like the economic downturn in Argentina (for all of you ARS traders out there), when a major typhoon hits Japan, things like that.
These situations are complete outliers, but when they happen, the best thing to do is avoid trading the respective currency altogether until things stabilize.
Simple as that.
But for everything else — heads of banks talking about nonsense, foreign ministers making a speech, bullshit-ass events like Davos, some guy from a banks being interviewed, etc….
None of this has any impact on our market. If it ever did, it would be so tiny, you’d never notice it — especially if you are wise and trade the daily chart exclusively.
Politics. Yuck.
Wouldn’t it be amazing to not have to follow politics if you didn’t want to?
Well you don’t. And you no longer have to just because “you’re a Forex trader and you have to stay on top of these things”.
I avoid politics like the plague.
Now when it comes to politics, you do need to pay attention to when things like major political elections and political events like Brexit for example are about to happen. You’ll hear about these things no matter how hard you try to avoid them, don’t worry.
And if they’re elections on smaller countries like New Zealand, you may not catch wind of it, but a good Forex News Calendar will alert you to it. Everyone should have one.
And New Zealand just elected a socialist, which is a death blow to any economy, so if you weren’t keen to this election happening, you could have really gotten nailed.
But rest assured, these events are very few and far between.
And again, just as before, it’s “everybody out of the pool” until those elections are over, and the market has subsided.
Economic Indicators/Events
Any real Forex trader knows that we cannot avoid Fundamental Analysis 100% of the time. There are news events out there bound to F up our trades if we don’t see them coming.
The good news is we can almost ALWAYS see them coming with (and I’ll link it again), a Forex calendar.
I will be making a video and blog soon on how to best approach these events if they apply to you (and most of them will not).
For now, here’s a little pro tip. Again, if you’re smart and only trading the daily chart, the only events you will really have to concern yourselves with on the calendar I have are the ones in red, and you can modify the calendar to only show you those.
If you are reckless and trade the 15 minute chart only, then you have a lot more of these to worry about.
Your average Daily chart trader
Conclusion
Rejoice dear trader, you no longer have to worry about 99% of this.
Take that time back.
Do whatever you want with it.
Relax in a hammock, and listen to a great podcast while your troubles float away.
Let the pontificators, and investors worry about Fundamental Analysis.
That stuff aint us.
— VP