Fundamental Analysis Skills Are Crucial To FX Trading
|This post highlights the importance of fundamental analysis in Forex trading.
One of the most common questions traders ask me is: 'How do I quickly improve my Forex trading?'
It's a question I answer in some detail in the latest issue of Shares Magazine. I also thought it was worth sharing some thoughts here too.
Fundamental Analysis is the Key
Fundamental analysis means spotting patterns in financial news and is something that is pivotal to successful FX trading.
Don't ever think that real-time news and events won't affect price. If something significant happened during the Tokyo session, for example, you can almost be certain that traders in the London session will be trading on the basis of that news. It is being able to see these types of opportunities that make FX traders profitable.
So if there's a large move on a currency pair, try to find out what caused it. A trader's ability to spot patterns and traits in the currency market will determine whether they are consistently profitable.
It's also important to understand the economic dynamics of individual countries and how this affects the price of their respective currency. These factors can move a currency in a particular direction for months or even years at a time and present profitable trading opportunities.The Euro Zone is a perfect example of this.
The more financial news you consume in real-time, the better you'll get at applying the insights to your trades.
Focus the majority of your learning on fundamental analysis, as this is the skill-set that will make you better at judging opportunities.
There are plenty of resources to keep up to date with too.
A Google search for 'FX trading news' will provide you with plenty of information to strengthen your fundamental analysis skills.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.