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What is the best way to learn the fundamentals?

  • #21
  • Mar 17, 2013 8:46am Mar 17, 2013 8:46am
Quoting Myo
I agree with Redlion in almost everything he says (though I wonder why quant stuff is needed if somebodyīs trying to go down the global macro/position trading route). And to the threadstarter, why not read The Secrets of Economic Indicators by Bernard Baumohl (you can find it on Amazon) for a start? Have you ever looked at the FF calendar and felt dazzled? No longer. This book tells you why an indicator is important to know, how it is computed and what it can tell you about the future. Itīs also brilliantly written and very accessible. Hereīs...
OK - so with this leading indicator of the economy and the well being of the markets, what's the overall correlation to how the forex market performs after a release of positive information and how as traders we should react?
"To live with Passion, it takes Courage and Grace to survive"
  • #22
  • Mar 17, 2013 9:07am Mar 17, 2013 9:07am
Quoting Britpip7
OK - so with this leading indicator of the economy and the well being of the markets, what's the overall correlation to how the forex market performs after a release of positive information and how as traders we should react?
I have no idea. Iīm new to fundie trading as well but I would assume that trying to derive an intraday buy/sell-signal from looking at how a single indicator prints is a foolīs game for retailers. The book says that strong housing is dollar bullish though:

"Foreign investors are attracted to the U.S. if they can earn a higher rate of return here relative
to what they can receive in other countries. Thus, a strong housing report is considered
bullish for the dollar because it usually supports a scenario of higher corporate
profits and a firming of U.S. interest rates.
The dollar’s value can slip with weak housing data because it signals slower economic
growth in the future and thus falling interest rates. Under such circumstances, foreigners
might choose to seek out more lucrative investment opportunities outside the U.S."
  • #23
  • Mar 17, 2013 9:43am Mar 17, 2013 9:43am
Quoting Britpip7
OK - so with this leading indicator of the economy and the well being of the markets, what's the overall correlation to how the forex market performs after a release of positive information and how as traders we should react?
If I may...

I think you need to answer that question for yourself. Let me give you some additional questions to find answers to.

1. Do I understand the structure of the market I am participating in?

2. Who are the participants?

3. How do fundamentals affect the different market participants and what they do?

4. How might the different market participants trade in general?

5. Why would the different participants do what they do on an intraday and long term basis?

6. How do the market participants that don't actually trade an instrument have the largest impact?

7. Do I really understand the market?

and the list goes on and on...

I will be the first to admit that there is neither a right or wrong answer to the questions of fundamentals vs technicals, but it's how one is utilizing the information they have. If you understand the market then you can utilize both as tools based upon your time horizon. Of course, you can get by without either one since there are basics of every market that are the same. Technicals and fundamentals are correlated, because they depend on the same basic mechanism's that drive markets. Per my current understanding I believe that most that use technicals don't really comprehend the tools they use. It's just easier for people to use them because they are visual and I think that was the context that the lazy comment was used. This doesn't mean there are those that don't utilize there own technicals with success and completely understand the tool they are using, but they are only a tool. Again, I believe these individuals have a remarkable grasp on the market and it's the same with those who use fundies.
  • #24
  • Mar 17, 2013 10:41am Mar 17, 2013 10:41am
Quoting TantumVerum
If I may...

I think you need to answer that question for yourself. Let me give you some additional questions to find answers to.

1. Do I understand the structure of the market I am participating in?

2. Who are the participants?

3. How do fundamentals affect the different market participants and what they do?

4. How might the different market participants trade in general?

5. Why would the different participants do what they do on an intraday and long term basis?

6. How do the market participants that [i]don't actually trade...
You may, and at some point in time I may well backtest this data to see how the weeks following the news release look for EU and GU.

I was posing the question to see if the poster of the comment had any evidence to support the post.

