Fundamental Analysis - Where to start?

Hello traders,

I have for quite a long time been trading Forex using technical analysis almost 100% of the time.
My experience is mixed. Sure, you can easily see that people react to things such as trendlines, S&R, patterns etc., but I lose more often than not anyway..

I am strongly thinking about switching to fundamental analysis.
I need to know where to start, but also where to learn more than the basics.
I know how to, you know, look at news and buy if the outcome is better than expected, but I'm sure that's not enough to be a successful trader.

So please, could you guys who are familiar with fundamental analysis recommend me some books, educational movies/series, websites, even indicators that will help?

I see on the forexfactory.com calendar what the news are called, and a brief description, but where can I learn more than just those few lines on the subject?

I DON'T want an "Introduction to Fundamental Analysis" article or stuff like that, I want to really, REALLY learn about it.

Any help appreciated.

Best regards, Elias Finoli

hey elias...... fundamental analysis is probably more difficult than technical.... or at least it is for me......

a daily habit of mine is to watch dukascopy tv.... there is a free app for the iphone....

the fx basic has major financial institutions forecasts for the major pairs.... month, 6 month and 12 month projections...... forecasts down to the pip..... they highlight 1 each day.....

those banks will raise and lower their forecasts slightly almost every week probably due to fundamental changes, but still you get an idea of what they see into the future.....

one would think banks are in a better educated position to understand all those subtle figures than me......

sometime back i spent hundreds of hours searching the net looking for forecast type data for a commitment of traders ea..... i needed 12 month targets....... dukascopy swiss forex was a standout......

my preference is the iphone app version.....h

Babypips is pretty good for an overview. I'm finding books on hedgefunds are helping me the most, 'more money than god' is a good one to start with. Also find some quality posters on here and read all their posts

I've been trying more and more to use fundamentals and it seems like every week a new thread starts here but never really takes off. the little that I know now will sometimes work and some times just get me in trouble because I interpret it wrong and end up taking the wrong side or closing a trade too early....

One thing I have learned is that it's just as easy to have too much information about fundamentals in the same way that you can have too many indicators on a chart.

What I do now is try and just keep a couple of sources that I read daily and also have twitter feeds by the same people so I can get their takes on things and check my charts and see the reaction.

This is what I use:

John Kicklighter From dailyFX Aug 3 11 Video He does a daily video and articles with analysis. I really like how he lays things out, very easy to understand.

Kathy Lien Boris Schlossberg FX360 They do daily commentary that again is very easy to understand.

They all use twitter so if your a day trader they give lot's of tweets all day almost like a news service.

I'm still learning and have a long way to go but these tools are helping! Good Luck!

Thank you all for your posts, they helped me out a lot

Let's make this the official Fundamental analysis source thread or something

Oh and one more thing, is trading the non-farm payroll report as easy as it sounds?

IMO, Fundamental Analysis is for the analyst-types that talk, talk, talk about the markets but do not trade. I learn a heck of a lot from folks who are up to speed on the fundamentals, and I have a lot of respect for them; but I wouldn't let them touch my trading account. It is true that certain reports and fundamental analysis has an impact on the markets long term...unfortunately, the EURUSD can go 150 pips against the analyst while they continue to hold to their fundamental view of things. I would prefer to ride the market 150 pips down based on my triggers, I could care less why it did it from a fundamental standpoint.

I totally get that, but knowing what caused it may help you, no? It may even help you catch that same move every month etc.

The "knowing" can be quite complex and perplexing. Many times the charts go in the opposite direction of what the fundamentals are saying. This divergence may only last for a couple of weeks or a week. But if you try to trade off of what makes sense fundamentally, you may get stopped out time and time again. Being keen on the fundamentals is good for investors not traders. An investor can take a weak dollar position and hold it for a year or two. He could care less about the daily fluctuations. A trader needs revenue......any way he can get it; as often as he can.

Hm I see.. may I should stick with technical analysis after all

If trading the fundies works for you, then by all means keep it up.

The picture below is just a really basic real time example of why we need to at least have a basic idea of whats happening with the fundamentals.

Theirs been talk for days about a BOJ intervention. Look on the front page of FF and it still isn't confirmed but they probably just had an intervention.

I wouldn't have wanted to be holding a USDJPY short 5 minutes ago....

postsed by DaTrader
The picture below is just a really basic real time example of why we need to at least have a basic idea of whats happening with the fundamentals.

