trading with fundamentals is the only way to go

It's obvious that a country with higher interest rates will (over time not a 15m or D1 chart) out perform a country with lower interest rates, unless the variables within the country change and the interest rates are not changed to reflect that. That is why if you have to use indicators use them on higher time frames.... why? Because they lag and this lag better reflects fundamental values. If you are trading fundamentals on anything lower than D1 don't worry about it this will never make since to you. If you are trading news releases on the 5-15m congratulations you have figured it out. Point being is that while a news release may have a more short term effect on price, the determining variables like inflation rates, unemployment rates, interest rates, etc.. will have a longer impact on that nations economy. SO is trading fundamentals profitable? IMO that would depend on the economic knowledge and patience of the trader.

Insightful, as usual, hilmy. As has often been stated, the market can remain irrational longer than you can remain solvent. Long term fundamentals will eventually be reflected in a currencey... but when that reflection will happen is anybody's guess. To be a good fundamental trader you need 1) a very small pip size relative to your account, and 2) the patience of Job. Long term fundamental traders think in terms of months and years. From a daytrading perspective, fundamental analysis is really of no use.

Regards,

I think most here in this discussion... while engaging in our debates and discussions on the merits of FA vs TA (and other types of analysis)... have to admit it's all different strokes for different folks. What works for one will fail for another and vice-versa.

Price does what it does and if we analyze and trade well and are successful at trading and have more dollars each year than we had the year before... then whatever we used for our analysis is valid for us. That could be as simple as coin flipping and gambling for some... FA for others and TA for yet others. What is "the only way to go" at the end of the day is whatever works for each trader.

It's always fun to debate and argue your own personal belief systems... but at the end of the day your "religion" is no better than the "religion" of someone else who uses their beliefs to trade and cope and rationalize why they make and lose money in the markets.

There are some exceptions like using releases/release schedule as a tool for estimating volatility.

I would claim that the best thing is to combine TA and FA.

The latest Active Trader has a very interesting interview with former quant fund manager who talks about quant strategies involving fundamental aspects and the effects it had to market environment and the quant fund crash of 2007 - it's really worth reading.

This is the begin of article
http://www.activetradermag.com/index...avid_Leinweber

It's always fun to debate and argue your own personal belief systems... but at the end of the day your "religion" is no better than the "religion" of someone else who uses their beliefs to trade and cope and rationalize why they make and lose money in the markets.[/quote]


Most people shape their "beliefs" about forex around 2 things:

1) They want or need it to be true

2) Their experience has told them that it is true

When both conditions exist together for a person, it can create a very powerful belief.
Neither condition,(stand alone or taken together), has any probative value as to the validity of the belief it is supporting.

Regards,

The main reason why FA is a right way to go;

High Frequency Trading Programs account for 70% of all trading on the NYSE.
For starters you should know that most indexes or exchanges offer a ¼ of a penny rebate for broker dealers who put in orders. So simply putting in an order, even if there’s no profit made on the price, can make a ¼ of a penny in profit.
Let’s say an institutional investor has put in an order to buy 15,000 shares of XYZ company between $10.00 and $10.07. The institution’s buy program is designed to make this order without pushing up the stock price, so it buys the shares in chunks of 100 or so (often it also advertises to the index how many shares are left in the order).
First it buys 100 shares at $10.00. That order clears, so the program buys another 200 shares at $10.01. That clears, so the program buys another 500 shares at $10.03. At this point an HFTP will have recognized that an institutional investor is putting in a large staggered order.
The HFTP then begins front-running the institutional investor. So the HFTP puts in an order for 100 shares at $10.04. The broker who was selling shares to the institutional investor would obviously rather sell at a higher price (even if it’s just a penny). So broker sells his shares to the HFTP at $10.04. The HFTP then turns around and sells its shares to the institutional investor for $10.04 (which was the institution’s next price anyway).
In this way, the trading program makes ½ a penny (one ¼ for buying from the broker and another ¼ for selling to the institution) AND makes the institutional trader pay a penny more on the shares.
You’re probably asking, “How can HFTPs do this? Doesn’t the SEC or someone else regulate them?” Fasten your seat belts… what's coming will probably blow your mind.
HFTPs are tapped into the actual electronic stock exchanges (the NYSE, Nasdaq, etc). Put another way, they have access to any and all trades that occur on the stock market. In fact, they’re usually a few microseconds ahead of ANY trade ANYONE makes. And I mean anyone (you, me, Warren Buffett, hedge funds, etc).
These programs don’t analyze financial statements or charts… they’re designed to simply access the information that is being transmitted across an electronic stock exchange, and then insert themselves between someone’s order and the actual electronic market makers (the programs that connect buyers and sellers).
How do they do this?
By having their servers set up within a quarter mile of the ACTUAL exchanges (NYSE, Nasdaq, etc).
When it comes to transmitting information online, server and network speed can only take you so far. And when you’re dealing in microseconds, actual physical location between servers can make ALL the difference in the world.
So HFTP firms ACTUALLY have their servers housed in buildings located as closely as possible to the buildings housing the NYSE’s servers. This might only mean 0.0001 second’s worth of difference but that 0.0001 second is all that’s needed for an HFTP to step in front of your order to the NYSE for 10 shares of Bank of America, push the price up a penny, and collect a ½ cent rebate in the process.
Now comes the truly horrifying part. ALL of this is 100% allowed, supported, and endorsed by the actual stock exchanges: the NYSE, Nasdaq, etc. These exchanges make money based on the number of transactions occurring. So adding a few middlemen to traditional buy/ sell transactions is A-OK. It’s all for the sake of “increase liquidity.”
And this kind of nonsense now comprises 70% OF ALL MARKET TRANSACTIONS. Put another way, the market is now no longer moving based on REAL orders, it’s moving based on a bunch of HFTPs gaming each other and REAL orders to earn fractions of a penny.
I don’t trust this stock rally for a minute. The fundamentals simply don’t support it. The market’s move have become entirely technical in nature.
Bull markets require REAL buyers making REAL orders, not computers gaming one another for ½ penny profit.

