Hello traders! This week’s topic is, again, on the somewhat difficult side. In every Online Trading Academy class that I teach, the topic of the fundamental strength of world economies comes up. Even though our class’ main purpose is to teach you how to look at charts and earn a few pips from the moves in the markets, being aware of fundamental differences can be helpful especially for the long term traders out there. The main problem comes with spending TOO MUCH time researching the differences in fundamental strengths. This can lead to an inherent bias to either a positive or negative view of the economy in question.
Professional traders make a living from trading what the charts tell us to trade – not our beliefs of economic strength or weakness. Very often the two do coincide, but very often they do not. When economic numbers from whatever source are released, many new traders attempt to immediately jump into the market hoping for a few quick pips. Very often the market punishes these traders as it quickly reverses direction on them! Using many of these numbers to formulate a hypothesis on the strength or weakness of an economy is difficult, as many times these numbers are lies. Oops, I meant revised the next time they are released. Here are a few easy examples:
In this snapshot from forexfactory.com, you can see several bits of economic news releases. The first column of numbers is the actual release, the second is the expected figure, and the third is the previous release of this data…. Continue Reading
