Forex Technical Analysis

How to use Fundamental Analysis to do Strategic Planning

Fundamental analysis or in short FA, can best be explained as a study of the macro environmental forces that affect world markets. Thus FA as a study would be best utilized in helping the trader plan out strategic moves.

Strategic trading is long term, not short term trading. Strategic traders are not about scalping the market. In Forex it is tough to actually define long or short term. You could say that a 15 minute time frame was long to you as you believe in trading a 5 minute time frame.

For our purposes we will define long term as a time frame of 1 day in the Forex market. In other markets long term could means weeks or months. In Forex this is usually not the case.

Strategic planning is worthwhile for any trader in any time frame because it allows you to have a sort of “glimpse” into the future. Personally for long term trading such “peaks” are a lot more valuable than technical indicators. Still as a caveat I must say that each trader has a personal trading method and what ever makes money for you consistently is a good method.

So just what is FA??

FA is the analysis of world forces that affect markets. Or to draw a clearer picture it could be that huge batch of locust ate up all the wheat thus affecting the prices of commodities. The direct consequence to you is that if you were trading a com-dollar depending on the position you took, that could be either bad news or good news.

So there you have it! FA is NEWS! That’s all to it, but for you as a trader to make profits out of this news you got to learn how to link it all up together.

Here are some sources whereby most traders can get their information for FREE!
Yes it is that dirty four letter world starting with F… Free…

Why do I say that? Well because most of the things that are good for you come with a cost. IF you use FREE stuff then there is always that possibility you plan your trade base on faulty information.
I mean come on; you didn’t pay for the information so you can’t really say you got screwed.

Ok here are some free sources:

1. Television/Radio

This is a superb way of getting information. Especially if you are like most traders. We basically sit in our comfy chair, with our coffee or beer or green tea fruit juice mix (if you are a health junkie) and trade. Thus all we need to do is tune into the radio or the television and at appointed times (I don’t know about your country) we get news telling us what is happening around the world.

Pros: It is FREE! What else can I say about it, not a single cent to pay other than your electricity bills and you get information at your figure tip. This is also a relatively unbiased source of information.

Cons: Old news is what you get when you tune in. If you make tactical trading decisions when you receive this news then most likely your trading position will not be accurate.

2. Newspapers.

I hardly need to say more. Unless it is very difficult to get access to newspapers in your part of the world, then this is another very accessible medium. To get free papers just walk up to any news stand and start flipping. Public libraries also stock up on several copies of papers as well.

Pros: There is a lot of information that can be squeezed into a paper. The reporting can also cover many areas that you might not be aware off.

Cons: Old news is bad news.

3. Internet

Well you are most likely this online right now. The internet is a huge source whereby a lot of information can be easily obtained. Always remember that information gained but not used is useless.

Pros: largest source of information available at no to low cost.

Cons: Well it is biased (even this!) Due to that, you as a trader must take what works for you and cast out the rest.

My candid advice to you is that you must not allow yourself to use the news to make tactical decisions. When you rely on a news spike, then what you are doing is scalping. That is dangerous and if you are not careful you will lose your account faster then you blink!

By: Joshua Geralds