the only fundamental factor is ONESELF,which is sadly ignored. otherwise in my humble opinion FA,TA,TEA LEAFS,STARS,COMMENTATORS,CNN,BLOOMBERGS are technical factors.i am trying to read the most fundamental factors that is MYSELF,but you are seeing urself in a broken mirror.u know what i mean.hmmmmm. by the way last week i played against and pro,fundamental and technical,still manage to make about 15 percent.[ps i dont need any lecture about gambling and MM.that all bullshit]

A TLDNR cut and paste post on an issue in the NYSE, and Al Franken looking in the mirror saying "I'm good enough...I'm smart enough...the ultimate FA is ME, and doggone it I like myself!"

.... and so another thread runs headlong over the cliff into complete hilarity.

Are you saying that won't work then? Damn, I've been practicing all weekend ready for Monday!

Please don't come back to this thread. One self proclaimed market wizard is too many.

Welcome back, T.

I second that BTW Welcome back Tom. Always enjoy reading through the threads you start.

ufff calm down mr tdion.making me feel like a infidel for breaking ur religion of TA+MM{i include FA and tea leaves} sorry for rubbing u the wrong way but what i think one need in trading is a flair.[it is an ART] thanks.[be gentle next time mr tdion ur giving me an impression of a fanatic rather than a trader.thanks once more for listening.happy trading]

I'm with you drzakir123!!

This thread has become surprisingly entertaining... let me grab my popcorn.

and eduational mr rabid.btw mr rabid its only when u smell blood and taste it u feel completley alive[in ur case i guess its milk lol lol uff meow meow]

Could you (the people promoting Fundamental Analysis) specify what you mean by Fundamental Analysis? Are you trading the news, or are you guys applying economic theories and models?

Maybe billflet or one of the other mods will clean this thread up.

nology i will explain to u by an real example.take euro/usd for last couple of weeks its was in uptrend and going up and up with reaction here and there, earlier price broke 1.4720[march 09 high] and go on to touch 1.4846 which was the high{on monthly and weekly charts its a resistance point so u can trust itfor a probability of 80 to 95 percent].fomc statement 23/09/09 is a major event.on that day 30 to 40 minutes ago price was playing around 1.4770 to 1.4780.now it more important to concentrate on price action.dont worry about what the statement comes [btw the statements was very negative for the dollar but dollar strenghten like a hot cake afer the statements release.thats for the tedions funnymentals lol] which is irrelevant because that was already discounted by the market[ how do u know that, answer was by price action of last few weeks which was going up as insider i mean the relatives of fed chairman and governors knows it before u and me small guys knows it]ur thinking should be like this what is the probability of price turning from 1.4845 if it reach there.quite high becos the market already discounted that information.u should be trying to take a short position as near as possible to 1.4845. and to take a position there u should have a confidence in urself and flare.that u will develop with experience and longevity in trading. as seykota says there r bold trader and there old trader but there r very few old and bold traders.so take reasonable bets around these areas and will be atleast bold trader and longevity.god bless u thanks.by the way this my last post on this thread thanks for bearing me. and this is for tdion.i have already lost my virginity twice by blowing my accounts twice and this is my third account where i am doing reasobaly ok.that way i am feeling like a wizard in that experience lol lol bye

I think it's a safe bet that fundie traders don't trade on news, lol.

Earlier, interest rate was discussed as a key factor. Certainly. I also think year to year budget deficit is important too, tho. If you were trading on those kind of factors with very low leverage (like none) all you'd need is some kind of timing method to round it all out.

I can see how it would work. I just don't trade that way.