Fundamental Analysis ♦ The Most Profitable Forex Trading Strategy.
Traders I’m about to show You the most profitable trading Strategy That’s ever Existed in Forex What’s really in Trouble.
Welcome Fundamental Analysis, another high impact article. The best place to learn Fundamental Analysis and use that information to give you guys an edge in today’s market.
Okay We thought Yellen might do the tapering in October 2017. All right we were expecting to start to do the tapering in
2017, but we didn’t Know What’s gonna be next month. So that Gave us a Lot of us strength and we caught that Us sell side move on the euro/usd.
You guys can check out the last Week’s Money Market Breakdown to see our forecast and see what happened.
When it comes to a High Impact article, I know this one. But I think this is going to be the best of many. Economic data and Fundamental Analysis that you guys are seeing being spit Out. For example on Bloomberg, being spit on CNBC, over there in Forex Factory, over at Seeking Alpha, all over.
Trading Economics It’s very hard to interpret and I mean all of it, all right?
It’s really hard to conceptualize how it all will fits. So i’ve been thinking and i’ve been pondering over a metaphor that can help me conceptualize it.
Economic data for Fundamental Analysis, to maybe just one simple metaphor one simple variable. And I can Just have all these other independent variables that maybe affect how well the economy is performing. Or maybe how bad it is going, and I got it for you okay.
Discovering this and conceptualizing it in this way showed me exactly how we make money when trading. I already Knew how we made money when I’m trading using Fundamental Analysis. Using Economic, Divergence is one way, but I’m gonna show you exactly is done and how that economic divergence is the best trading strategy in forex.
It’s a little bit more Long-Term trading alright? it Requires a lot more interpretation of these Fundamental Analysis of the Markets and a lot more of an understanding of these Economic data.
Fundamental Analysis plus Technical Analysis
When you know about fundamental analysis and know how to can align it with the technical analysis information. It gives you an amazing edge. This is how the top best traders guys in the industry are assessing the markets.
And if you are not assessing markets in this capacity, again you are not putting yourself in a situation that is going to generates the profits you want.
Now to sum it all up, let’s pull over into the blackboard I’m going to show you guys exactly how these top best traders are making money in this market.
You got to make sure you get involved in these moves and interpret this fundamental Analysis data as soon as possible. If you have that edge you will for sure start making good money.
I’m not sure how many accountants rationalize the economy has a vehicle. That’s exactly what I’m going to do, only with the difference that I’m going to help you guys to understand it in relation to other vehicles.
The other Vehicles are other economies, because that’s where our edge is. The edge is how is this vehicle functioning.
Regardless to how this vehicle is functioning, we need to know the variables inside each vehicle to understand its functioning in relation to another.
I know that’s a lot, but you can drop a car over here it’s not going to be pretty guys, so bear with me and see it’s already started.
Imagine this to be your economy:
And that is going to help you really understand how Forex works and why you can make money Forex.
And also why this is the most probable way to make money in Forex.
The variables that we’re going to be looking for are going to include:
- The driver of the vehicle.
- We need to talk about the gas.
- We need to talk about the brakes.
- And we also need to talk about the speed of the car.
♦ So the driver for us folks is the central bank. is that the Central Bank.
♦ The gas is the productivity.
♦ The brakes are the interest rates.
♦ The speed of the car is going to be inflation.
In this article you can find information how inflation affects your trades.
So these are the key variables to our economy and unlike a vehicle, in fundamental analysis an economy guys it wants to exist forever.
There really isn’t a destination.
So you’re always going to have productivity happening, which means, you’re always going to have the vehicle going.
But just like I mentioned, you won’t have a vehicle moving at all if there is no productivity.
So that’s why gas represents productivity for us. And based on the amount of productivity, the interesting thing that happens, unlike a vehicle, when there’s more productivity happening in the economy usually there an increase in speed. Because the economy needs to burn off that
extra productivity. And what happens is that we get an increase in speed in terms of economic growth.
You can get ballooning to start to happen. We saw that in 2008, well we look back on every single time we make one of these article, it’s a great place to get a lot of examples and to learn from them.
So when we use this fundamental analysis and see increase in speed in terms of the economy, economic growth, what you’ll see happening is an increase in inflation. You don’t want to see that much of an increase in inflation, you don’t want to see that much capital moving around in the money supply. Because again, you may not really have any true value there. There may not be any true productivity happening in those areas.
So what will happen is that the driver, the central bank, will put on the brakes.
Those are when they are applying Interest Rates, and those interest rates are their governors. What happen is, as this economy and as this vehicle is moving along as an increases in speed the central banker inside notice is that whole process happening and he says; holy crap.
The driver starts applying the brakes and a lot of times, as you guys can know, in 2008 here’s a chart 2008 what started happening
In tho9s fundamental analysis chart you can see hot the economic was monstrously just pushing to the upside.
