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. (Click to Tweet)
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.
This blog is also a good source of fundamental analysis commentary, so be sure to sign-up to my newsletter to keep up to date with the latest posts (subscription is at the bottom of the page).
P.S. – If you want to learn more about how I trade, check out the link below
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