Tradeonomics – Four Steps to Trading Economic Indicators
Step by Step Guide to Using Fundamental Analysis in Your Trading Strategy
Do you know the #1 reason why many retail traders underperform compared to their market counterparts namely – interbank dealers, hedge funds, financial institutions?
Studies suggests that despite retail traders having strong requirements to be well informed they are not. They do not anticipate returns on trades, lack trading acumen and are emotional when trading.
What stops traders from being better informed, improving their trading acumen or reducing emotional trades such as hope and wishful thinking?
The answer is – it’s not easy to make the connections between the economy, central bank actions and financial instrument prices.
However there are just 4 steps that simplify the process of making the connections between these three factors easier. Continue reading to find out the 4 steps…
As a trader in the interbank market I relied purely on technical analysis for the first few years. Drawing trendlines, using technical indicators such as moving averages, MACD, RSI etc etc to predict returns in the FX markets.
Though I utilised technical analysis I never really understood the “fundamentals” behind the primary trend or reversal of trends; what these linkages between economic indicators, financial markets and central bank policy decisions were…
To quote the guru of technical analysis –
“Market Analysis can be approached from either direction (Technicals or Fundamentals). While I believe that technical factors do lead the known fundamentals, I also believe that any important market move must be caused by underlying fundamental factors. Therefore, it simply makes sense for a technician to have some awareness of the fundamental condition of a market.” – John J. Murphy, Technical Analysis of the Futures Market
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Proof: Four Steps to Trading Economic Indicators