My original comments regarding technicals still stands. Once the fundamentals are released, the market digests and reacts. How it does that is reflected in the price action and the associated historic and dynamic s/r levels.
"To live with Passion, it takes Courage and Grace to survive"
  • #25
  • Mar 17, 2013 11:13am Mar 17, 2013 11:13am
Quoting Britpip7

I was posing the question to see if the poster of the comment had any evidence to support the post.
Where did I make the claim that fundie-trading was as simple as "If number Y positive -> buy currency X"? What kind of evidence are you looking for?
  • #26
  • Mar 17, 2013 11:53am Mar 17, 2013 11:53am
Quoting Myo
Where did I make the claim that fundie-trading was as simple as "If number Y positive -> buy currency X"? What kind of evidence are you looking for?
I think the sentence "This book tells you why an indicator is important to know, how it is computed and what it can tell you about the future" was the one that caught my attention.

Following it up with an excerpt from the book gave the impression that you had done some research on the topic, apparently this was an incorrect impression.

So, essentially you have copied a random section from a random book with no objective evidence to support the quote?

Maybe you had another reason for enlightening us to the information and I am missing the point. However, from you history on FF, you do seem to post a lot of comments without any charts / evidence, so this is probably another such post.
"To live with Passion, it takes Courage and Grace to survive"
  • #27
  • Mar 17, 2013 12:35pm Mar 17, 2013 12:35pm
Quoting Britpip7
I think the sentence "This book tells you why an indicator is important to know, how it is computed and what it can tell you about the future" was the one that caught my attention.
Yes, this is what the book is about.

Quote
Following it up with an excerpt from the book gave the impression that you had done some research on the topic, apparently this was an incorrect impression.

Indeed an incorrect impression. I quoted an excerpt mainly to show that the book was written in a clear and straight-forward manner and also that it is a good start to learn about FA, because a) its content easily relates to everyday trading and b) it hopefully "sophisticates" the decision making process of the aspiring fundamental trader. I believe this is a worthwhile read for FA newbies like OP and myself. A dry 500-page-volume on global macroeconomics would be hard to digest for most starters, wouldnīt it? It was not my intention to give the impression I had done "research" on the topic. Where did I say that?

Quote
So, essentially you have copied a random section from a random book with no objective evidence to support the quote?

Of course it was random. I just picked "Building Permits" but could have gone with "CPI" as well. Again, what kind of "objective evidence" are you looking for?

Quote
You do seem to post a lot of comments without any charts / evidence, so this is probably another such post.

Thatīs cheap. Op started a thread and asked for the best way to learn fundamentals and Iīm trying to help him. I could say you are "hi-jacking" his thread, trying to turn it into an argument whether TA or FA is the way to go and adding nothing worthwhile in the context of this thread. Iīm too lazy to scroll through your posts but should I now assume that most of them completely miss the point?


Edit: I just re-read Opīs post. He wants "the whole picture", not just news announcements. Well than he has to pick up a book on global macroeconomic theory after all, lol.
  • #28
  • Mar 17, 2013 1:19pm Mar 17, 2013 1:19pm
Quoting Myo
Yes, this is what the book is about.



Indeed an incorrect impression. I quoted an excerpt mainly to show that the book was written in a clear and straight-forward manner and also that it is a good start to learn about FA, because a) its content easily relates to everyday trading and b) it hopefully "sophisticates" the decision making process of the aspiring fundamental trader. I believe this is a worthwhile read for FA newbies like OP and myself. A dry 500-page-volume on global macroeconomics would be hard to digest for most starters, wouldnīt...
Not a cheap shot, just an observation on some of your recent comments.

If you wanted to demonstrate how fundamentals drive the market, then some charts supporting the release of your example together with corresponding results. So from that view point I have completely missed the point.

As research does not seem to be part of your posting method, I'll save you the effort of researching my posts and leave you to your own devices.

Another one for the ignore list and another thread to unsubscribe - I have no desire to hijack the thread and do not have the time for pointless discussions with another example of an individual who snipes at people trying to contribute in a positive manner.
"To live with Passion, it takes Courage and Grace to survive"
  • #29
  • Mar 17, 2013 2:01pm Mar 17, 2013 2:01pm
Quote
Not a cheap shot, just an observation on some of your recent comments.

