This article looks at forex strategies related to fundamental factors.
Fundamental speed forex strategies are a method of tracking important economic indicators that may have a direct impact on your currency pairs. You need to know how to react to that information, when to enter your position and when to exit your trade in an effective manner.
There are several economic reports published on a daily basis, but only certain ones require your attention. The big currency movements happen when economic releases are tied to the currency rate with another currency. Some of the economic releases you should watch are:
- Trade balance
- Retail sales
- Consumer confidence
- Unemployment levels
- Home sales
- Interest rates
- Consumer price index
Most of the available online economic calendars highlight the releases that have a high economic impact. A good tool to use is Bloomberg’s economic calendar as it marks events that could impact the market with a red star.
Once an economic release has been made, you can expect a price movement for about two minutes. The reaction in the forex market is dependent upon whether the release met expectations or not. If it met expectations it will generally move in the direction that was expected. It often seems to go haywire after the first couple of minutes after the release.
This is generally not a confused movement, but possibly central banks trying to stabilise their currency rate or the large banks trying to obtain the best rate of transfer. The movements are normally out of your hands. You may do better to hold off on trading for those first ten minutes or so.
If your forecast figure matches the actual figure, you should not trade simply because there is some movement in the market. This strategy offers you a few options in a trading day and traders are often tempted to trade during a neutral period simply because it is available and for no other reason. You should trade according to your trading plan and not on the emotions of the market.
Your reaction to the market news should be according to your strategy and trading plan. You should observe the market and decide if the short burst of volatility is suitable for your trades or if you wish to ride it out. More often than not, during the up and down swing in the market, you should sit back and watch. The market will settle down and the true trend will emerge.
Forex Strategies System
Many traders find it difficult to trade on fundamental factors as daily forex news releases affect the market. This means that you have to be aware of the long term effect on your long term trades. The emotional and over-reactionary movements in the market can cause more confusion, but you should stick to your forex strategies and not allow the market emotion to sway your discipline.
It is important for traders to have a suitable forex strategy that allows them to trade effectively. You should maintain your strategy and not waiver from it regardless of the market sentiment and erratic movements after certain news announcements.