Theirs been talk for days about a BOJ intervention. Look on the front page of FF and it still isn't confirmed but they probably just had an intervention.

I wouldn't have wanted to be holding a USDJPY short 5 minutes ago....
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Shit happens. if you are trading on 5M TF take your loss and move on. You cant plan for that spike unless you are trading the news.
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Finoli,
Find a good and simple tech system on a 1 hour TF and get good at it. There are dozens on FF and other sites that work. Cut your losses and let your profits run. Works. Sounds like you have got a long education process to go through first. If you want to be a fundi trader first get deep pockets for draw down.
Jack

I am learning fundamental trading, too. I believe it is often mixed up the concepts of "fundamental analysis" and "fundamental trading".

There is a brief talk about fundamentals on forex. http://www.forexpros.com/education/f...on-forex-55964

There is another basics made by fluiDynamic (#3 post)
http://www.forexfactory.com/showthread.php?t=303097

Fundamental analysis is a process of
1. obtain of all related data.
2. feed data into their models, or analyst's brain.
3. analysis result from their models.
4. possible a forecast of future data.
5. publish or give report to the traders or talk on TV, radio, etc.


Fundamental trading is a process of
1. study quantitative fundamental factors and predication of price level on these driving factors.
2. build their trading strategy, risk model, cost model, etc... to set up their trading procedure.
3. get analysis report, or know when news come out to get news, data.
4. make decision to enter the market, manage their position.


No.1 task is very hard for most of retail traders. It is like "hi-tech" and "hi- wage" skills. Which is why most of retail traders have to trade on technical base. It is no possible for somebody (expert) to leak information on this front.

No.2 task is also very secretive. It belong to proprietary trading stuffs. I believe.

But, I read book about equity trading. There are 3 basic fundamental types of trading strategy:
1. Value/Yield, or we can say "value model". What data would this model use?
2. Growth, or "growth model". What data?
3. Quality, or "quality model". What data or news?

Ok, you can build your model, then, do quantitative tests, then, set up your fundamental trading systems. Try and get a feeling, give back any good progress.

Cheers!

Instead of focusing on fundamental analysis I would recommend "Global Macro Analysis" instead. It is similar to fundamental analysis, but it is much more relevant.

The market wizards book contain a few interviews with global macro traders.

If you want books specifically on pure global macro then there are these two:

1. Inside the House of Money: Top Hedge Fund Traders on Profiting in the Global Markets

2. The Invisible Hands: Top Hedge Fund Traders on Bubbles, Crashes, and Real Money


Those books should help.

Finoli, it's better not to trade news, especially when important data are released, such as GDP, Non-farm Payrolls etc., because of sharp price movements which can be expected.

That is why calendars are of great importance for fundamental trading.

http://ecx.images-amazon.com/images/...SH20_OU01_.jpg

http://ecx.images-amazon.com/images/...SH20_OU01_.jpg

http://ecx.images-amazon.com/images/...SH20_OU01_.jpg

Get a subscription to The Economist, the Financial Times, The Wall Street Journal, etc - or go to your library and read them every week. Do that while you actively trade for a few years and fundies will start to make sense.

Another book to consider:

http://ecx.images-amazon.com/images/...SH20_OU01_.jpg
http://www.amazon.com/gp/reader/0195...pt#reader-linkhttp://www.amazon.com/gp/reader/0195...pt#reader-link

Listen to grkfx and The Fool.

Search the forum and read anything from Darkstar, also check out his website for the "Ohh Sweet Liquidity" posts.

Read the thread Order Flow - Achieving the mindset by Carnegie.

I am only still learning, but I gathered sooo much information from these sources, that it left my head spinning. These sources alone, should keep you busy for many months of hard study.

This just occurred to me;

Read this thread also by ScottyB: Stating The Obvious and The Quest For Wisdom

Hi,

Read this thread from the start, this guy's amazing. This is long term, big picture stuff. He looks at the economic and political situation and matches it to the pairs, rather than the other way around.

http://www.forexfactory.com/showthre...ight=Razorjack

Totally agree, but why wouldn't you want to know both? In my view, they seem to go hand in hand.

To trade the fundamentals, you really need a good grasp of macroeconomics. Here's a good book to get you started:

A Concise Guide to Macroeconomics: What Managers, Executives, and Students Need to Know by David Moss

Additionally, I think that you should start to read some bank, and investment group reports. Pimco puts out some good reports: http://europe.pimco.com/EN/Insights/...sOverview.aspx