Itīs cheap because your "perception" of the value of my previous posts has nothing do to with the issue that is at debate. Itīs just an ad hominem attack, guised as an "observation".

Quote
If you wanted to demonstrate how fundamentals drive the market, then some charts supporting the release of your example together with corresponding results. So from that view point I have completely missed the point.


I donīt have a chart for housing, but below is one that shows 2012 EURUSD historical reaction for NFPs up to July (property of dailyfx.com). Itīs the quickest i can come up with. Could be interesting for intraday traders but itīs much too short for my liking (35 hours). Make of it what you will. The effect a single indicator print has on a currency will probably depend on a whole lot of other reasons (previous prints, what part of the economic cycle are we in, etc etc). Iīm not even close to figuring this stuff out but I believe itīs the way forward for my trading. If you make money trading with 100% TA i couldnīt convince you anyway.



Quote
Another one for the ignore list and another thread to unsubscribe - I have no desire to hijack the thread and do not have the time for pointless discussions with another example of an individual who snipes at people trying to contribute in a positive manner.

Yeah, youīre the victim here, buddy
Attached Image
  • #30
  • Mar 17, 2013 2:40pm Mar 17, 2013 2:40pm
I would like to drop my in 2cents with facts on my hands.

In technically, there is short or long signals for you to make entry.

In fundamentals, and most the time, there is NO right or wrong because you never know how it would impact the market in the long or what message is hidden. Now would you answer me, how would you trade something like that?

My option is that if you want to try Fundmental, read economy news every day, and you need to be in the fx market for several years to know (in general) how each news impacts the market.

Everyone's knowledge and understanding is different, so i may also say fundamental is NOT for everyone, too.

-------------------------------------------------------------

Below screenshoot was couple trade I placed purely on the fundamentals at the end of last year on 12/31/13. and I am sure there wasn't MUCH going on at the New Year Eve 2012, "technically wise"

The JPY pairs were traded on the rumor the new BOJ governor will be taking over the office and going in for more QE which will be weak Yen that would boost Jap export which is a major part of Japanese GDP.

The GBP pairs were traded on GBP triple dip recsscion fear.

While AUD and NDZ were going really STRONG at the beginning of 2013.

I took a screenshoot before i closed the EUR pair and AURUSD (closed reason stated below), and I did not follow up with screenshoots afterwards.

Attached Image (click to enlarge)
Click to Enlarge Name: 2013-3-14 21-23-28.png Size: 71 KB


From 12/31/2012 to 3/15, three and half months,

AUDJPY opened at 89.43, screenshoot at 92.43, now is 99.24 (couple days ago hits 100), that's 1057 pips if close last week.
GBPNZD opened at 1.9616, screenshoot at 1.9090, now is at 1.8250 (couple days ago hit 1.800), that's 1616 pips if close last week
NZDJPY opened at 71, screenshoot at 73, now is at 79 (couple days ago hit 80), that's 900 pips if close last week
GBPAUD opened at 1.555, screenshot at 1.5255, now at 1.4400 (couple days ago hit 1.4400), that's 1150 pips if close last week

AUDUSD opened at 1.038, screenshoot at 1.05, and closed at 1.05 areas because US strong data started to show, and AUD long term resist level and mental resisit level 1.05 is hit, but I was able to pocket the 123 pips when close.
EURAUD closed on EUR recovery rumor months ago, but I was able to pocket the 280 pips when close.
EURNZD closed on EUR recovery rumor months ago but I was able to pocket the 468 pips when close.

Now we are talking about almost 5000 pips again in 3.5 months of trading that only require you to look 10 minutes a day.
And not to mention the swap interests ALL these pairs give me everyday for 3.5 months.

-------------------------------------------

Of course, I closed these position NOT perfectly and probably only pocketd only 3000 pips or so, but this is an live example I bring you here to show that how powerful it is if fundamental traded right.

