It’s important to know what forex fundamentals are in order to supplement your trading plan; especially if you’re more of a technically related trader. If none of this makes sense to you, just listen in, make some notes and maybe you’ll get a couple of nuggets from the show that you can distill down and add to your trading methodology. Hopefully, there will be something you can remember and use in the future in this episode Forex Fundamental Analysis.
Fundamental trading is really about news events and how they affect the markets. – Dr. Jason Gospodarek
Dr. Jason doesn’t trade fundamentals only in his forex account, he’s mostly a technical trader but he believes you need to be aware of what is going on in the world and your markets if you want to be successful in your trading. He’s not a fundamental trading guru but he’s taken a lot of courses on it, has read books on it and has learned how to trade forex going on 14 years now and he uses fundamentals when he does his trading.
What is Fundamental Trading?
Here are the basics of it. It’s the central banks monetary and fiscal policy. The fiscal policy is the direction the government works regarding taxation and spending and borrowing. The monetary policy is the actions they take to achieve the fiscal policy.
In forex trading, if you want to distill everything down to the most simple format, interest rates of a currency is the value of the currency. If you talk the US Dollar, the interest rate is how valuable that US Dollar is. The same holds true for the Australian Dollar, the Euro or the British Pound.
Banks buy currency and hold it in reserves and/or increase its supply. What they do is they pull it back, they keep more of it back and it helps to raise the rate of the currency. The banks can also put more of the currency out into the market and decrease its value slightly.
That’s part of the backbone of what forex trading is. Forex stands for Foreign Exchange which is currency trading.
What News to Watch
When the rubber meets the road, fundamental trading is really about news events and how they affect the markets. There are a lot of news events to follow. Most of the high-impact or medium-impact news events are the most important. You can do searches online. You can Google search ‘forex economic calendar’ and find one that you like. Jason happens to like Forex Factory. You can find the link below.
To find out more about Forex Fundamental Analysis and how Dr. Jason uses it in his daily trading, download and listen to the entire episode.