Tips Practical Fundamental Analysis For Beginner Traders
Practical Fundamental Analysis For Beginner Traders - Many consider that to interpret forex news, you need to study economics first. If we talk about a few decades ago, it might be like that. However, in this information technology era, all traders can get access to information at the same time through the forex calendar, so that fundamental analysis can be done by novice traders. Easily and practically, fundamental analysis can be carried out by the following steps:
Through the internet network, data will be released on the site of statistical institutions or data compilation bodies simultaneously with updates on the forex calendar that are already available on the trading platform and can be accessed freely on various websites.
Also read: How to play Forex for beginners without capital
Forex news will definitely come out late, because journalists need time to collect data and write it down. However, the forex calendar can be updated almost instantly. The forex calendar is also equipped with a color code to indicate whether a data is bearish (red), bullish (green), or neutral (black / brown).
What currencies do you trade? Get to know the fundamentals of each country by creating a list that contains at least seven factors:
- GDP (Gross Domestic Product)
- Consumer Inflation (CPI)
- Employment (Unemployment Rate, Non-farm Payroll, etc.)
- Retail Sales (Retail Sales)
- Interest rate
- Business sentiment
- Central Bank policy
On each factor, label whether the latest data is Bearish (the latest actual data is worse than expected), Bullish (the latest actual data is better than expected), or Neutral (the actual data is in line with expectations). You can also add extra factors such as political or security conditions, if there is forex news that is shocking outside of the economic data mentioned above.
If the majority of factors are labeled Bullish, then that currency will tend to strengthen. If the majority of factors labeled Bearish, then the currency will tend to weaken. If the comparison is equal, it means Neutral.
Suppose you are going to trade USD / JPY, then compare how the end result of two earlier points list. For example USD Bullish, while JPY is Bearish; means that USD / JPY in the medium-long term is likely to move up.
Then what if both USD and JPY are both Bullish or Bearish? Yes, that means USD / JPY tends to be neutral. You can still trade the USD / JPY, but the volatility is little possibility for large market players generally will wait forex news release that are explosive.
Just because using fundamental analysis does not mean you can ignore technical analysis. Fundamental analysis provides the background if you are going to trade the medium to long term (Swing Trading or Trading Position), but you still have to use technical analysis to determine the appropriate price level for the Open and Close positions.
Suppose the USD / JPY had turned out to tend bullish, then it does not mean you can carelessly opened the position now. Use technical analysis to find support levels where the USD / JPY has the potential reversal, then just opened the position.
Those are tips that I can share about Practical Fundamental Analysis for Beginner Traders. Hopefully with what I have shared, it can be useful for all of you and good luck.
1. Have a Referral Forex Calendar
Through the internet network, data will be released on the site of statistical institutions or data compilation bodies simultaneously with updates on the forex calendar that are already available on the trading platform and can be accessed freely on various websites.
Also read: How to play Forex for beginners without capital
Forex news will definitely come out late, because journalists need time to collect data and write it down. However, the forex calendar can be updated almost instantly. The forex calendar is also equipped with a color code to indicate whether a data is bearish (red), bullish (green), or neutral (black / brown).
2. Create a Fundamental Per Currency Analysis List
What currencies do you trade? Get to know the fundamentals of each country by creating a list that contains at least seven factors:
- GDP (Gross Domestic Product)
- Consumer Inflation (CPI)
- Employment (Unemployment Rate, Non-farm Payroll, etc.)
- Retail Sales (Retail Sales)
- Interest rate
- Business sentiment
- Central Bank policy
On each factor, label whether the latest data is Bearish (the latest actual data is worse than expected), Bullish (the latest actual data is better than expected), or Neutral (the actual data is in line with expectations). You can also add extra factors such as political or security conditions, if there is forex news that is shocking outside of the economic data mentioned above.
If the majority of factors are labeled Bullish, then that currency will tend to strengthen. If the majority of factors labeled Bearish, then the currency will tend to weaken. If the comparison is equal, it means Neutral.
3. Compare Per-Pair Fundamental Analysis
Suppose you are going to trade USD / JPY, then compare how the end result of two earlier points list. For example USD Bullish, while JPY is Bearish; means that USD / JPY in the medium-long term is likely to move up.
Then what if both USD and JPY are both Bullish or Bearish? Yes, that means USD / JPY tends to be neutral. You can still trade the USD / JPY, but the volatility is little possibility for large market players generally will wait forex news release that are explosive.
4. Compare Fundamental and Technical Analysis
Just because using fundamental analysis does not mean you can ignore technical analysis. Fundamental analysis provides the background if you are going to trade the medium to long term (Swing Trading or Trading Position), but you still have to use technical analysis to determine the appropriate price level for the Open and Close positions.
Suppose the USD / JPY had turned out to tend bullish, then it does not mean you can carelessly opened the position now. Use technical analysis to find support levels where the USD / JPY has the potential reversal, then just opened the position.
Those are tips that I can share about Practical Fundamental Analysis for Beginner Traders. Hopefully with what I have shared, it can be useful for all of you and good luck.
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