Attached Image (click to enlarge)
Click to Enlarge Name: 2013-3-17 12-43-36.png Size: 28 KB

Now with Profit Factor over 1700, let's talk about if fundamental is rewarding or worth doing, and my answer is YES, OF COURSE.

Not sure about what you think
More than a hobby. Never a game. US Client at 1:50.
  • #31
  • Mar 17, 2013 2:49pm Mar 17, 2013 2:49pm
Quoting Chi
[size=2]In technically, there is short or long signals for you to make entry.

In fundamentals, and most the time, there is NO right or wrong because you never know how it would impact the market in the long or what message is hidden. Now would you answer me, how would you trade something like that?

My option is that if you want to try Fundmental, read economy news every day, and you need to be in the fx market for several years to know (in general) how each news impacts the market.

Everyone's knowle[size=2]dge and understanding...

Well done!
Question: How large was your SL on these positions? How do you decide when to bail out? Fundamental reasons as well? Technical? Or do you use
a fixed, random SL?
  • #32
  • Mar 17, 2013 2:59pm Mar 17, 2013 2:59pm
Quoting Myo

Well done!
Question: How large was your SL on these positions? How do you decide when to bail out? Fundamental reasons as well? Technical? Or do you use
a fixed, random SL?
let me come back to your question after lunch.
More than a hobby. Never a game. US Client at 1:50.
  • #33
  • Last Post: Mar 17, 2013 3:56pm Mar 17, 2013 3:56pm
TO THREAD MAKER..

my some opinion to learn funda

1st.. never believe to bank signal, big broker, or company..

example: Bank A recommendating to sell EUR/USD at this price to that price, Bank B analyz choose buying EUR/USD at that price to this price... never believe to such signal. and opinion.. if bank A give signal buy we sell, if bank B give signal sell we buy... that idea not always going correct ! just never believe to bank signal, don't follow it, don't trade against it. use own brain.


2nd.. crosscheck from funda with big timeframe technical..

usually if some statement or comment come from "important people" and market react up or down, price usually (from my own opinion) will going and stop at big TF technical,,,, R/S, SMA line, pivot, high/low, etc. so we can trade within funda until that technical place, or waiting against trend when price arive to that technical place.. minimum i use daily TF when important statement or some meeting happen. like now when i write this text, EUR/USD last friday move is testing daily Tf 100sma line.. and stuck near there. so actually.. funda and technical can be used and matched each others, if we know how to make it


3rd.. CFTC data may good place to know how market respon to fundamental

u can go to this url -- http://cftc.gov/dea/futures/financial_lf.htm and see it yess.. lot of text. no need complaint about bla bla bla.. that data usually updated at friday. how u can trade it, or u trade it or not, or u care or not, or can u read it or not.. doesnt matter just see and pay attention to Dealer Intermediary category and Leveraged Fund category at that future report. one day u may know how "chain food" at market happen Thats is good data to begine get close with sentiment for my opinion. lot of anothers data.. but start from US is not bad starting i think


4th.. only focus to market topic

this useful to help you avoid lossing hair to much, so if many site news talk about 1 topic, for example ECB meeting, or FOMC statement, i think less care about another news/data which come same day is better, so care only that hot topic. because market in "waiting mode" so.. what others news come before that big topic usually less effecting market.


5th.. simple funda from my version

this my simple theory.. if something issue happen, sell home currency. example if ECB, italy, spain, greece, bailout program, etc etc.. i more like selling euro and buying rival, USD.. or example, if issue is about US QE, fiscal clive, etc i more like selling US dollar and buying risky currency. this not always going right.. but i like this simple mindset.. what ever issue/rumours come from country.. sell the home currency just my idea.

last my suggestion.. funda will driving you to fatallity wrong perception.. so when market reversal totally you still holding that old and wrong perception.. that gonna end bad. so my advice is.. keep crosscheck funda with big TF technical is best way to learn and survive


Thats all my opinion, i just sitting duck and also still learn funda

If i do wrong and misslead hope someone give correction

have a nice day
take what you can take, before market take it back
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