News - the basis of fundamental analysis
Among active traders actively working in all kinds of stock markets, including the foreign exchange market, there are two basic approaches to the analysis of movement quotes. This is Technical and fundamental analysis. It may be noted that the differences between these two approaches are, one might say, fundamental and somewhere even philosophical, and the extremely radical representatives of these two schools of stock market analysis do not recognize each other, considering their direction to be the only right one.
The golden mean a
Historically, the majority of private traders in our homeland preach mainly technical analysisSometimes they completely dismiss the merits of the other approach. Strong adherents of technical analysis, as a rule, are not interested in anything but charts, these people are sure that they do not need to know anything but simple mathematics. As a rule, very selfless adepts of this method spend a lot of time searching for a universal "golden formula", which would work on all types of charts and on all different instruments. As a rule, they don't study analytical reviews and don't keep track of economic newsThey build graphs of varying complexity, piling them with all sorts of indicators and oscillators, behind which sometimes the price chart itself cannot be seen. At the same time, "pure" fundamentalists go to the other extreme, studying many economic factors, they try to find a fair price or a fair exchange rate, trying to calculate the undervaluation or overvaluation of this or that currency against another one, and based on that determine the dominant trend.
However, as always the truth lies in the middle, too fanatical adherents of this or that approach to stock trading, in the long run sooner or later lose. From the experience of active and successful traders it is proved that it makes sense to use both methods comprehensivelyGiven the achievements, and they are, of both fundamental and technical analysis.
That's why, given, as mentioned above, some bias among our, domestic traders in the direction of technical analysis, in this article I will try to explain some the basic principles of fundamental analysisThe following are some of the key points that can help you not to make fatal mistakes when trading on the foreign exchange market.
Basic Concepts of Fundamental Analysis Forex
So, fundamental analysis is based on macroeconomic dataThe sources of which are economic news. However, this news is very and very numerous, in our information age news of different nature is poured upon us as from a horn of plenty on television, radio and the Internet. How to understand this sea of information and, as they say, to separate the wheat from the chaff.
First of all, since we work in the foreign exchange market, we will be interested not just in news, but in news. In this regard, it should not be more difficult to identify the most important indicators. The fact is that there is a certain periodicity in the release of economic forex newsI'm not going to give any examples, because any site of a solid dealing center has a calendar of releases. I'm not going to give examples, because on any site of a solid dealing center, both domestic and foreign, you can find the output calendar news . As a rule, this calendar is given a week ahead, and on some sites even a month ahead.
What should you pay attention to first?
By virtue of the historical rules of the Jamaican monetary system, the basic and reference world currency is dollar. Therefore, the news on the U.S. should be the first thing to pay attention to. Next, it should be noted that due to its specifics, the market operates 24 hours a day. However, the daily trading session of the currency market is usually divided into three main time periods, three intraday trading sessions - Asian, European and American. So the main flow of news on the U.S., with some exceptions, falls at the beginning of the American trading session. Stock markets in the U.S. start working at 8 a.m., respectively, according to Moscow time at 16-00. As a rule, important news on the calendar forex news are released in half an hour and an hour and a half after the beginning of the trading session, respectively, at 16-30 and 18-00. Exactly at this time will be observed the peak of activity on the currency market. Even for an ardent supporter of technical analysis, just knowing this pattern can give good benefits, he will just know that at this time you should prepare for a good trade.
It should also be noted again that news on the U.S. will be important for any currency pair on e.
Then, accordingly, for each major currency pair, in addition to news on the U.S. will be important economic news of the country whose currency is paired with dollar. For example, for EURUSD this is the Eurozone news, as well as (it should be noted) the news from the key Eurozone countries - Germany, France and Italy. It should be noted that due to the fact that Germany has been dominating in the Eurozone lately, the news regarding this country is considered by the markets as more important than the Eurozone news. The same approach is applied to other currency pairs GBPUSD, USDJPY, USDCHF, etc.
It should also be noted that news release on other key pairs also follows approximately the same logic as the U.S. news release, the main block of news on the economies of these countries falls within the first two hours after the start of the trading session in these countries. You should use the following time frames: New York time for US news, London time for Canadian news and London time for Canadian news. poundThe main thing is that we have to be able to get a good idea of what we are doing.
As a result, even a superficial acquaintance of the trader, who uses the technical analysis, with the basics of the fundamental analysis gives visible advantages, without excluding his own "technical" method. Economic News The "technicians" knowing this will be ready for market bursts of activity during the release of this or that news. However, it should be noted that this is just the first step in mastering the "foundation," a deeper study of this method of analysis gives even greater advantages in trading. The following articles on this topic will describe how to apply it, and how to better understand the events in the market, which makes the process of trading sensible.