Can you see how those interest rates were increasing, but still we had a collapse habit. They should have implemented measures before.
The panel was really pushed. Before the speed really started increasing, they should have implemented measures there in the productivity sector in the economic sector via reform. A lot of times people say a free-market is the perfect capitalistic scenario to be in, government shouldn’t be involved in any capacity.
But you guys got to rationalized, we have these guys at the top that are making all this money. they’re going to start doing things. They are going to start implementing different ways of making money in the economy that may not be too beneficial for the economy. A.K.A Mortgage-Backed- Securities.
But if the government intervened in that process to stop the banks from being together and allow them to get
too big to fail, then maybe we could have avoided the 2008 collapse. So Government intervention, Central Bank intervention, can slow the economy down. If they slow the economy down, they’re usually going to do that by slowing productivity. They’re going to slow productivity by raising rates.
By making money less accessible, but what we’re going to do right now is, we’re going to go over it’s a gas.
I want to show you guys with this fundamental analysis, the Breakdown of Productivity. Because it’s pretty simple up to right now, but there are a lot of different variables within productivity that can help us pinpoint exactly economic growth, the types of that growth in terms of productivity. There could be a lot of productivity happening guys but it’s not all beneficial. All right?
Fundamental Analysis – Types of Productivities
So let’s go into all the variables of productivity and I hope you rationalize the type of gas going in the vehicle and if that’s good or bad.
Some of the aspects that I mentioned earlier of the economy, when I was relating it back to the vehicle had variables within them as well.
Inflation for example, I mentioned inflation being the speed. There are different types of inflation. I wrote about that too.
When it comes to productivity, the gas in the economy, there are four other variables that I look for when it comes to productivity and how it
relates to the overall economy performing.
First, Fundamental Analysis, variable of productivity that I want you guys to understand is employment.
A lot of folks look at that Non-Farm Payroll that comes out at the beginning of every month, because it’s it’s extremely important how many jobs have been added into the economy.
That’s going to help us understand the amount of productivity that’s going to be happening in the economy, and remember, depending on the amount of productivity we have, depends on how much gas is being pushed into the economy, and that’s going to depend on the amount of speed that the economy is actually going to increase or decrease.
Another important factor of employment are the types of jobs being added so that’s something.
Second, Fundamental Analysis, we have economic growth, just blatantly economic growth, and we have trades. Things like PPI; Purchasing Price Index, you have things like PMI; Producer’s Managers Index.
Imports and Exports and if you have imports and exports, you also going to have Trade Balance.
How much are we exporting versus importing and what’s the current standing of that. In an economic expansion we want to be taking on a little bit more imports than exports because if we’re just still producing a lot in the economy and pushing that out of the economy, because of that we’re going to have an increase in inflation. If we’re in a recession well, we want a lot of exports, we want to be producing a lot within the economy, and so that way, we’re increasing productivity within the economy.
It’s varying degree, a lot of times people say all the economy’s functioning on a trade deficit, well if the economy is expanding extremely fast, you might want to be functioning on the trade deficit. So that’s something that’s very important.
Third, Fundamental Analysis, is geopolitical events.
Things like you know Marie Lepen versus Macomb, back in April, if she won the election back then, it was a potential that you would have France leaving the European union. That had heavy implications on the currency that would have also had heavy implications on the productivity of the economy.
Situations like Brexit, we saw investing go down after Brexit. Investing into the UK and so, since investing went down, you had a decrease in productivity even though they did pretty well in their latest GDP figure. You saw how that did have implications of on how productivity was functioning, economy, and that again weighed down the currency.
A few things I didn’t mention inside geo were actually things like war, so North Korea situation had have bad implications on our currency prices, had implications on gold prices, that affects the economy. The push and pull there. You also have natural disasters, those events have definitely massive implications in short-term. Usually on economies.
Recently we’ve seen that we had a lot of different weather patterns, having all these hurricanes Puerto Rico, now has zero electricity running it within the economy at the moment. Those have heavy implications on economies there.
Last But Not Least in fundamental analysis we also must include commodity prices.
Commodity prices, as you guys know, definitely have heavy implications. When you’re dealing with the commodity based currency a lot of times you hear that jargon there, people will relate
the prices of gold, prices of oil.
We do that inside of our community all the time and compare and contrast that and say, okay guys we’re having a huge uptick in oil prices, less listeners are look to start buying the Canadian dollar for example, so if I’ve showed you guys a chart back when gas was fairly cheap, you would have seen that the Canadian dollar was actually doing fairly poorly, but then once gas started coming back around and gas prices started to increase, you’ll see the Canadian dollar again start to increase in terms of its economic divergence: USD versus Canadian Dollar.
Why is that the case?
Well that’s because literally twenty-five percent, a quarter of all exports that are happening within Canada, are based in their natural resources. In their mineral deposits. That being their oil. Just when you look at the economic data coming out on Forex Factory or when trading economics or fundamentals using your own fundamental analysis, looks for it in terms of productivity, that is usually where most of the economic data is functioning.
