Updated: Oct 5, 2021
WELCOME TO THE TRADE TALK TABLE, HERE IS TODAY'S DISCUSSION:
By: Seth Arnez Oct, 1st, 2021
In today's Trade talk table, we discuss the importance of conducting fundamental analysis when analyzing the markets. As Seth mentioned above, most beginner traders often times unknowingly lack fundamental analysis when trading. becoming consumed in the technical side of trading isn't such a bad thing, however when you become overly consumed to the point where you don't pay any attention to the fundamental side; taking a loss once in a while will leave you extremely curious. You'll begin to question your technical side of trading, when 9 times out of 10 there wasn't anything wrong to begin with. What's missing is your fundamental mental analysis, prior to executing your positions.
HOW CAN NEWS NEGATIVELY IMPACT THE MARKET?
News can negatively impact the market in a multitude of ways for example, in the most recent pandemic. In febuary of 2020 when COVID-19 spread sporadically, it caused multiple buissnesses to shut down temorarily, affecting millions of Americans nation-wide. As citizens of the united states we are consumers. which means if we have little to no income coming in due to the pandemic, the less liquidity is circulating in the economy. this can internally effect the value of the US dollar causing in the decrease in value.
CAN I PROFIT OFF OF NEGATIVE NEWS ?
Due to events that are similar to this happening in the past, yes. an experienced day-trader can see news such as "citizens in the United States losing their jobs due to COVID-19" as an opportunity to catch bearish positions on most pairs that include USD as it's base currency.
HOW CAN NEWS POSITIVELY IMPACT THE MARKETS ?
News can also impact the market positively in more ways then one. the main way being supply and demand. In this world there are people, businesses, companies, corporations, & countries who are in need of something specific; they are called demanders. There are also people, buissnesses, companies, corporations, & countries that have exactly what they need: we call them suppliers. every demander needs a supplier, & every supplier needs a demander. This can cause an increase in the liquidity moving throughout the economy which means the value of a currency can strengthened.
IS IT POSSIBLE TO PROFIT OFF OF POSITIVE NEWS ?
An experienced trader who has witnessed this before can immeditely look to take bullish positions depending on what currency or country the news impacted.
WHAT RESOURCES ARE AT MY DISPOSAL TO FUTHER HELP ME CONDUCT A FUNDAMENTAL ANALYSIS WHEN ANALYZING THE MARKET?
FOREX FACTORY will provide you with folders that are color coordinated according to high, medium, & low impacts, with information on the current news at different times throughout the day.
CURRENCY STRENGTH METER provides you with the strength of each individual currency. Whenever the base currency has more currency strength then the secondary currency it indicates the market is bullish for that pair. If the secondary currency has more strength than the base currency, then that indicates the market is bearish for that pair.