Utilizing Fundamental and Sentiment based trading strategies in the Forex market is not typically how retail traders start out their trading career. However, many retail traders who do discover these types of strategies will tell you that this is when they had their "Breakthrough" from being an "inconsistent breakeven trader" to becoming a "consistently profitable trader." We developed this Wiki with the hope that more of our fellow retail traders will have their "Breakthrough".
This Wiki is for informational purposes only. Any financial gain or loss from utilizing this information is at the discretion of the person using it. We are not responsible for any outcome you have from using this information.
Before diving into this Wiki, it is important that you have a good grasp of Fundamental Analysis, Sentiment Analysis and Central banks because many of the strategies and ideas presented here assume that you are aware of these concepts because they work together. Please refer to those very important Wikis if you have not already.
This Wiki is a part of our Essential Forex Trading Guide. Be sure to check that out HERE.
Fundamental and Sentiment Trading Strategies
Let’s now have a look at some examples of strategies that fundamental and sentiment traders use to trade the markets. Specifically, we will show you how you can get to grips with these strategies, learn how to apply them and figure out the ones that fit your personality best.
As with the entire principle behind all our Wikis, our goal is not to spoon-feed you a method that will work 10% of the time that you can blindly trade. This is because as much as that would be lovely that is not how the markets work. What will make you a skilled trader is knowing when to apply a certain strategy and when to stay out of the market. Being in or out of the market should be based on the prevailing sentiment and market conditions which can only be developed through practice and experience trading the markets in real-time.
It’s very important to set your expectations correctly because your trading skills will improve over time with dedicated practice. You should not expect to read this Wiki and be managing millions a few weeks later. It simply does not work like this because your skills will develop over months and years rather than days and weeks... Sorry, but it's the truth. This is no different than any other profession that requires advanced skills. However, by learning successful strategies that are proven you will shorten the learning curve substantially and reduce your development to just the time it takes to practice what you have learned in live market situations.
It’s important to understand that your strategy is not the major thing that will make your trading business a success or failure. The absolute best way for you to learn the process of finding trades and identifying the best currencies will be trading the current session by following along with the news feeds and information sources we have discussed in previous Wikis such as the Trading Tools Wiki. If it was as easy as blindly following a mechanical strategy then 95% of retail traders would be profitable instead of the opposite reality that 95% of retail traders lose money.
Note: All strategies are employed only after the analysis phase is complete. Don’t think that because you have a system you can cut out any of the 4 phases of the trading routine because they are relevant no matter how you execute your trades or what you base your trades on.
How to Trade Risk Events
Trading Risk Events can be a very profitable form of trading but you need to know how to do it correctly. In the following Wiki, we are going to explore How to Trade Risk Events including:
You can access the main Wiki on How to Trade Risk Events HERE.
How to Trade with Central Banks
Understanding Central banks and how they conduct themselves in the Forex market is one of the most important concepts that a Forex trader needs to know about for effective trading. In this Wiki, we will explore How to Trade with Central Banks Including:
How to Trade with Central Banks How to Trade Central Bank Statements
You can access the main Wiki on How to Trade with Central Banks HERE.
How to Trade Upcoming Economic Figures
In the following Wiki, we will take a look at How to Trade Upcoming Economic Figures and how you might apply this concept to your trading.
You can access the main Wiki on How to Trade Upcoming Economic Figures HERE.
How to Trade the Previous Session
The previous session almost always will have an impact on the current trading session. For this reason, it is useful to know how the previous session will impact the current session and how you can go about trading it. This is what the following Wiki will focus on.
You can access the main Wiki for How to Trade the Previous Session HERE.
Trading Surprise Data and News
In the following Wiki, we will explore Trading Surprise Data and News and how you can apply this concept to your own trading should some surprise data or news occur.
You can access the main Wiki for Trading Surprise Data and News HERE.
Trading with the News Feed
News Feeds can provide many trading opportunities if traders know how to capitalize on them properly. In this Wiki, we will cover how to trade with the news feed so you can understand how to add this potentially profitable strategy to your trading toolkit.
You can access the main Wiki for Trading with the News Feed HERE.
Trading Fundamental Pullbacks
Trading Fundamental Pullbacks is a simple strategy that involves patience to wait for the medium term sentiment to bring prices back to a place where it makes sense for large investors to see a bargain and want to get back in or add to an existing position. In the following Wiki, we will explore:
You can access the main Wiki for Trading Fundamental Pullbacks HERE.
Positioning Yourself with Medium Term Sentiment
In this Wiki, we will take a look at Positioning Yourself with Medium Term Sentiment and how you can apply that to your trading.
You can access the main with on Positioning Yourself with Medium Term Sentiment HERE.
Carry Trading
Carry Trading is a time-tested strategy that has been used by large institutions for decades. In this Wiki, we will take a look at what Carry trading is and how you can apply this to your own trading efforts.
You can access the main with on Carry Trading HERE.
Trading Strategy Summary
Before you place any trade you need to have these questions answered and fully understood.
What is the cause of the move?
- Use the tools to determine what caused the move (Bloomberg, Newsquawk, ForexFacorty, etc.). The real time news feed is usually the best for short term trading.
What are the Fundamentals?
- How does the current move match or line up with the fundamentals for that currency?
- This helps to determine if the move is in line with the fundamentals or if there is a short term counter trend sentiment trade that may allow us to get in at a better price.
What is the Fair Value of the currency?
- Determine the last extreme high or low that happened while the current fundamentals have been in play.
- The fair value is the previous extreme high ( uptrend) or low ( down trend) as long as the fundamentals have not changed.
What is a good entry price?
- You compare where the current price is to where the fair value price is. If there is a large enough difference between the prices then it could be a good potential entry point.
- You can use the trading tools combined with trade setups with the technical strategies as well.
What is the current sentiment?
- After you have answered all the questions above it will be easy to determine what the short term sentiment is and whether it is in line with the fundamentals or not.
Keys to Successfully Executing Trading Strategies
- This is the key to successful trading...Period! Without conviction in your trading it will be virtually impossible for you to successfully executing your trading strategies. Please take the time to read our Wiki about Conviction in your Trading HERE.
Knowledge:
- Always increase your understanding of the markets because knowledge leads to confidence which leads to conviction.
Fundamentals and Sentiment:
- Focusing on these will lead you to the knowledge of what actually drives price movements in Forex.
Tune In:
- It’s not enough to just scan the news now and then. You must be constantly focussed on what is moving price and how the fundamentals and sentiment are playing out every day.
Do Not Overcomplicate Trading:
How to Tune Back into Trading
In this Wiki, we will take a look at How to Tune Back into Trading and how you can use this to better perform in your trading when you have had time away from trading.
You can access the main Wiki for How to Tune Back into Trading HERE.
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