Day Trading Course for Beginners
Day Trading Lesson 3: Fundamental Analysis and News Trading
Introduction to Fundamental Analysis
Fundamental analysis involves evaluating the intrinsic value of an asset by analyzing economic, financial, and qualitative factors. Traders use fundamental data to make trading decisions and assess the long-term potential of an asset.
Economic Indicators and Their Impact
Economic indicators are key statistics that provide insights into the health of an economy. Common indicators include Gross Domestic Product (GDP), unemployment rate, inflation rate, and consumer confidence. Day traders monitor these indicators as they can significantly impact market movements.
News Trading Strategies
News trading involves capitalizing on short-term market volatility triggered by significant economic announcements or news events. Traders need to react quickly and effectively to changes in market sentiment driven by news.
Knowing when news is coming out each day is ESSENTIAL to day trading, especially if you are trading on the lower timeframes, like the 1 minute to 5 minute timeframe (Typical timeframes for day traders and scalpers).
Knowing when news that effects markets is happening is essential, not because you need to trade the big news events, but because you need to be cautious of volatility. Major news events tend to draw in a lot of trade volume giving massive volatility.
Before you trade always check for news. This isn't your "News Media", it is News that effects the financial markets. Go to Forex Factory Calendar EVERY MORNING BEFORE TRADING. One single news event can easily crush a day traders trading account, if they are not paying attention.
Yellow folders represent news that generally has a low impact on the markets, while Orange folders represent news that generally has a moderate impact on the markets and Red represents news that will likely have a very massive impact on the market.
Beside each folder, it will display the currency that will be effected by this news. For Example, if it is USD, then anything paired with USD, like EUR/USD, XAU/USD, USD/JPY, US30 ETC., will experience volatility. Often a red folder will effect other pairs as well, despite them having the same currency listed, or not, as everything is connected.
Correlating Fundamental and Technical Analysis
Successful day traders often combine fundamental and technical analysis to make well-informed trading decisions. Correlating the fundamental outlook with technical signals can provide a more comprehensive view of market conditions.
Practical Exercises
Practice analyzing economic indicators, interpreting news events' impact on asset prices, and incorporating fundamental insights into your trading strategies. Developing proficiency in fundamental analysis will enhance your ability to anticipate market movements.
Next up: Day Trading Lesson 4: Risk Management and Capital Preservation