Certain times you see things regarding interest rates, usually again you might be able to peg interest rates to certain things, involving CPI, but at the end of the day CPI has a lot to do with economic growth. That’s number two for us. We have the PMI, you can have CPI as well.
How much are people actually spending on certain goods in the economy, that deals with productivity and that’s what you can section off
different economic releases to help you to rationalize exactly what you’re looking for. That is highly important.
One more thing I want to tell you about before we end this segment, traders this is the most important part of the entire article, here.
Fundamental Analysis – Economic Divergence
Remember, everything that I just hope you guys rationalize, depending on the speed of the economy you’re going to get a certain interest rate, but the thing about today’s economy, is it’s a global economy. We do exports into China, China has exports into the United States, we have lots of differents geo and national conglomerates functioning in every single different country. Certain countries, certain companies have footprints we are over a hundred different countries, we’re all interconnected.
Back in the day you’re going to have one economy fail and I’m talking about potentially maybe back into the early 1900, you know maybe could have an economy fail and you know that you as a functioning company not do so bad, but after we started manufacturing cars, there’s probably when everything started and then manufacturing software and computers and then clothes and everything else, and then food, after we became so interconnected if one come one country sneezes they all sneeze.
I want to show you guys a picture:
NZD AUD EUR USD
These are different economies they all are moving in the same direction, they’re all wanting economic growth, but if one country has a hiccup, imagine that they’re all tethered together, when the U.S failed in terms of its banking system in 2008, imagine these cars are moving along, they’re all pushing along, and then boom!!! you have this huge roadblock, here in the US, well then what happens?
These countries start to smash together, so the divergence that originally existed, kind of evaporates. They all start failing a bit, but once the U.S started to pick up, that gap is your edge, and I’m trying to hope you guys realise that this is the moneymaker time, in between the one going up the the one going down, because if you have one economy going backwards and you have one economy going forwards, then the currency pair is going to be changing in value immensely.
You’re going to have the euro going in Bullish direction, for example and you’ll have the USD going in Bearish direction. For example:
The euro is appreciating and the USD is failing, in many occasions wasn’t happen you’re going to have this parabolic move, that’s what we’ve seen happen this year, but the USD can only fail so much until it affects the EUR, you guys get what I mean?
Maybe if you get a situation where the New Zealand can fail, Cyprus for example, Spain for example, those economies really haven’t rebounded so well since 2008. Well you have over there the euro, yeah but we here have the us dollar, those economies are pushing forward. You see this tethering right there, imagine it to be a rubber band, you see they are getting pulled backwards as these economies are moving forward and eventually you usually can see these economists are pushing forward because there’s investment in those economies over there.
There are companies from these entities, from these countries, that are inside of these economies there. So eventually you will have the laggards pull up, but it may take some time and in that time you can use this fundamental analysis to trade that economic divergence.
There’s just so many scenarios where, as the USD for example the USD/CAD this year alone, we came from, I think the dollar 36’s and we went as low as the dollar 22’s.
That is a prime example of the Canadian dollar, the number one G7 currency in the entire world, versus the USD, a very dismal situation.
I can show you guys the USD compared to all the other currency pairs have been doing worse and worse and worse, if you guys can understand how these economies are standing here all these different vehicles that are driving, if you can understand they are standing relative to another economy, that is the edge, the economic divergence is how you’re making money.
You’re trading the spread between one economy moving slowly and another economy doing well.
you’re putting your capital and betting that this economy is going to do well relative to this one and as that comes to fruition you’re getting paid in between there.
Economic diverges folks, is how all the central bankers and how all the major market participants are actually trading all right.
They’re using Fundamental Analysis, they are not using Technical Analysis. Technical analysis only gives you so much of an edge, technical analysis for myself is more less precision, it is a necessity for sure, but understanding the economy as a whole in the split and the moving between those economies expanding and contrasting that each other, is where you find the biggest edge. So if you can conceptualize this, here in the long run and build a model around this, then you will be able to make money.
It’s just about getting in during those weekly scenarios, in those intraday scenarios where that divergence is happening very incrementally, there’s a lot of noise in between that process, there’s a lot of noise on the intraday chart, there’s even a lot of noise on the weekly chart sometimes, but in the long run if you know an economy is performing and you know another economy is suffering,
eventually you will get that split and then, there is where you make your money, on the bet that such economy is going to fail or on the bet that this economy is going to start picking up its pace. To
To close, economic divergence is the way that the major institutions are making their money and if you can rationalize economic divergence and understand all the different variables that allow economy to do well or allow an economy to do bad, then you can make money trading in that capacity.
Give me some feedback if you guys needs help to conceptualize this process right here, but that is the edge, that is the edge and that is where you’re going to make most of
Your profit always my motor exciting to keep cranking out anytime you impact articles, thanks for reading!