When to Trade Against the Fundamentals

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As renown and successful Forex trader and educator, Jarratt Davis has developed a detailed strategy on how to trade the latest economic and political global events through fundamental analysis. He now teaches retail forex traders how to achieve profitability by predicting market trends through this methodology. In this article, Jarratt highlights instances when it’s actually useful to trade against the fundamentals.

My whole trading philosophy is based upon fundamental analysis. I’m a firm believer that following global news events to determine future moves in the markets and currency price is the best way to become profitable. What’s more, I encourage all of my students to use this methodology to trade currencies in line with their underlying trend direction.

Over the years I have used many different trading methodologies, and from my experience, nothing is a better indicator of how a currency’s price will moves than global news events. This is often seen as overly simple by many traders, but economic data and political events from a particular country or continent can cause a local currency’s price to rise or fall. The principle is very simple, if data or events are positive in nature, price is likely to rise. Reversely, if data or events are negative, price is likely to fall.

Of particular importance to this form of fundamental analysis are economic data releases such as national unemployment data, manufacturing output data, GDP data and monetary policy announcements from central banks. In addition, news events such as national elections, international conflicts and natural disasters can also move the markets significantly.