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Forex fundamentals and news are esentially economic factors that

can be understood as catalysts for price movement on the markets.

The school of thought known as ” Forex fundamental analysis”

basicaly says that you can predict future movement on the market

based on a market’s fundamentals or news data. I’m sure you think

now that you can simply study the economic fundamentals and news

of a matket and make predictions about it’s future movement based

on this data, but you will see that things are not quite that simple.

Ever heard the old saying: ”Buy the rumor, sell the fact”? This saying

has been on Wall Street for hundreds of years, and there is a reason

why. It’s because when market data is released, it typically has

already been factored into the market abd it’s influencebwill be

minimal once ut finally gets out. Traders and investors work based

on anticipation of what is going to happen in the future, and the

base for predictions are fundamental analysis and news data. Here is

where the ”buy the rumor” part comes in at. The tricky part is that

we can’t know exactly how much of any piece of impending

economic news has already had an effect on the market vs. What is

going to happen when that data is out. That’s why you should not

pay to much attentionbto upcoming Forex news data and

funfamental analysis, because everything that has en affect on the

market can be seen much more clearly and effectively from

analyzing tge price action on s raw price chart.


Perhaps the most importantthing you should learn from this lesson is

that the raw PRICE ACTION of a market can show you directly what

factors caused that market to daily bar on a daily price

chart is the end result of economic variables that effected the

market during day. There are thousands of factors that can make the

markets to move on any given day, but trying to analyse these

fundamental and news factors doesn’t necessarily mean they are

useful or even relevant for short or mid-term Forex traders, even

though they are the catalysts for price movement in a market.

In many cases, when some big economic news break out, like an

FOMC policy meeting or Non-Farm Payrolls, traders and investors

make asumtions about the outcome for weeks or even months

before the actual event, so that when it happens it’s already factored

into the market and is practicaly a non-event. Usually the market

becomes more unpredictable during there big news events, but if

you keep your focus on the HIGHER TIME FRAME CHARTS like I do,

this unpredictability won’t have effect on you or your success. The

core of how I ”trade the news” is if there is a strong daily chart trend

in place, I am more concerned with that, and I will use any opposite

trend retraces that occur as a result of the news to look for PRICE

ACTION SIGNALS in-line with the daily chart trend.

In the chart below, we can see a GBPUSD daily chart and that on

December 18th the market surged higher shortly after the FOMC

meeting announcement. Now, the important point to consider here

is that traders and investors had been discussing this

announcements “potential” for weeks leading up to it, and that the

GBPUSD was ALREADY trending higher for a long time before this.

The announcement itself was actually somewhat positive for the U.S.

dollar as the Fed announced they were scaling-back their bond-

buying program, but what happened? The trend continued as usual.

The point is that you can’t stop a freight train…there are very strong

reasons why market’s trend, and one single news event is very

unlikely to change the course of the trend. Thus, this is why I ignore

the news except maybe to note when the volatile reports are coming

out so that I can look for a nice entry in-line with the daily chart



If you try to analyze all the economic news factores that are affecting

a market everyday, you will just end up stressing, second-guessing

you ”gut” feeling and become confused and frustrated, where there

is no need for that feelings to exist. A lot of traders think that all the

economic news are important, because if so many experts talk about

it they must be important, right? Well not really. The financial news

industry is huge and employes thousands of people , but it’s your job

to see if the economic data is useful to you as a trader.

As we already discussed, the price action in a market gives you all

the important information you need. You can stop reading economic

reports and listening to news with ”expert views” on the market,

because all that matters is absorbed into a market and reflected

through its price action. If you want to know how to interpret and

use the raw price action in the market, checkout my PRICE ACTION

TRADING COURSE for more informations.