|
Statistics
Total online: 1 Guests: 1 Users: 0
|
Trade
More importantly, fundamental analysis or price?
In a broader sense, forex traders can join the two camps – the fundamental analysts and traders that use price dynamics. At first glance it may seem that the proponents of the "fundamental" methods will become more conservative traders but in currency markets they are likely to be regarded as "desperate" players.
Fundamental analysis involves "digesting" various official releases, which helps to assess the degree of national economic well-being of different countries. Usually in fundamental analysis consider data such as reports on jobs, inflation and the performance statistics. But that's not all the interesting individual reports on productivity, the trade data, tracking of population dynamics. That is, everything that affects the economy and can be quantified, collected and announced by the government of the country.
Often this information is published in the form of "news". It would seem that a better informed forex trader, watching the news, will be more rational in their trading. But here lies the catch-the markets are not so predictable often respond to important and urgent news. Here's an example: the most profitable forex trades in history were made after one of the largest events of the second half of the 20th century – the fall of the Berlin wall. No one could predict exactly how international currency will react to the future unification of Germany.Here were the winners, and big losers. Forex market fundamental news is based on logic not more than playing in a casino or a bet on red in roulette.
One of the pitfalls when trading on the news – that for the clear figures published in government reports, is a lot of hidden variables. And most of the Forex traders sitting at his Desk, will never be privy to that informal information that can ensure effective action directly before the important informational messages. Fundamental analysts almost always traded on "incomplete" information.
On the other hand, traders focused on prices, saying that it is much safer to follow the trade movements of the currency prices, as these price fluctuations already "include" all these fundamental variables. In their environment it is believed that it is much easier and more reliable to judge about the bread when he gets out of the oven than trying to evaluate it for each individual grain, which can then be milled into flour and then into dough.
In reality, most forex traders is not confined exclusively to one or the other of these "worlds". Even if the trader-Zenovich skeptical of fundamental data, it will be justified to keep up with important financial news (e.g., announcement on interest rates by Central banks, jobs report, a survey on consumer confidence), as these data can cause the rise of the variability in the currency markets.They will not suggest in which direction will move the markets, but no trader wants to be caught by surprise the looming danger of a sharp rise in volatility. On the contrary, the harsh fundamentalists" would have reached, after studying the behavior of exchange rates on charts that illustrate the final result of all those government reports that they are trying to "predict".
|
| Category: Forex | Added by: (30.10.2017)
|
| Views: 309
| Rating: 0.0/0 |
|
