Finding the Best FX Fundamental Indicators

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There are two ways that you can analyse the FX market and they are technically and fundamentally.  If you are looking at fundamental analysis you should consider the fundamental indicators that you should be using.  Fundamental indicators are generally FX news releases.  There are hundreds of news releases each day and you have to find the indicators that are best for you.

How to Find FX Fundamentals

When new traders look at using fundamental indicators they are often confused about where they can find all this information.  These FX traders feel that trawling news websites may not give them all the information that they need.  This is true and using news websites can be very time consuming if you are looking for FX news.  The best way to keep up to date with all of the news is to use a forex calendar.  These devices list all the news releases that are set for a day and many of them have links to where you can find the information.

Filtering the News

Each day hundreds if not thousands of new releases are published that can affect the forex market.  It is important that you filter the information to what you need.  To do this you first have to determine what you need for your trading strategy.  There are three news impact levels that you have to be aware of.  These levels are high, medium and low.  Most fundamental trading strategies will focus on the high impact releases like news about interest rates, the GDP and the employment reports.  These are all releases that have a large and long-term impact on the market.

It is also important that you filter the news to the currencies that you need.  There is no point in knowing about the news release that affects the Australian dollar if you are going to trade the Pound and Euro pair.  Calendars allow you to filter out all the new releases that do not affect the countries that you specify.

Using the Fundamentals in Tandem

Many new FX traders feel that they can trade by looking at one news release.  While this is possible it is not ideal as you should be using the news releases in tandem.  You also have to use the release in context.  If you do not take into account the effect of other releases and the general market sentiment you could open a position that moves in the opposite direction of the market.

The best way to understand which releases work together is to go through the supply chain.  When you look at the supply chain you can see which releases are linked to each other.  With the supply change the inflation report is linked to the retail sales report which in turn is linked to the employment report.  This is due to the inflation rate affecting how much people spend which has already been affect by the job market and general employment figures.  Only when you look at the releases together and in the correct context will you be able to get a full view of the market.



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